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H.187

AN ACT RELATING TO PROVIDING ADJUSTMENTS IN THE AMOUNTS APPROPRIATED FOR THE SUPPORT OF GOVERNMENT

     The Senate proposes to the House to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following:

* * * Part I.  EDUCATION TAXATION AND COLLECTION * * *

* * * Town school districts * * *

Sec. 1.  16 V.S.A. § 428 is amended to read:

§ 428.  AMOUNT OF MONEY BUDGET TO BE VOTED AND

             COLLECTED

(a)  At each annual town school district meeting, the electorate shall vote such sums of money as it deems necessary for the support of schools.  If such sums are not approved or acted upon at the annual meeting, the electorate shall vote such questions at a duly warned special school district meeting.  A district may vote money necessary for the support of schools therein to the end of the full school year next ensuing.

(b)  Following Within 10 days of adoption of a budget by the electorate and calculation of the yield amount pursuant to section 4027 of this title, if the district has voted a budget with local education spending in excess of the general state support grant amount, the commissioner of education shall determine the district’s local share property tax percentage.  The selectboard shall then bill each property taxpayer for the local share property tax amount, and may use tax classifications if authorized.  Homesteads shall be billed without regard to the income sensitivity calculation under chapter 154 of Title 32, the superintendent shall report to the commissioner of education the budget amount voted, identifying budgeted amounts anticipated from privately raised funds.

(c)  Local share property tax amount is the education property tax liability due under section 5402 of Title 32, times the local share property tax percentage, minus any amount of education property tax assessed for that year on an electric generating plant subject to tax under chapter 213 of Title 32.  Local share property tax percentage means the percentage of the liability under chapter 135 of Title 32 necessary to raise per equalized pupil local education spending in excess of general state support amount, divided by the yield amount.  Local education spending shall have the same meaning that it has in subdivision 4001(6) of this title.

(d)  The treasurer of each school district which has voted a budget with local education spending in excess of the general state support grant and which can raise more than the yield amount shall, on December 1 in the year in which the tax is levied and on June 1 of the following year, pay to the state treasurer for deposit into the education fund one-half of the municipality’s education property tax liability net payment, as determined by the commissioner of education.  Payment shall be accompanied by a return prescribed by the state treasurer in consultation with the commissioner of education.  Any portion of local share property tax liability due to the treasurer and paid before the due date shall be discounted on a per diem basis at an annual rate of six percent.  A district which has not voted a budget and for which the commissioner has used the most recently adopted budget in calculating the yield amount under section 4027 of this title, shall be subject to this subsection, based on its most recently adopted budget and shall borrow the funds necessary to make payments to the state treasurer.

(e)  The payment provisions of section 5403 of Title 32, and the administrative provisions of section 5409 of Title 32 shall apply to the local share property tax.  Taxes assessed and collected by a municipality shall be assessed and collected in accordance with chapter 133 of Title 32.

(f)(c)  If the electorate of a school district votes for its budget by Australian ballot, it shall do so using ballot language jointly developed by the commissioner and secretary of state and adopted by the commissioner, by rule.

* * * Incorporated school districts * * *

Sec. 2.  16 V.S.A. § 511 is amended to read:

§ 511.  BUDGET

(a)  At a meeting legally warned for that purpose, an incorporated school shall vote such sums of money as it deems necessary for the support of schools.  If such sums are not approved or acted upon at the annual meeting, the electorate shall vote such questions at a duly warned special school district meeting.  A district may vote money necessary for the support of schools therein to the end of the full school year next ensuing.

(b)  Following Within 10 days of adoption of a budget by the electorate and calculation of the yield amount pursuant to section 4027 of this title, if the incorporated district has voted a budget with local education spending in excess of the general state support grant amount, the commissioner of education shall determine the district’s local share property tax percentage.  The prudential committee shall then bill each property taxpayer for the local share property tax amount, and may use tax classifications if authorized.  Homesteads shall be billed without regard to the income sensitivity calculation under chapter 154 of Title 32, the superintendent shall report to the commissioner of education the budget amount voted, identifying budgeted amounts anticipated from privately raised funds.  The prudential committee shall have the same authority to enforce collection and payment of this tax, including the collection of interest on overdue taxes, as selectmen have in enforcing collection and payment of town taxes.

(c)  Local share property tax amount is the education property tax liability due under section 5402 of Title 32, times the local share property tax percentage, minus any amount of education property tax assessed for that year on an electric generating plant subject to tax under chapter 213 of Title 32.  Local share property tax percentage means the percentage of the liability under chapter 135 of Title 32 necessary to raise per equalized pupil local education spending in excess of general state support amount, divided by the yield amount.  Local education spending shall have the same meaning that it has in subdivision 4001(6) of this title.

(d)  The treasurer of an incorporated district which has voted a budget with local education spending in excess of the general state support grant and which can raise more than the yield amount shall, on December 1 in the year in which the tax is levied and on June 1 of the following year, pay to the state treasurer for deposit into the education fund one-half of the municipality’s education property tax liability net payment, as determined by the commissioner of education.  Payment shall be accompanied by a return prescribed by the state treasurer in consultation with the commissioner of education.  Any portion of local share property tax liability due to the treasurer and paid before the due date shall be discounted on a per diem basis at an annual rate of six percent.  An incorporated district which has not voted a budget and for which the commissioner has used the most recently adopted budget in calculating the yield amount under section 4027 of this title, shall be subject to this subsection, based on its most recently adopted budget and shall borrow the funds necessary to make payments to the state treasurer.

(e)  The payment provisions of section 5403 of Title 32, and the administrative provisions of section 5409 of Title 32 shall apply to the local share property tax.  Taxes assessed and collected by a municipality shall be assessed and collected in accordance with chapter 133 of Title 32.

(f)(c)  If the electorate of an incorporated school district votes for its budget by Australian ballot, it shall do so using ballot language jointly developed by the commissioner and secretary of state and adopted by the commissioner, by rule.

* * * Tax Rates * * *

Sec. 3.  32 V.S.A. § 5402 is amended to read:

§ 5402.  EDUCATION PROPERTY TAX LIABILITY

(a)  A statewide An education property tax is imposed on all nonresidential and homestead property at a rate of $1.10.  The tax shall be at a base rate of $1.38, adjusted as required under subsection (e) of this section, and multiplied by the district spending adjustment for the municipality, per $100.00 of equalized education property value as most recently determined under section 5405 of this title; but the homestead property tax liability shall not exceed the adjusted liability for eligible claimants under chapter 154 of this title but in no case less than $1.10.

(b)  Calculation of municipality’s education tax.

(1)  The commissioner of taxes shall determine the education property tax liability for to be collected by each municipality for the following school year by multiplying the tax rate adopted under subsection (a) of this section by the municipality’s most recent equalized education tax grand list for the previous year.  On or before June 30 each year, the commissioner of taxes shall inform each municipality of its the education property tax liability to be collected

     (2)  If a district has not voted a budget by May 1, the commissioner shall determine a preliminary amount of education tax to be collected by the municipality, by multiplying the minimum tax rate allowable under subsection (a) of this section by the municipality’s most recent equalized education tax grand list, and shall inform the municipality by June 30 of the preliminary amount to be collected.  Upon receipt of the municipality’s budget information from the commissioner of education, the commissioner shall determine, and inform the municipality of, the full amount of education tax to be collected by the municipality under subdivision (b)(1) of this section.

(3)  The legislative body in each municipality shall then bill each property taxpayer for the education property tax on the education property tax grand list, and the legislative body may use tax classifications if authorized, to raise that amount the amount determined under this section

(4)  Taxes assessed under this section shall be assessed and collected in the same manner as taxes assessed under chapter 133 of this title.  Taxes assessed on homesteads shall be assessed without regard to the adjustment for eligible claimants under chapter 154 of this title.

* * *

     (e)  Annually, by November 15, the commissioner of education shall, after consultation with the secretary of administration and the joint fiscal office, decrease the education property tax base rate of $1.38, for the following fiscal year only, to the minimum rate which will retain the projected education fund budget stabilization reserve at the five percent level authorized under section 4026 of this title for that fiscal year; and shall determine a proportional adjustment to the applicable percentage base for income sensitivity under 32 V.S.A. § 6066; and shall report to the secretary of administration and to the  general assembly the data and the calculation used to determine the tax rate under this subsection, and report the rate to all districts.

* * * District spending adjustment * * *

Sec. 4.  32 V.S.A. § 5401(12) is added to read:

(12)  “District spending adjustment” means a fraction in which the numerator is the education spending, per equalized pupil, of the municipality for the school year, and the denominator is the base education payment for the school year, as defined in 16 V.S.A. § 4001, except for a municipality in which education spending per equalized pupil is less than the base education payment, “district spending adjustment” means the lesser of 1, or a fraction in which the numerator is the education spending plus privately raised funds, per equalized pupil, of the municipality for the school year, and the denominator is the base education payment for the school year.

* * * PART II.  INCOME SENSITIVITY ADJUSTMENTS * * *

Sec. 5.  32 V.S.A. § 6066(a) is amended to read:

(a)  An eligible claimant who owned the homestead on April 1 of the year in which the claim is filed shall be entitled to an adjustment amount equal to the amount determined under subdivision (1) of this subsection plus the amount in subdivision (2), as follows:

(1)  Statewide property Property tax adjustment:

(A)  For a claimant with household income of $75,000.00 or more:

(i)  the statewide adjusted property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year; minus, if less:

(ii)  minus (if less) two percent the applicable percentage of household income for the taxable year, ; plus the statewide adjusted property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year in excess of $160,000.00.

(B)  For a claimant with household income of less than $75,000.00:

(i)  the statewide adjusted property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year;

(ii)  minus the lesser of:

(I)  two percent the applicable percentage of household income for the taxable year; or

(II)  the statewide adjusted property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year reduced by $15,000.00.

(2)  Local share property tax adjustment.  The adjustment amount determined under subdivision (1) of this subsection shall be increased by:  the local share percentage rate established under Title 16 for the claim year for the municipality in which the homestead is located, multiplied by the adjustment amount determined under subdivision (1).  “Applicable percentage” in this section means 2.5 percent, adjusted as determined under section 5402(e) of this title, multiplied by the district spending adjustment for the municipality in which the homestead is located, as determined under section 5401(12) of this title.

Sec. 6.  AMENDMENT OF RELATED INCOME SENSITIVITY

             PROVISIONS

(a)  The baseline amount for determining an education tax rate under subsection (3) of Section 50a of No. 60 of the Acts of 1997, as amended, shall be the greater of the municipality’s fiscal year 1998 local education spending per pupil (unless the spending increase is due to a change in average daily membership), or the base education payment as defined in 16 V.S.A. § 4001(14) for the fiscal year.

(b)  For purposes of a claim for property tax adjustment under chapter 154 of Title 32 by a taxpayer in a municipality which has upon its grand list an operating electric generating plant subject to the tax under section 5402a the adjusted property tax rate shall be the municipality’s total education property tax rate imposed under subsections (2) and (3) of section 50a of No. 60 of the Acts of 1997, as amended; and the applicable percentage shall mean 2.5 percent, adjusted as determined under section 5402(e) of Title 32, and multiplied by a factor of:  1 plus a fraction, the numerator of which is the tax rate imposed under subsection (3) of that section 50a, and the denominator of which is the actual tax rate imposed under subsection (2) of that section.

* * * PART III.  EDUCATION PAYMENTS AND SPENDING * * *

* * * Base and Adjusted Education Payment Amounts * * *

Sec. 7.  16 V.S.A. § 4001(6) is amended and (13), (14), and (15) are added to read:

(6)  “Local education Education spending” means the amount of the school district budget, any assessment for a union school or joint contract school, technical center payments made with respect to the district under section 1561(b) of this title, and any amount added to pay a deficit pursuant to 24 V.S.A. § 1523(b) which is paid for by the school district from the general state support grant and from local share property tax revenues.  Local education spending does not include, but excluding any portion of the school budget paid for by any other sources such as endowments, parental fund raising, federal funds, nongovernmental grants or other state funds such as special education funds paid under chapter 101 of this title other than base education payments, or privately raised funds.

(13)  “Privately raised funds” means any portion of the school budget or other district expenditures received from nongovernmental sources, such as endowments, parental or other private fundraising or nongovernmental grants.

(14)  “Base education payment” means $7,000.00 per equalized pupil, adjusted as required under section 4011 of this title.

(15)  “Adjusted education payment” means the district’s education spending per equalized pupil.

Sec. 8.  16 V.S.A. § 4011 is amended to read:

§ 4011.  GENERAL STATE SUPPORT GRANTS EDUCATION

              PAYMENTS

     (a)  Annually, the general assembly shall appropriate funds to pay for a general state support grant an adjusted education payment for each equalized pupil and a portion of a general state support grant base education payment for each adult diploma student.  In fiscal year 2002, the general state support grant for each equalized pupil shall be $5,448.00. 

(b)  For each following fiscal year, the general state support grant base education payment shall be $7,000.00, increased by the most recent New England Economic Project cumulative price index, as of December 1 November 15, for state and local government purchases of goods and services from fiscal year 2002 2005 through the following fiscal year, as provided through the state’s participation in the New England Economic Project for which the payment is being determined.

(b)(c)  Annually, each school district shall receive a general state support grant an adjusted education payment for support of basic education costs.  Funds distributed under this section shall be allocated on the basis of the equalized pupils in each school district.  However, no school district shall receive more than its local education spending amount.

(d)  Funds received under this section which are attributable to an increase in student count due to the poverty ratio of the district shall be used by the district to provide learning readiness experiences for preschool age children or early reading and math experiences for school age children.  These services shall be provided to children who are at risk of not succeeding in the general education environment.  School districts are authorized to work collaboratively to share resources or otherwise find ways to maximize use of funds received under this section.  However, due to the difficulty of determining how much of these funds to attribute to an individual student, this subsection shall not apply to tuition funds received by a receiving school.

(e)  The commissioner shall pay an amount equal to the general state support grant, $5,810.00 in fiscal year 2004 adjusted annually for inflation by the factor used to adjust the base education payment under subsection (b) of this section to the Vermont Academy of Science and Technology for each Vermont resident, 12th grade student enrolled.

(f)  Annually, the commissioner shall pay to a department or agency which provides an adult diploma program, an amount equal to 0.3 times the general state support grant, $5,810.00 in fiscal year 2004 adjusted annually for inflation by the factor used to adjust the base education payment under subsection (b) of this section or each student who completed the diagnostic portion of the program in the previous year.

(g)  On or before December 15, the commissioner shall recommend to the general assembly an appropriate level of general state support grants to school districts for the next ensuing school year.

* * * Technical Centers  * * *

Sec. 9.  16 V.S.A. § 1561(b) and (c) are amended to read:

(b)  A technical center shall receive from the education fund for each full‑time equivalent student sent from a school district within Vermont, 100 percent of the per equalized pupil general state support grant $5,810.00 in fiscal year 2004 adjusted annually for inflation by the factor used to adjust the base education payment under subsection 4011(b) of this title and an equivalent amount shall be subtracted from the amount due to the sending district under section 4011 of this title.

(c)  Annually, the general assembly shall appropriate funds to pay for a supplemental assistance grant per full-time equivalent student.  The amount of the grant shall be equal to 40 percent of the per equalized pupil general state support grant  $5,810.00 in fiscal year 2004 adjusted annually for inflation by the factor used to adjust the base education payment under subsection 4011(b) of this title, payment for that year.  

* * * Fund Payments * * *

Sec. 10.  16 V.S.A. § 4027 is amended to read:

§ 4027.  DETERMINATION OF YIELD AMOUNT AND AMOUNTS DUE

              TO OR FROM THE EDUCATION FUND NET EDUCATION

              FUND TRANSFER AMOUNTS

(a)  On September 15 of each year, the commissioner of education shall determine a predictable yield for the following fiscal year, based upon the allocation, if any, to the yield pool by the General Assembly for the following fiscal year, and upon projected local education spending and projected local share income sensitivity costs for the following fiscal year.  The commissioner shall calculate the predictable yield so that the estimated amount due into the yield pool, plus the amount allocated to the yield pool by the General Assembly, equals the estimated amount due out of the yield pool.  By October 1, the commissioner shall report to the General Assembly the data and the calculation used to determine the predictable yield under this subsection.

(b)  Annually, on or before June 30, the commissioner of education shall use the predictable yield amount established in subsection (a) of this section to determine:

(1)  the local share property tax percentage a school district which adopts a budget with local education spending in excess of the general state support grant shall collect on properties in the district; and

(2)  how much the district shall pay into or receive from the education fund.

(c)  [Deleted.]

(d)(a)  On or before June 30, the commissioner of education shall inform each school district municipality which, by May 1, voted a budget with local education spending in excess of the general state support grant and for which no petition for reconsideration has been filed, how much it will owe to the education fund or how much it will receive from the fund of the net amount of its education tax obligation under section 5402 of Title 32 and its adjusted education payment receipts under 4011 of this title.  If a petition for reconsideration has been filed, or the district municipality has not voted a budget by May 1, and subsequently votes a budget with local education spending in excess of the general state support grant, the commissioner shall inform the district how much it will owe to or receive from the fund municipality of the net amount of the its education tax obligation and its adjusted education payment receipts within 10 days of receiving a report from the superintendent pursuant to subsection (e) of this sectionThe commissioner shall notify the commissioner of taxes of the information reported to municipalities under this subsection.

(e)(b)  Annually, on or before June 1, each superintendent shall report to the department of education, on a form prescribed by the commissioner, each local education budget which was adopted by May 1 for the following fiscal year by the member districts of the supervisory union and for which no petition for reconsideration has been filed, and shall identify budgeted amounts anticipated from privately-raised funds.  A superintendent shall report a budget adopted following May 1, to the department of education, between 30 to 40 days following adoption, or, if a petition for reconsideration has been filed, within 10 days of final adoption of the budget.

Sec. 11.  16 V.S.A. § 4028 is amended to read:

§ 4028.  FUND PAYMENTS TO SCHOOL DISTRICTS

(a)  On or before September 10, December 10, and April 30 of each school year, each school district shall receive funds equal to one-third of the adjusted education payment under section 4011 of this title shall become due to school districts.

(1)  the general state support grants due under section 4011 of this title;

(2)  the amount due to a district which adopts a budget with local education spending in excess of the general state support grant and which is able to raise less than the yield amount.

(b)  Payments made for special education under chapter 101 of this title, for technical education under chapter 37 of this title and for other aid and categorical grants paid for support of education shall also be from the education fund.

(c)  The commissioner of education shall determine a school district’s net payment amount due the fund, which is the amount due under subsection 5402(b) of Title 32 in excess of the payments due the district under subdivision (a)(1) of this section and the net payment due the state under section 4027 of this title.  If a school district fails to deposit the net amount due under section 5402 of Title 32, or fails to deposit the amount due under section 4027 of this title, on or before the due date therefor, then in addition to any other penalties prescribed by law, payments to be made under this section shall be reduced by a percentage equal to the unpaid portion of the amount due.  However, in no case shall payments to the school district equal more than 80 percent of the payments due the school district under this section until the municipality has paid in full.

Sec. 12.  32 V.S.A. § 5409 is amended to read:

§ 5409.  DUTIES OF MUNICIPALITIES AND ADMINISTRATION

The following shall apply with regard to the education tax imposed under this chapter and to the local share tax imposed under section 428 or 511 of Title 16:

(1)  Late payments of the tax by a municipality to the state shall be assessed interest at a per diem rate of eight percent per annum of the amount due.  If a payment is more than 90 days overdue, any state funds due the municipality shall be withheld.

(2)  If  by August 1 a municipality has failed to issue notices of assessment of the statewide property or local share property tax education tax; or if the municipality fails for more than 90 days after the due date for any installment payment of either tax to enforce the tax in the municipality; then the commissioner of taxes shall either issue notices of assessment or collect the tax or both, or bring appropriate court action to require the municipal officials to issue notices and collect the tax, as the commissioner deems necessary.

(3)  In any case of administration under subdivision (2) of this section by the commissioner of taxes of local share property tax:

(A)  Sections 5868, 5869, 5873, 5875, 5881, 5882, 5883, 5884, 5885, 5886, 5887, 5891, 5892, 5893, 5894 and 5895 of Title 32, as amended, shall apply in the same manner as to income tax.

(B)  Persons aggrieved by decisions of the listers may appeal in the manner provided for property tax appeals in chapter 131 of Title 32; and the commissioner of taxes shall have all the powers described in chapter 133 of Title 32.

(C)  The commissioner may abate in whole or in part the statewide or local share property education taxes of a taxpayer who has been granted an abatement of municipal taxes under section 1535 of Title 24.

(4)  [Deleted.]

(5)  In case of insufficient property tax payment by a taxpayer to a municipality, payments shall be allocated first to municipal property tax, and next to local share property tax, and last to statewide the education property tax.  In case of insufficient payment by a taxpayer to the department of taxes, payments shall be allocated first to liabilities other than education property taxes, and next to local share property tax, and last to statewide the education property tax.

(6)  In case of overpayment by a taxpayer who has an income tax liability under chapter 151 of this title and a homestead property tax liability, a refund of the overpayment, after accounting for any benefit amount allowed under chapter 154 of this title, shall be deemed to be a refund of income tax for purposes of debt setoff under subchapter 12 of chapter 151 of this title.

(7)  Notwithstanding section 435 of this title, the commissioner shall deposit the revenue from taxes imposed under this chapter and the local share property tax under Title 16 in the education fund, credited to the account of the municipality for which it was received.

(8)  A municipality's liability to the state for education property taxes shall not be reduced by any early payment property tax discount or similar discount offered by the municipality.

* * * Estimate of Per Pupil Spending * * *

Sec. 13.  16 V.S.A. § 563(11) is amended to read:

(11)  Shall prepare and distribute annually a proposed budget for the next school year according to such major categories as may from time to time be prescribed by the commissioner.  Any proposed budget shall show all revenues and expenses, shall provide an estimate of the proposed per equalized pupil expenditures, and shall state the specific amount of any deficit incurred in the most recently closed fiscal year and how the deficit was or will be remedied.  The proposed budget shall be prepared and distributed at least ten days before a sum of money is voted on by the electorate.

* * * Education Spending - Use of Funds * * *

Sec. 14.  16 V.S.A. § 4029 is amended to read:

§ 4029.  USE OF FUNDS FOR LOCAL EDUCATION SPENDING

(a)  Funds for local education spending received by a school district may be used by a school district only for legitimate items of current education expense and shall not be used for municipal services. 

(b)  Funds raised under section 2664 of Title 17, section 2601 of Title 20 or section 1309 of Title 24 shall be used only for municipal services and shall not be used for educational expenses received by a municipality other than a school district may not be used directly or indirectly for education expenses.

(c)  If the commissioner of education determines that a school district has spent funds paid under section 4028 of this title for an item that is not a legitimate item of current education expense, the treasurer of the municipality shall, within 90 days, remit the amount of the expenditure to the education fund.  The treasurer shall use funds raised pursuant to section 2664 of Title 17, section 2601 of Title 20 or section 1309 of Title 24 for this purpose.  If the commissioner of education determines that a municipality other than a school district has spent funds raised under section 2664 of Title 17, section 2601 of Title 20 or section 1309 of Title 24 for an item that is a legitimate item of current education expense, the treasurer of the municipality shall transfer the amount of the expenditure from the local education fund to the municipal fund.

* * *

* * * Small Schools * * *

Sec. 15.  16 V.S.A. § 4015(b), (c) and (d) are amended to read:

(b)  Small schools support grant:  Annually, the commissioner shall pay a small schools support grant to any eligible school district.  The amount of the grant shall be the greater of

(1)  the amount determined by multiplying the two-year average enrollment in the district by $500.00 and subtracting the product from $50,000.00, with a maximum grant of $2,500.00 per enrolled student; or

(2)  the amount of the general state support grant for the current year, $5,810.00 in fiscal year 2004 adjusted annually for inflation by the factor used to adjust the base education payment under subsection 4011(b) of this title multiplied by the two-year average enrollment, multiplied by the AGS factor.

(c)  Small schools financial stability grant:  In addition to a small schools support grant, an eligible school district whose two-year average enrollment decreases by more than ten percent in any one year shall receive a small schools financial stability grant.  However, a decrease due to a reduction in the number of grades offered in a school or to a change in policy regarding paying tuition for students shall not be considered an enrollment decrease.  The amount of the grant shall be determined by multiplying the general state support grant amount for the current fiscal year, $5,810.00 in fiscal year 2004 adjusted annually for inflation by the factor used to adjust the base education payment under subsection 4011(b) of this title by the number of enrollment, to the nearest one-hundredth of a percent, necessary to make the two-year average enrollment decrease only ten percent.

(d)  Funds for both grants shall be appropriated from the education fund and shall be added to payments for the general state support grant base education payment or deducted from the amount owed to the education fund in the case of those districts that must pay into the fund under section 4027 of this title.

* * * Technical Amendments * * *

Sec. 16.  GENERAL CONFORMING AMENDMENTS

     (a)  The term “education tax”, as defined and used in this act, shall be substituted as the context requires in Title 16 and Title 32, and elsewhere in the Vermont Statutes Annotated, for the terms “state wide property tax”, “education property tax”, “state education property tax” or other similar terms referring to the state education property tax enacted by No. 60 of the Acts of 1997, as amended, and the Legislative Council is directed to make conforming revisions in the codification and publication of the statutes as appropriate. 

     (b)  The terms “local share tax”, “local share property tax”, or other similar terms in Title 16, Title 32, or elsewhere in the Vermont Statutes Annotated, and all other references to the local share property tax enacted by No. 60 of the Acts of 1997, as amended, shall be deleted as the context requires, and the Legislative Council is directed to make conforming revisions in the codification and publication of the statutes as appropriate.  

Sec. 17.  REORGANIZATION OF CHAPTER 133 OF TITLE 16

16 V.S.A. chapter 133 is redesignated as follows:

(1)  The chapter title shall be amended to read:

Chapter 133.  State and Local Funding of Public Education

(2)  The title of subchapter 2 shall be amended to read:

Subchapter 2.  General State Support Funding of Public Education

(3)  The title and designation of subchapter 3 shall be repealed, and the contents of subchapter 3 shall become a part of the redesignated subchapter 2.

Sec. 18.  REPEALS

The following sections of Title 16 are repealed:

(1)  § 11(29) (local education spending).

(2)  § 4000(b) (policy regarding local education spending).

(3)  § 4001(4) and (5) (yield amount and general state support grant).

(4)  § 4025(a)(2) (local share tax revenue).

* * * Transition Grants * * *

Sec. 19.  TRANSITION GRANTS

(a)  Transition Grants Based on Grand List

     (1)  In fiscal years 2005 through 2009, each municipality with grand list per pupil in excess of the 85th percentile grand list per pupil for all municipalities shall receive a transition grant as determined by the commissioner of education. 

     (2)  In fiscal year 2005, the transition grant shall be the municipality’s education grand list; multiplied by the tax rate of the municipality determined under 32 V.S.A. § 5402 without regard to this section, minus $1.38; multiplied by a fraction:  the numerator of which is the municipality’s grand list per pupil, minus the 85th percentile grand list per pupil for all municipalities; and the denominator of which is the municipality’s grand list per pupil.

     (3)  In this section, “grand list per pupil” means the equalized education grand list per equalized pupil, as of January 2004.

(b)  Transition Grants Based on Spending Per Pupil

     (1)  In fiscal years 2005 through 2009, each municipality with education spending, including privately-raised funds, in fiscal year 2005, which is less than $6400 per equalized pupil shall receive a transition grant as determined by the commissioner of education. 

     (2)  In fiscal year 2005, the grant shall be an amount equal to the difference between the total education tax liability of the municipality under education finance law immediately prior to passage of this act, and the total education tax liability of the municipality under the provisions of this act, as applied to fiscal year 2005.

(c)  Fiscal Years 2006 Through 2009; Application of Grants

     (1)  In fiscal years 2006 through 2009, a municipality shall receive a transition grant which is a percentage of the 2005 grant as follows:  2006, 80 percent; 2007, 60 percent; 2008, 40 percent; and 2009, 20 percent.

     (2)  A transition grant shall not affect the education tax liability of a municipality under 32 V.S.A. § 5402; but the legislative body of a municipality shall take into account the transition grant for the fiscal year when determining its effective education tax rate under 32 V.S.A. § 5404(b).

* * * Current Use – Farm Buildings * * *

Sec. 20.  32 V.S.A. § 3752(12) is amended to read:

(12)  "Use value appraisal" means, with respect to land, the price per acre which the land would command if it were required to remain henceforth in agriculture or forest use, as determined in accordance with the terms and provisions of this subchapter.  With respect to farm buildings, "use value appraisal" means 30 0 percent of fair market value.  The director shall annually provide the assessing officials with a list of farm sales, including the town in which the farm is located, the acreage, sales price and date of sale.

Sec. 21.  32 V.S.A. § 3760 is amended to read:

§ 3760.  PAYMENT TO MUNICIPALITIES

     (a)  Annually the state shall pay to each town the amount necessary to limit its tax rate increase in the prior year due to the loss of municipal property tax revenue for that year based on use value of enrolled property as compared to municipal property tax revenue for that year based on fair market value of enrolled property, to zero.  The director of property valuation and review shall determine the amount of the available funds under this section to be paid to each town, and a town may appeal the director's decision in the same manner and under the same procedures as an appeal from a decision of a board of civil authority, as set forth in subchapter 2 of chapter 131 of this title.  On November 1 of each year, the director of property valuation and review shall pay to each municipality the amount calculated as described above in this section.  If the appropriation for the year is insufficient to pay the full amount due to every town under this subsection, payments in that year shall be made to such towns proportionately.  The director's calculation of payment amounts to municipalities shall be based on grand list values and total tax appropriations as submitted to the director for the prior year.

     (b)  Assessing officials shall appraise property enrolled in the program at fair market value consistent with other appraisals.  On or before July 5, the assessing officials shall provide the director with the listed value of all property in the municipality enrolled in the program.  If the director certifies that the value set by the assessing officials is significantly above the fair market value or is not equitable with other assessments, the director’s estimate of the fair market value shall be substituted for that of the assessing officials.

(c)  A town aggrieved by the director’s decision under this section may appeal that decision under the same procedures as an appeal from a decision of the board of civil authority.

Sec. 22.   APPROPRIATION; FARM BUILDINGS; PAYMENT TO

                MUNICIPALITIES

     There is appropriated in fiscal year 2004 from the general fund the amount of  $125,000.00, and from the transportation fund the amount of $125,000.00, to the director of property valuation and review for state payments to municipalities for farm buildings enrolled in the current use program as determined by section 3760 of title 32.

* * * FY04 Block Grant * * *

Sec. 23.  FISCAL YEAR 2004 GENERAL STATE SUPPORT GRANT

Notwithstanding the provisions of  16 V.S.A. § 4011(a), the general state support grant for each equalized pupil in fiscal year 2004 shall be $5,810.00.

* * * Studies * * *

Sec. 24  JOINT LEGISLATIVE EDUCATION COST CONTAINMENT

             STUDY

     (a)  There is created a joint legislative committee, to be known as the Joint Legislative Education Cost Containment Study Committee to consider ways to contain education costs throughout the system of education finance.  The joint committee shall take testimony on the cost drivers facing public education and the impact of future trends on these costs factors.  The joint committee’s review shall include but not be limited to the following:

          (1)  special education uniform standards of service and litigation reduction strategies;

          (2)  review of district size to identify opportunities for economies of scale in administrative services;

          (3)  potential for savings through coordinated staff and teacher recruitment and screening and possible state funded assistance with teacher and staff bargaining support;

          (4)  costs savings resulting from a review of state and local mandates;

          (5)  opportunities for joint purchasing of services or centralized services including insurance products, supplies, materials, uniform computer systems;

          (6)  review of health insurance and workers compensation as to budget impacts, including levels of premiums, co-payments and plan quality as compared to that provided to other public sector employees including the state employees;

          (7)  potential for technology related savings including use of remote communication and video technology  to increase class offerings and other initiatives;

          (8)  opportunities for improved facilities utilization strategies including program co-location or other initiatives; and

          (9)  opportunities for efficiencies in funding technical education facilities and programs, and alternatives for payment of technical education costs; and

          (10)  various costs, incentives and disincentives through the interplay of current state funding provided to special education, technical education and local schools.

     (b)  The joint committee shall be comprised of four members of the House, not all from the same political party, appointed by the Speaker from each of the House Committees on Ways and Means, Education, and Appropriations, and one additional House member appointed at large; and four members of the Senate, not all from the same political party, appointed by the Senate Committee on Committees, from the Senate Committees on Finance, Appropriations, Education, and one additional Senator appointed at large.

     (c)  The joint committee shall meet no more than eight times and hold at least one public hearing.  The joint committee shall seek comment and participation from the Vermont Association of School Business Officers, the Vermont N.E.A., the Associations of School Superintendents, Principals, School Boards and Directors of Special Education, from representatives of the business community, and the public at large.  It shall submit a report by January 15, 2004, to the Clerk of the House and Secretary of the Senate.  Members of the joint committee shall be entitled to compensation and expenses as provided in 2 V.S.A. § 406.  The joint committee shall be entitled to the services of the legislative council and the joint fiscal office, and shall be assisted, upon request, by other state agencies.

Sec. 25.  GRAND LIST ISSUES STUDY

     The Legislative Council and Joint Fiscal Office, in consultation with the department of taxes, Vermont League of Cities and Towns and Vermont Assessors and Listers Association, shall study the issues affecting grand list valuation and their impact on property tax equity, including the following:

     (a)  factors contributing to fluctuations in common levels of appraisal and variations in coefficients of dispersion;

     (b)  local capacity for appraisal of utility, commercial and industrial property; and shall report to the general assembly by January 15, 2004, on legislative options to address these issues.

     (c)  the fiscal impact of the homestead property tax income sensitivity adjustment, as it may be affected by adjusting the allowable acreage surrounding an eligible homestead from two acres to 25 or 27 acres, or other appropriate acreage.

* * * Local Option * * *

Sec. 25a.  24 V.S.A. § 138(a) is amended to read:

§ 138.  LOCAL OPTION TAXES

(a)  Local option taxes are authorized under this section for the purpose of affording municipalities an alternative method of raising municipal revenues to facilitate the transition and reduce the dislocations in those municipalities that may be caused by reforms to the method of financing public education under the Equal Educational Opportunity Act of 1997.  Accordingly,:

(1)  the local option taxes authorized under this section may be imposed by a municipality only during calendar years 1999 through 2004 2008;

(2)  a municipality opting to impose a local option tax may do so prior to July 1, 1998 to be effective beginning January 1, 1999, and anytime after December 1, 1998 a local option tax shall be effective beginning on the next tax quarter following 30 days’ notice to the department of taxes of the imposition; and all authority to opt to impose a local option tax under this section shall terminate September 1, 2003 2007, and all authority to impose a local option tax shall terminate on December 31, 2004 2008; and

(3)  a local option tax may only be adopted by a municipality in which:

(A)  the education property tax rate in 1997 was less than $1.10 per $100.00 of equalized education property value; or

(B)  the equalized grand list value of personal property, business machinery, inventory, and equipment is at least ten percent of the equalized education grand list as reported in the 1998 Annual Report of the Division of Property Valuation and Review; or

(C)  the combined education tax rate of the municipality will increase by 20 percent or more in fiscal year 1999 or in fiscal year 2000 over the rate of the combined education property tax in the previous fiscal year.

* * * Effective Dates * * *

Sec. 26.  EFFECTIVE DATES

(1)  Sections 1 through 19, relating to the education tax, shall take effect January 1, 2004, and shall apply to education taxes for fiscal years 2005 and after, and to property tax adjustments for fiscal years 2005 and after. 

(2)  Sections 20 and 21, relating to exemption of farm buildings and payment to municipalities, shall take effective from passage and apply to grand lists of April 1, 2003 and after, and shall apply to the January 2003 equalized education property tax grand list for purposes of calculating municipalities’ education property tax liabilities.  Section 22, providing an appropriation for payments to municipalities for the farm building exemption, shall take effect July 1, 2003, and for purposes of calculating payments due municipalities under section 3760 of title 32 in fiscal year 2004 the director shall adjust the grand list values for fiscal year 2003 to reflect the reductions of the use value appraisal of farm buildings as provided by Sec. 20 of this act.

(3)  Section 23, increasing the general state support (block) grant for fiscal year 2004 shall take effect July 1, 2003.

(4)  This section and sections 24 and 25 providing for a cost containment study and a grand list issues study shall take effect from passage.

The Senate further proposes that after passage of the bill the title be amended to read as follows:

“AN ACT RELATING TO EDUCATION FUNDING.”



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us