March 6, 2010

Voters question budget defeat in well-off Charlotte | The Burlington Free Press | Burlington, Vermont

Voters question budget defeat in well-off Charlotte | The Burlington Free Press | Burlington, Vermont

Molly Walsh's excellent story in Saturday's Free Press spotlights the egregious shortcoming of Vermont's school funding mechanism. Income sensitivity, a politically correct term for subsidies, has become far too generous (See highlighted portion of story below).

Vermont legislative leadership apparently considers income sensitivity the 'third rail' of legislative spending programs. If they touch it, they must fear the wrath of the education establishment and the 65% of Vermont taxpayers who benefit from it. Meanwhile, as Ms Walsh points out, taxes and annual spending for the subsidy will soon reach $182 Million.

This travesty cannot be allowed to continue. It makes a mockery of local control because far too many taxpayers are insulated from the effects of their 'yes' vote for school budgets that continue to escalate the tax rate. The result is ever higher education spending and taxes for a declining student enrollment.

Legislators must change the rules of the game. Do they have the courage? No evidence of that to date.

"Are tax breaks fair?

Tax breaks based on income also play a role in the final tax rates. Discounts claimed under this exemption have grown dramatically statewide and are projected to keep ballooning by 53 percent from fiscal 2009 to fiscal 2012, from $119 million to $182 million.

Vermont Tax Commissioner Richard Westman flagged the scale of the tax break as a problem in December and noted that such exemptions diminish the tax base and place more pressure on remaining properties and taxpayers who aren’t exempted.

Charlotte is one of the wealthier towns in Vermont. However, even there, 41 percent of primary homes qualify for school property tax breaks. Thirty homes qualified for the maximum $8,000 tax break allowed under state law this year. Eighteen of the 30 homes were assessed at $1 million or more, and one home was assessed at $2.17 million. The lowest assessed value for a homestead qualifying for the full $8,000 tax break was $740,900, according to town records.

The tax breaks are based on a household’s income.

Some critics of the current system say it’s too easy for people with sizable wealth in real estate and other assets to qualify for tax breaks.

It’s unclear if concern over income sensitivity played any role in the Charlotte school budget outcome, but the pattern of tax breaks is prompting questions. Mary Mead, Charlotte’s town clerk and treasurer, said the formula doesn’t make sense.

“It needs a big fix,” she said."
Post a Comment