Why property taxes may go up in Vermont next year

Published: Nov. 20, 2017 at 5:47 PM EST
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Vermont officials are bracing for a large increase in property taxes next year.

"It's kind of unprecedented," Vermont Tax Commissioner Kaj Samsom said. "It's the biggest forecasted jump that we could find, at least in recent history."

The Legislature's nonpartisan Joint Fiscal Office has estimated tax rates could rise 9-10 cents in fiscal year 2019. The Scott administration generally agrees.

Resident homeowners would see a jump from about $1.50 per $100 of home value to nearly $1.60. For nonresidential properties, the rate would increase from about $1.53 to about $1.63.

"Everyone understands you need revenue in order to pay for roads, schools, whatnot. I get that, but we're paying quite a bit of taxes, I think, already," said Jean-Luc Jenni of Waterbury.

Half of the projected increase is the result of decisions made by lawmakers and the governor earlier this year. They used $36 million from two different sources to lower the residential property rate and keep the nonresidential rate flat-- $9 million taken from reserves plus $27 million the result of a surplus.

"There is a consequence to that. So when you use one-time money or surpluses or go into the statutory reserve, you know, you have to make that up in the future," Samsom said.

There is no surplus this year. And the reserve fund is now below levels required by statute and must be replenished.

The projected tax hike anticipates school spending to grow by 3.5 percent. Samsom says local school boards have not finalized budgets, but that would cause much of the increase.

Gov. Phil Scott, R-Vermont, says he wants to limit per-pupil spending growth to 2.5 percent.

"I think it's a reasonable goal. I certainly expect that. I suspect that some people in some areas will perhaps go even farther," Vt. Education Secretary Rebecca Holcombe said.

Holcombe says school consolidation must be discussed as the student population drops.

"If you have the same number of buildings with similar numbers of staffs serving a much, much smaller population, we are going to have a very expensive system," she said.

The Scott administration and lawmakers will face the pending tax increase when lawmakers return in January.