Vermonters can look forward to a property tax increase

by John McClaughry

This doesn’t come as any surprise to me, but I was glad to hear Republican Representative Oliver Olsen of Jamaica explain it on the House floor last week, during consideration of the Miscellaneous tax bill.

Here’s the point he made: “The Governor’s budget included a substantial reduction in the General Fund transfer to the Education Fund. A smaller contribution to the Education Fund from the General Fund necessitates a property tax increase, which is another component of the Miscellaneous Tax Bill. The homestead base rate increases from 86 cents to 87 cents and the non-residential base rate increases from $1.35 to $1.36. In effect, the statewide property tax is being used to help close the General Fund gap in Fiscal Year 2012.”

Let me expand on his point. Act 60, the education finance law as amended in 2003, specified four streams of money flowing into the Education Fund. One was a statewide tax on residential property, the rate varying by district. The second was a state tax on nonresidential property, with a uniform rate throughout the state. The third was a collection of relatively small, earmarked taxes. The fourth was a pledged transfer from the General Fund to the Education Fund.

When General fund dollars run short, as now, this transfer can be curtailed. That throws more of the education tax burden on residential property tax payers – whose base tax rate the legislature is now raising.