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H.480

 

     An act relating to education funding

     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.

(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.  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.

* * * Statewide Education Tax * * *

Sec. 3.  32 V.S.A. § 5401(7) is amended to read:

(7)  “Homestead” means the principal dwelling owned and occupied by a resident individual, as defined in section 5811 of this title, in which the individual claims residence for purposes of income tax liability and rights and privileges of residency.  A homestead also includes a dwelling owned by a farmer as defined under section 3752 of this title, and occupied as the permanent residence by a parent, sibling, child, grandchild or shareholder of the farmer-owner, provided that the shareholder owns more than 50 percent of a corporate farmer-owner, including attribution of stock ownership of a parent, sibling, child or grandchild.  A homestead includes as much of the parcel of land surrounding the dwelling as is reasonably necessary for use of the dwelling as a home, but in no event more than two acres per dwelling unit, up to a maximum of 10 acres per parcel, determined without regard to any road which intersects the land.  If two or more homestead dwellings are located on a single parcel, the value of the parcel allocated to each homestead shall be the total value of the parcel divided by the number of principal dwellings, unless otherwise determined by ownership of record of the land.  A homestead may consist of a part of a multi-dwelling or multi-purpose building, including cooperative property occupied as a permanent residence by a member of a cooperative housing corporation incorporated under 11 V.S.A. chapter 14, and a pro rata part of the land upon which it is built.  A mobile home may constitute a principal dwelling for purposes of this chapter.  A homestead does not include buildings or improvements detached from the home except for a building used as a garage for personal passenger vehicles and any sheds used for noncommercial purposes.  A homestead and used for business purposes; and does not include that portion of a principal dwelling used for business purposes if the portion used for business purposes includes more than 25 percent of the floor space of the building.

Sec. 3a.  32 V.S.A. § 5401(12) and (13) are added to read:

               (12)  “District spending adjustment” means a fraction in which the numerator is the district’s education spending plus excess spending, per equalized pupil, for the school year; and the denominator is the base education payment for the school year, as defined in 16 V.S.A. § 4001.

               (13)  “Excess spending” means the equalized per pupil amount of the district’s education spending minus the portion of education spending which is approved school capital construction spending; in excess of 125 percent of the statewide average district education spending per equalized pupil in the prior fiscal year, as determined by the commissioner.

Sec. 4.  32 V.S.A. § 5402 is amended to read:

§ 5402.  STATEWIDE EDUCATION PROPERTY TAX LIABILITY

(a)  A statewide education property tax is imposed on all nonresidential and homestead property at a rate of $1.10 at the following rates:

(1)  the tax rate for nonresidential property shall be $1.60 per $100.00, and

(2)  the tax rate for homestead property shall be $1.17 multiplied by the district spending adjustment for the municipality, but in no event less than $1.10, 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.

(b)  Calculation of 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 rates under subsection (a) of this section by the municipality’s most recent equalized education tax grand list for the previous year nonresidential and homestead values.  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 nonresidential and homestead education taxes to be collected by the municipality, by multiplying the minimum tax rates under subsection (a) of this section by the municipality’s most recent equalized nonresidential and homestead values, 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 nonresidential and homestead education taxes 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 nonresidential and homestead amounts of 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 amounts determined under this section.  Each homestead property tax bill shall include notice of the education spending per equalized pupil in the taxpayer’s district and its relation to the base education payment; and the effect of the education spending in the district upon the homestead tax rate and the applicable percentage for income sensitivity; and shall also include an insert supplied by the commissioner of taxes which explains the relationship of district education spending to homestead property tax rates.  Tax bills shall show the tax due as the rate determined under subsection (a) of this section, multiplied by the current listed value of the property to be taxed, multiplied by a factor which accounts for grand list equalization.  The grand list equalization factor shall be the ratio of the municipality’s most recent equalized education grand list value divided by its current year education grand list value.

(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. 

(c)  Notwithstanding section 426 of Title 16, the The treasurer of each municipality shall by December 1 of the year in which the tax is levied and on June 1 of the following year pay to the state treasurer for deposit in the education fund one-half of the municipality’s statewide nonresidential tax and one‑half of the municipality’s homestead education property tax liability net payment, as determined by the commissioner of taxes, as determined under subsection (b)(1) of this sectionPayment The commissioner of education shall determine the municipality’s net nonresidential education tax payment, and its net homestead education tax payment to the state, and payment shall be accompanied by a return prescribed by the director in consultation with the commissioner of education.  The municipality may also retain one-half one‑eighth of one percent of the net payment amount to the state, as determined by the director of property valuation and review.  Notwithstanding sections 182 and 461 of this title, any remaining balance shall be paid to the school district total education tax collected, only upon timely remittance of the December 1 net payment to the state treasurer

     (d)  Annually, by December 1, the commissioner of taxes, after consultation with the secretary of administration, the department of education and the joint fiscal office, shall determine if there is a projected surplus in the education fund budget stabilization reserve in excess of the five percent level authorized under section 4026 of this title.  If there is a projected surplus in excess of  that level, the commissioner of taxes shall recommend, for the following fiscal year only, a reduction in the rates of the statewide education tax rates which will retain the education fund stabilization reserve at the five per cent level and  determine a proportional adjustment to the applicable percentage base for homestead income-based adjustments under section 6066 of this title.  The proportional adjustment shall reflect the ratio for rate increases in statewide education tax rates under subsection (e) of this section. The commissioner shall report the recommended reduction in rates to the secretary of administration and to the general assembly, and shall include the data and the calculation used to determine the proposed reduction under this subsection.

     (e)  Annually, by December 1, the commissioner of education shall determine the growth in the average statewide homestead property tax rate under subsection (a)(2) of this section from the prior school year.  The rate of the statewide education tax on nonresidential property under subsection (a)(1) of this section shall be increased in the following school year by one half of the amount of the growth in the average rate of the statewide homestead property tax, rounded to the nearest cent, as determined by the commissioner under this section.

     (f)  An owner of a building containing qualified rental units shall be entitled to a percentage reduction in the education property tax due under this section.  The reduction percentage shall be 10 percent, multiplied by the ratio of qualified rental units to total rental units in the building.

          (i)  “Qualified rental units” under this subsection means units which are at the time of the claim under this subsection, and were for the entire preceding calendar year, subject to rent restriction under provisions of state or federal law.

          (ii)  A municipality shall allow a percentage reduction under this subsection upon presentation by the taxpayer to the municipality of a certificate of education tax reduction, obtained from the commissioner of taxes.  The commissioner of taxes shall issue a certificate of education tax reduction upon presentation by the taxpayer of information which the commissioner shall require.

          (iii)  A percentage reduction granted by a municipality under this subsection shall not affect the amount of statewide education property tax to be collected by the municipality, and the municipality shall be deemed to have paid to the state treasurer the amount of tax reduced in accord with this subsection.

Sec. 4a.  Subsection (2) of Sec. 50a of No. 60 of the Acts of 1997, as amended, is amended to read:

(2)  A municipality which has upon its grand list an operating electric generating plant subject to the tax under section 5402a of Title 32, shall be subject to the education property tax under chapter 135 of Title 32 at one‑half the rate provided in section subsection 5402(a)(1) and one-half the base rate provided in subsection 5402(a)(2) of Title 32; and

Sec. 5.  32 V.S.A. § 5410 is amended to read:

§ 5410.  DECLARATION OF HOMESTEAD

(a)  A resident may shall declare one ownership of a homestead for purposes of this chapter education property tax.

(b)  Annually on or before the due date for filing the Vermont income tax return, with without extension, each resident individual may shall, on a form prescribed by the commissioner, which shall be verified under the pains and penalties of perjury, declare his or her homestead, if any, as of, or expected to be as of, April 1 of the year in which the declaration is made.

(c)  [Repealed.]

(d)  The commissioner shall provide a list of homesteads in each town to the town listers by May 15.  The listers shall notify the commissioner by June 1 of any residences on the commissioner’s list which do not qualify as homesteads.  The listers shall separately identify homesteads in the grand list.

(e)  The commissioner shall adopt rules governing late filing of a homestead declaration and the eligibility requirements for declaring a homestead.

(e)(f)  Intention to establish a permanent residence is a factual determination to be made in the first instance by the commissioner.  No one factor is conclusive of whether a dwelling is a permanent residence; the commissioner may consider any relevant factors, including but not limited to the following: formal and informal statements of the declarant; the location of residences owned or leased by the declarant; where the declarant spends time; the declarant’s place of employment and business connections; the location of items of significant value (either monetary or sentimental) to declarant; where the declarant’s family lives, place of voter registration, place of issuance of automobile registration and driver’s license; previous permanent residency of the declarant; and address listed on federal and state income tax returns filed by the declarant.

(f)(g)  If the property identified in a declaration under subsection (b) of this section is not the taxpayer’s homestead, or if the owner of a homestead fails to declare a homestead as required under this section, the commissioner shall assess the taxpayer a penalty in an amount equal to eight percent three percent if the municipality’s nonresidential tax rate is higher than the municipality’s homestead tax rate for the tax year to which the declaration pertains, or in any other case shall assess the taxpayer a penalty in an amount equal to eight percent, of the education tax assessed on the property, ; or if the declaration was filed or failure to declare was with fraudulent intent, then the commissioner shall assess the taxpayer a penalty in an amount equal to 100 percent of the education tax assessed on the property plus interest from the original due date of the property tax on the property, at the applicable rate established in section 3108 of this title.  Any penalty imposed under this subsection may be recovered by assessment and enforcement and with appeal rights in the same manner as an income tax under chapter 151 of this title.  Amounts collected under this subsection shall be credited to the education fund.  The commissioner may waive or reduce the eight percent penalty under this subsection for good cause.  Education taxes assessed in the fiscal year upon property identified in a declaration of homestead, but which was not the taxpayer’s homestead, shall remain payable to the commissioner.  Upon the filing of a new or corrected declaration by an owner subject to this subsection, any additional tax shall be assessed by the municipality and remitted to the state treasurer upon collection; any reduction in tax shall be refunded from the education fund; and any change in property tax shall have no retroactive effect upon the education tax rates for the municipality.

* * * PART II.  HOUSESITE TAX ADJUSTMENT* * *

Sec. 6.  32 V.S.A. § 6061(3) and (7) are amended and (11) is added to read:

(3)  “Household” means, for any individual and for any taxable year, the individual and such other persons as resided with the individual in the homestead at any time during the taxable year.  A person who is not related to any member of the household and who is residing in the household under a written home-sharing agreement pursuant to a nonprofit home-sharing program or a person residing in a household who is hired as a bona fide employee to provide personal care to a member of the household and who is not related to the person for whom the care is provided shall not be considered to be a member of the household.

(7)  “Rent constituting property taxes” means for any homestead and for any taxable year, at the claimant’s option, (A) 21 percent of the gross rent or (B) that portion of the gross rent which equals the property tax assessed for payment in the calendar year allocable to the claimant’s rental unit for the period rented by the claimant.  “Gross rent” means the rent actually paid during the taxable year by the individual or other members of the household solely for the right of occupancy of the homestead during the taxable year.  If a claimant’s rent is government-subsidized, the property tax allocable to the claimant’s rental unit shall be reduced in the same proportion as the rent is reduced by the subsidy.  “Rent constituting property taxes” shall not include payments made under a written home-sharing agreement pursuant to a nonprofit home-sharing program, or payments for a room in a nursing home in any month for which Medicaid payments have been made on behalf of the claimant to the nursing home for room charges.

(11)  “Housesite” means that portion of a homestead, as defined under section 5401(7) of this title, which includes the principal dwelling and as much of the land surrounding the dwelling as is reasonably necessary for use of the dwelling as a home, but in no event more than two acres per dwelling unit, up to a maximum of 10 acres per parcel.

Sec. 7.  32 V.S.A. § 6061(5)(C) is amended to read:

(5)  “Modified adjusted gross income” means the sum of “adjusted gross income” as defined in section 5811 of this title:

* * *

(C)  without the inclusion of gifts from nongovernmental sources, surplus food or other relief in kind supplied by a governmental agency, or the first $4,000.00 $6,500.00 of income earned by a full-time student who qualifies as a dependent of the claimant under the federal Internal Revenue Code, or the first $4,000.00 $6,500.00 of income received by a parent who qualifies as a dependent of the claimant under the Internal Revenue Code, or payments made by the state for foster care or to a family for the support of an eligible person with a developmental disability as defined in subdivision 8722(2) of Title 18.  If the commissioner determines, upon application by the claimant, that a person resides with a claimant who is disabled or was at least 62 years of age as of the end of the year preceding the claim, for the primary purpose of providing attendant care services (as defined in section 6321 of Title 33) or homemaker or companionship services, with or without compensation, which allow the claimant to remain in his or her home or avoid institutionalization, the commissioner shall exclude that person’s modified adjusted gross income from the claimant’s household income.  The commissioner may require that a certificate in a form satisfactory to the commissioner be submitted which supports the claim.

Sec. 8.  32 V.S.A. § 6061(6) is amended and (12) is added to read:

(6)  “Property tax” means the amount of ad valorem taxes, exclusive of special assessments, interest, penalties, and charges for service, assessed on real property in this state used as the claimant’s homestead housesite.

(A)  “Statewide property tax” means the tax assessed under chapter 135 of this title on real property in this state used as the claimant’s homestead.

(B)  “Local share property tax” means the tax assessed under section 428 or 511 of Title 16 on real property in this state used as the claimant’s homestead.

(12)  “Claim year” means the year in which a claim is filed under this chapter.

Sec. 9.  32 V.S.A. § 6066(a) and (b) are amended to read:

§ 6066.  COMPUTATION OF ADJUSTMENT

(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), determined as follows:

(1)  Statewide property tax adjustment:

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

(i)  the statewide property education tax rate as adjusted under section subdivision 5402(a)(2) of this title, multiplied by the equalized value of the homestead in the taxable year housesite;

(ii)  minus (if less) the sum of

(I)  two percent the applicable percentage of household income for the taxable year, plus

(II)  the statewide property education tax rate as adjusted under section subdivision 5402(a)(2) of this title, multiplied by the equalized value of the homestead housesite in the taxable year in excess of $160,000.00.

(B)  For a claimant with household income of less than $75,000.00 but more than $47,000.00:

(i)  the statewide property education tax rate as adjusted under subdivision (a)(2) of section 5402 this title, multiplied by the equalized value of the homestead in the taxable year; housesite

(ii)  minus the lesser of:

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

(II)  the statewide 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.

(C)  For a claimant whose household income does not exceed $47,000.00 the statewide education tax rate as adjusted under subdivision (a)(2) of section 5402 of this title, multiplied by the equalized value of the housesite minus the lesser of:

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

(II)  the statewide education tax rate under subdivision (a)(2) of section 5402 of this title, multiplied by the equalized value of the housesite 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 two and one-tenth percent, multiplied by the district spending adjustment under subdivision 5401(12) of this title for the property tax year which begins in the claim year for the municipality in which the homestead residence is located; but in no event shall the applicable percentage be less than two percent.

(3)  a claimant whose household income does not exceed $47,000.00 shall also be entitled to a credit against the claimant’s tax liability under chapter 151 of this title equal to the amount by which the property taxes for the municipal fiscal year which began in the taxable year upon the claimant’s homestead housesite owned on December 31 of the taxable year, reduced by the adjustment amount determined under subdivisions (1) and (2) of this subsection, exceeds a percentage of the claimant’s household income for the taxable year as follows:

* * *

(b)  An eligible claimant who rented the homestead on the last day of the taxable year, whose household income does not exceed $47,000.00, and who submits a certificate of rent constituting property taxes shall be entitled to a credit against the claimant’s tax liability under chapter 151 of this title equal to the amount by which the rent constituting property taxes upon the claimant’s homestead housesite exceeds a percentage of the claimant’s household income for the taxable year as follows:

* * *

Sec. 9a.  AMENDMENT OF RELATED INCOME SENSITIVITY                                       PROVISIONS

     The legislative council shall replace the word “homestead” with the word “housesite” where the context requires in chapter 154 of Title 32.

Sec. 10.  AMENDMENT OF RELATED INCOME SENSITIVITY                                       PROVISIONS

(a)  The base line amount for determining an education tax rate under subdivision (3) of Sec. 50a of No. 60 of the Acts of 1997, as amended, shall be for fiscal year 2005 and thereafter the greater of $7,602.00 per equalized pupil 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 subdivisions (2) and (3) of Sec. 50a of No. 60 of the Acts of 1997, as amended; and the applicable percentage factor shall be:  one plus a fraction, the numerator of which is the tax rate imposed under Sec. 50a(3), and the denominator of which is the tax rate imposed by the municipality under Sec. 50a(2).

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

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

Sec. 11.  16 V.S.A. § 4001(6) is amended and (13) and (14) 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, 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 from 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.

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

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

Sec. 12.  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, except for unorganized towns and gores.  An unorganized town or gore shall receive an amount equal to its adjusted education payment for that year for each student based on the weighted average daily membership count which shall not be equalized.   However, no school district shall receive more than its local education spending amount.  In fiscal years 2005 and 2006, if the district’s adjusted education payment is less than the base education payment, the district shall receive its education spending per equalized pupil plus 40 percent of the excess of the base education payment over the district’s adjusted education payment, but only for deposit in a district’s education reserve fund, authorized in accord with section 2804 of Title 24, for expenditure on legitimate items of education expense.  In fiscal years 2007 and thereafter, no school district shall receive more than its 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, 82 percent of the base education payment 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, 25 percent of the base education payment for each student who completed the diagnostic portion of the program in the previous year, based on an average of the previous two years.

(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.  The commissioner shall pay to a school district a percentage of the base education payment for each resident student for whom the district is paying a technical tuition to a regional technical center but who is not enrolled in the district and therefore not counted in the average daily membership of the district.  The percentage of the base education payment to be paid shall be the percentage of the student’s full-time equivalent attendance at technical center multiplied by 82 percent.

(h)  Annually, by September 1 the commissioner shall calculate the statewide average district spending per equalized pupil for the current fiscal year, and 125 percent of that average spending, and shall publish those amounts on the department website and notify school districts of the amounts.

Sec. 12a.  16 V.S.A. § 4031 is added to read:

§ 4031.  UNORGANIZED TOWNS AND GORES

     (a)  For an unorganized town or gore, if education spending per pupil is in excess of the base education payment there shall be imposed on its education property tax grand list the tax rate necessary to raise the excess amount.

     (b)  A tax imposed under this section shall be administered and collected in the same manner as an education property tax in accord with the provisions of Chapter 135 of Title 32.  For purposes of a claim for property tax adjustment under chapter 154 of Title 32 by a taxpayer in a municipality affected under this section, the applicable percentage shall not be multiplied by a district spending adjustment, but shall be multiplied by a fraction, the numerator of which is the unorganized town’s or gore’s education spending per pupil and the denominator of which is the base education payment.

* * * Technical Centers  * * *

Sec. 13.  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 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 33 percent of the base education payment for that year.

Sec. 13a.  16 V.S.A. §1552(c) is amended to read:

(c)  For students from a school district within Vermont, funds received under subsections 1561(b) and  subsection 1561 (c) of this title shall be subtracted when calculating the tuition charge. For students who are not Vermont residents, funds received under subsections 1561(b) and  subsection 1561 (c) of this title shall not be subtracted when calculating the tuition charge.

* * * Fund Payments * * *

Sec. 14.  16 V.S.A. § 4027 is amended to read:

§ 4027.  DETERMINATION OF YIELD AMOUNT AND AMOUNTS DUE

               TO OR FROM THE EDUCATION FUND 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 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 nonresidential education tax and its homestead education tax under section 5402 of Title 32, and its adjusted education payment receipts under section 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 its nonresidential education tax and its homestead education tax, 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.  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. 15.  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. 16.  [Deleted]

Sec. 17.  32 V.S.A. § 5409 is amended to read:

§ 5409.  DUTIES OF MUNICIPALITIES AND ADMINISTRATION

The following shall apply with regard to the statewide 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 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 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.

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

Sec. 18.  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. 19.  16 V.S.A. § 4015(b), (c), (d) and (e) 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 82 percent of the base education payment for the current year, 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 82 percent of the base education payment for the current fiscal year, 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.

(e)  In the event that a school or schools which have received a grant under this section merge in any year following receipt of a grant, and the consolidated school is not eligible for a grant under this section, the consolidated school shall continue to receive a grant for three years following consolidation.  The amount of the annual grant shall be:

(1)  In the first year following consolidation, an amount equal to the amount received by the school or schools in the last year of eligibility.

(2)  In the second year following consolidation, an amount equal to two‑thirds of the amount received in the previous year.

(3)  In the third year following consolidation, an amount equal to one‑third of the amount received in the first year following consolidation.

* * * Technical Amendments * * *

Sec. 20.  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 subchapter 2.

Sec. 21.  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).

Sec. 22.  16 V.S.A. § 4026(e) is amended to read:

(e)  The enactment of this chapter and other provisions of the Equal Educational Opportunity Act of which it is a part have been premised upon estimates of balances of revenues to be raised and expenditures to be made under the act for such purposes as general state support grants for education, adjusted education payments, categorical state support grants, provisions for property tax income sensitivity, payments in lieu of taxes, current use value appraisals, tax stabilization agreements, the stabilization reserve established by this section and for other purposes.  If the stabilization reserve established under this section should in any fiscal year be less than 3.5 percent of the prior fiscal year’s appropriations from the education fund, as defined in subsection (b) of this section, the joint fiscal committee shall provide the general assembly its recommendations for change necessary to restore the stabilization reserve to the statutory level provided in subsection (b) of this section.

 

 

Sec. 23.  16 V.S.A. § 4030 is amended to read:

§ 4030.  DATA SUBMISSION; CORRECTIONS

(a)  Upon discovering an error or change in data submitted to the commissioner for the purpose of determining payments to or from the education fund, a school district shall report the error or change to the commissioner as soon as possible.  In this subsection, an error in data is a clerical mistake.  A change in data due to new information or a change in situation is not an error under this subsection, and any resultant Any budget deficit or surplus due to the error or change shall be carried forward to the following year.  A ruling of the commissioner as to whether a change in data is due to error or to new information or a change in situation shall be final.

(b)  The commissioner shall use data submitted on or before January 15 prior to the fiscal year which begins the following July 1, in order to calculate the amounts due each school district for any fiscal year for the following:

(1)  the general state support grant adjusted education payments due under section 4011 of this title;

(2)  transportation aid due under Sec. 98 of Act No. 71 of 1998; and

(3)  the small school support grant due under section 4015 of this title.

(c)  The commissioner shall use data corrections regarding local education budget amounts submitted on or before June 15 prior to the fiscal year which begins the following July 1, in order to calculate the amounts due each school district under section 4027 of this title.

(d)  Errors in data submitted to the commissioner following the dates required for calculations under subsections (b) and (c) of this section shall be used to adjust payments to or from the education fund in the fiscal year following the fiscal year in which the error was reported.  The commissioner shall not use data corrected due to an error submitted following the deadlines to recalculate the equalized pupil ratio under subdivision 4001(3) of this title, or the equalized yield under section 4027 of this title in any yearThe commissioner shall not adjust payments to or from the education fund if an error or change is reported more than three fiscal years following the date that the original data was due.  Adjustments to payments to or from the education fund under this section shall be made on the earliest date possible after the fiscal year in which the error was reported, and in accordance with the schedules set forth in subsections subsection 4028(a), 428(d) and 511(d) of this title and section 5402 of Title 32, and after the necessary appropriation by the general assembly.

(e)  The board may adopt rules as necessary to implement the provisions of this section.

 

 

Sec. 24.  32 V.S.A. § 5401(8) is amended to read:

(8)  “Local education Education spending” means “local education spending” as defined in subdivision 4001(6) of Title 16.

Sec. 25.  32 V.S.A. § 5861(f) is added to read:

     (f)  The commissioner shall require information on a Vermont personal income tax return which discloses the amount of real property taxes assessed by a municipality on the taxpayer’s homestead as defined under section 5401(7) of this title, and the uniform parcel identification number of the homestead property.  The commissioner may consider a return incomplete if the information required under this subsection is not provided, and shall cause such return to be completed.

Sec. 25a.  TEACHER NEGOTIATIONS; SUPERVISORY UNION LEVEL;                                      APPROPRIATION

(a)  The board of a supervisory union in which the member boards are not jointly negotiating teacher contracts may apply to the commissioner of education for a grant to work with its member districts to enter into an agreement to do so.

(b)  The commissioner is authorized to award one grant of up to $5,000.00 to each supervisory union board which applies for a grant under this section.

(c)  The secretary of administration shall pay a grant awarded under this section upon a warrant issued by the commissioner of education.  Notwithstanding the provisions of subsection 4025(d) of Title 16, funds for this grant shall be drawn from the education fund amounts appropriated to pay for the base education grant and shall not result in the repeal of chapter 135 of Title 32.  The secretary of administration shall submit a request for funds in the annual budget adjustment act to pay for any grants that may have been awarded under this section.

* * * Additional Education Tax Revenue * * *

* * * Sales Tax * * *

Sec. 26.  32 V.S.A. §9771 (5) is amended to read:

     (5)  The sale at retail of telecommunications service provided to a Vermont service address, except that the rate of the tax on telecommunications services, shall be 4.36 percent.           

Sec. 27.  [Deleted]

Sec. 28.  [Deleted]

Sec. 29.  [Deleted]

Sec. 30.  [Deleted]

Sec. 31.  [Deleted]

Sec. 32.  [Deleted]

 

 

 

Sec. 33.  32 V.S.A. § 9771a is amended to read:

§ 9771a.  TELECOMMUNICATIONS SERVICES; CREDITS AND

                 LIMITATIONS TAX LIMITATION

(a)  The amount subject to tax under subdivision 9771(5) of this title shall be reduced by the amount of $20.00 per month per line for each residential purchaser or user of local exchange services.

(b)  No purchaser or user shall be subject to tax under subdivision 9771(5) of this title in excess of $10,000.00 in any one calendar year.

Sec. 34.  [Deleted] 

Sec. 35.  32 V.S.A. § 9741 is amended to read:

§ 9741.  SALES NOT COVERED

Receipts from the following shall be exempt from the tax on retail sales imposed under section 9771 of this title and the use tax imposed under section 9773 of this title.

* * *

(5)  Sales of malt beverages taxed or exempted under chapter 15 of Title 7.

* * *

Sec. 35a.  [Deleted ]

* * * Property Transfer Tax * * *

Sec. 36.  32 V.S.A. § 9602 is amended to read:

§ 9602.  TAX ON TRANSFER OF TITLE TO PROPERTY

A tax is hereby imposed upon the transfer by deed of title to property located in this state.  The amount of the tax equals one and one quarter three‑quarters percent of the value of the property transferred, or $1.00, whichever is greater, except as follows:

(1)  with respect to the transfer of property to be used for the principal residence of the transferee the tax shall be imposed at the rate of five-tenths of one percent of the first $100,000.00 $125,000.00 in value of the property transferred and at the rate of one and one quarter three‑quarters percent of the value of the property transferred in excess of $100,000.00 $125,000.00, provided that no tax shall be imposed on the first $100,000.00 $125,000.00 in value of the property if the purchaser obtains a purchase money mortgage that the Vermont housing finance agency has committed to make or purchase;

(2)  with respect to the transfer of property which is enrolled at the time of the transfer in a program under chapter 124 of this title, or is otherwise a working farm at the time of the transfer if not so enrolled, the tax shall be imposed in the amount of five-tenths of one percent on the entire value of the property transferred; provided, however that no part of the property is converted to a use which would subject it to the land use change tax or an obligation to repay property tax benefits under chapter 124 of this title for a period of three years following the date of the transfer, or if it is a working farm which is not enrolled under chapter 124, that the property is not taken out of agricultural production for a period of six years following the date of the transfer.  For the purposes of this subdivision, a working farm shall mean a parcel of land actively used by a farmer, as that term is defined under section 3752(7) of this title.  If the conditions of this subdivision are breached by the buyer, the buyer shall be obligated to pay the full transfer tax in the amount of one and one-quarter three-quarters percent and this obligation shall run with the land.

(3)  with respect to the transfer to a housing cooperative organized under chapter 7 and whose sole purpose is to provide principal residences for all of its members or shareholders, or to an affordable housing cooperative under chapter 14 of Title 11, of property to be used as the principal residence of a member or shareholder, the tax shall be imposed in the amount of five-tenths of one percent of the first $100,000.00 $125,000.00 in value of the residence transferred and at the rate of one and one-quarter three-quarters percent of the value of the residence transferred in excess of $100,000.00 $125,000.00; provided that the homesite leased by the cooperative is used exclusively as the principal residence of a member or shareholder.  If the transferee ceases to be an eligible cooperative at any time during the six years following the date of transfer, the transferee shall then become obligated to pay any reduction in property transfer tax provided under this subdivision, and the obligation to pay the additional tax shall also run with the land.

* * * Meals and Rooms Tax ***

Sec. 36a.  32 V.S.A. § 9241(a) and (b) are amended to read:

§ 9241.  IMPOSITION OF TAX

(a)  An operator shall collect a tax of nine ten percent of the rent of each occupancy.

(b)  An operator shall collect a tax on the sale of each taxable meal at the rate of nine ten percent of each full dollar of the total charge and on each sale for less than one dollar and on each part of a dollar in excess of a full dollar in accordance with the following formula:

                 $0.01-0.11                 $0.01   $0.01 - 0.10             $0.01

                               0.12-0.22                     0.02    0.11 - 0.20              0.02

                  0.23-0.33                     0.03   0.21 - 0.30              0.03

                  0.34-0.44                     0.04   0.31 -  0.40             0.04

                  0.45-0.55                     0.05   0.41 -  0.50             0.05

                  0.56-0.66                     0.06   0.51 - 0.60              0.06

                  0.67-0.77                     0.07   0.61 - 0.70              0.07

                  0.78-0.88                     0.08   0.71 - 0.80              0.08

0.89-1.0                          0.09    0.81 - 0.90            0.09

                                                   0.91 - 1.00             0.10     

Sec. 36b.  32 V.S.A. § 9242(c) is amended to read:

     (c)  A tax of nine percent of on the gross receipts from meals and occupancies and ten percent of on the gross receipts from alcoholic beverages, at the rates imposed under section 9241 of this title, exclusive of taxes collected pursuant to section 9241 of this title, received from occupancy rentals, taxable meals and alcoholic beverages by an operator, is hereby levied and imposed and shall be paid to the state by the operator as herein provided. Every person required to file a return under this chapter shall, at the time of filing the return, pay the commissioner the taxes imposed by this chapter as well as all other monies collected by him or her under this chapter; provided, however, that every person who collects the taxes on taxable meals and alcoholic beverages according to the tax bracket schedules of section 9241 of this title shall be allowed to retain any amount lawfully collected by the person in excess of the tax imposed by this chapter as compensation for the keeping of prescribed records and the proper account and remitting of taxes.

 

 

 

 

* * *  Use Tax Collection – PIT * * *

Sec. 36c.  32 V.S.A. § 5870 is added to read:

§5870.  REPORTING USE TAX ON INDIVIDUAL INCOME TAX

              RETURNS

     The commissioner of taxes shall provide that individuals report use tax on their state individual income tax returns.  Taxpayers are required to attest to the amount of their use tax liability under Chapter 233 of this title for the period of the tax return.  Alternatively, they may elect to report an amount that is .04% of their Vermont adjusted gross income, as shown on a table published by the commissioner of taxes; and use tax liability arising from the purchase of each item with a purchase price in excess of $1,000.00 shall be added to the table amount.

* * * Tobacco products tax * * *

Sec. 36d.  32 V.S.A. § 7811 is amended to read:

§ 7811.  IMPOSITION OF TOBACCO PRODUCTS TAX

There is hereby imposed and shall be paid a tax on all tobacco products possessed in the state of Vermont by any person for sale on and after July 1, 1959 which were imported into the state or manufactured in the state after said date, except that no tax shall be imposed on tobacco products sold under such circumstances that this state is without power to impose such tax, or sold to the United States, or sold to or by a voluntary unincorporated organization of the armed forces of the United States operating a place for the sale of goods pursuant to regulations promulgated by the appropriate executive agency of the United States.  Such tax on tobacco products shall be at the rate of 41 82 percent of the wholesale price and is intended to be imposed only once upon any tobacco product.  Provided, however, that upon payment of the tax within ten days, the distributor or dealer may deduct from the tax two percent of the tax due.  It shall be presumed that all tobacco products within the state are subject to tax until the contrary is established and the burden of proof that any tobacco products are not taxable hereunder shall be upon the person in possession thereof.

Sec. 36e.  32 V.S.A. § 7814(a) is amended to read:

§ 7814.  FLOOR STOCK TAX

(a)  Tobacco products.  A floor stock tax is hereby imposed upon every retailer of tobacco products in this state at the rate of 21 41 percent of the wholesale price of each tobacco product.  The tax shall apply to tobacco products in the possession or control of the retailer at 12:01 a.m. o'clock on July 1, 1995 2003, but shall not apply to retailers who hold less than $500.00 in wholesale value of such tobacco products.  Each retailer subject to the tax shall, on or before July 25, 1995 2003, file a report to the commissioner in such form as the commissioner may prescribe showing the tobacco products on hand at 12:01 a.m. o'clock on July 1, 1995 2003, and the amount of tax due thereon.  The tax imposed by this section shall be due and payable on or before July 25, 1995 2003, and thereafter shall bear interest at the rate established under section 3108 of this title. In case of timely payment of the tax, the retailer may deduct from the tax due two percent of the tax. Any tobacco product with respect to which a floor stock tax has been imposed and paid under this section shall not again be subject to tax under section 7811 of this title.

* * * Income Tax Surcharge * * *

Sec. 36f.  32 V.S.A. § 5822a is added to read:

§ 5822a.  INCOME TAX SURCHARGE

In addition to the amount of tax determined under section 5822 of this title, there is imposed upon the taxable income earned or received in that year by every individual, estate and trust, subject to income taxation under the laws of the United States, a surcharge in the amount of one and one half percent of the taxpayer’s Vermont income tax liability for the taxable year.

Sec. 36g.  32 V.S.A. § 5884 is amended to read:

§ 5884.  REFUNDS; PETITIONS FOR REFUNDS

* * *

(b)  If the commissioner determines, on a petition for refund with respect to a timely filed return or otherwise, that a taxpayer has paid an amount of tax under this chapter which, as of the date of the determination, exceeds the amount of tax liability owing from the taxpayer to the state, with respect to the current and all preceding taxable years, under any provision of this title, the commissioner shall forthwith refund the excess amount to the taxpayer together with interest at the rate per annum established from time to time by the commissioner pursuant to section 3108 of this title.  That interest shall be computed from forty-five days after the date the return was filed or from forty-five days after the date the return was due, including any extensions of time thereto, with respect to which the excess payment was made, whichever is the later date.

(c)  Notwithstanding subsection (b) of this section, in the case of a refund claimed on a return which is filed after the last date prescribed for filing such return, including any extensions of time thereto, or claimed on an amended return, the interest on the excess amount to be refunded by the commissioner to the taxpayer shall be computed from forty-five days after the date the late or amended return is filed.

* * * Education Fund; Dedication of Revenues * * *

Sec. 37.  16 V.S.A. § 4025(a) is amended to read:

§ 4025.  EDUCATION FUND

(a)  An education fund is established to be comprised of the following:

(1)  All revenue paid to the state from the education property tax statewide education tax on nonresidential and homestead property under chapter 135 of Title 32.

(2)  Local share property tax revenues from those school districts which adopt budgets with local education spending in excess of the general state support grant and which are able to raise more than the yield amount.

(3)(2)   Funds appropriated or transferred by the general assembly, and for fiscal year 2006 and thereafter there is appropriated and transferred the amount determined as follows:  Annually on September 15, the amount to be appropriated and transferred under this subdivision for the following fiscal year shall be determined by multiplying the appropriation under this subdivision for the current fiscal year, by the percentage change in general fund base spending as of September 15 for the current fiscal year over the general fund base spending in the prior fiscal year.  For each fiscal year the governor shall present a budget to the legislature providing for a general fund appropriation and transfer to the education fund in this amount, and the legislature shall appropriate and transfer this amount adjusted as necessary to reflect the actual amount of general fund base spending enacted by the legislature for that fiscal year.

(4)(3)  Revenues from state lotteries under chapter 14 of Title 31, and from any multijurisdictional lottery game authorized under that chapter.

(4)  Revenue from the electric generating plant education property tax under section 5402a of this title.

(5)  Twenty percent of the revenues raised by the tax imposed by chapter 225 of Title 32 on meals, rooms and alcoholic beverages, less an annual amount equal to $1,560,000.00 which shall remain in the general fund dedicated to the purposes of promotion of tourism and marketing.

(6)  Nineteen percent of the tax on income of corporations, including S corporations, partnerships, and limited liability companies raised by chapter 151 of Title 32.

(7)  Fifty-eight and three-tenths percent of the revenues raised by the bank franchise tax imposed by section 5836 of Title 32.

(8)  Revenues raised by the tax on telecommunications services imposed by Secs. 76 through 84 of Act No. 60 of the Acts of 1997.

(9)  Revenues raised by the increase in brokerage fees imposed by Sec. 85 of Act No. 60 of the Acts of 1997.

(10)  Twenty-one percent of the revenues raised by the motor fuel tax on gasoline in fiscal year 1999, and 16 percent of the revenues raised by the motor fuel tax on gasoline in fiscal year 2000 and thereafter. 

(11)  One-sixth (5)  One-third of the revenues raised from the purchase and use tax imposed by chapter 219 of Title 32, notwithstanding 19 V.S.A. § 11(1).  Notwithstanding the provisions of this subdivision, only 12 percent of the revenue generated from the tax on short-term motor vehicle rentals, established in 32 V.S.A. § 8903(d), shall be deposited in the education fund.

(12)(6)  Forty percent of the revenues raised from the sales and use tax imposed by chapter 233 of Title 32.

(13)(7)  Medicaid reimbursement funds pursuant to subsection 2959a(f) of this title.

* * * General Fund; Dedication of Revenues * * *

Sec. 38.  32 V.S.A. § 435(b)(11) is amended to read:

(b)  The general fund shall be composed of revenues from the following sources:

* * *

(11)  Sales Sixty percent of the revenue from sales and use taxes levied pursuant to chapter 233 of this title;

Sec. 39.  32 V.S.A. § 435(b)(10) is amended to read:

(10)  33 48 percent of the revenue from the property transfer taxes levied pursuant to chapter 231 of this title; and the revenue from the gains taxes levied each year pursuant to chapter 236 of this title;

Sec. 40.  24 V.S.A. § 4306(a) is amended to read:

(a)  A municipal and regional planning fund for the purpose of assisting municipal and regional planning commissions to carry out the intent of this chapter is hereby created in the state treasury.  The fund shall be comprised of 17 13 percent of the revenue from the property transfer tax under chapter 231 of Title 32 and any moneys from time to time appropriated to the fund by the general assembly or received from any other source, private or public.  All balances at the end of any fiscal year shall be carried forward and remain in the fund.  Interest earned by the fund shall be deposited in the fund.  Of the revenues in the fund, each year 10 percent shall be disbursed to the Vermont center for geographic information; 70 percent shall be disbursed to regional planning commissions; and 20 percent shall be disbursed to municipalities.

Sec. 41.  10 V.S.A. § 312 is amended to read:

§ 312.  CREATION OF VERMONT HOUSING AND CONSERVATION

             TRUST FUND

There is created a special fund in the state treasury to be known as the “Vermont housing and conservation trust fund.”  The fund shall be administered by the board and expenditures there from shall only be made to implement and effectuate the policies and purposes of this chapter.  The fund shall be comprised of 50 39 percent of the revenue from the property transfer tax under chapter 231 of Title 32, and any moneys from time to time appropriated to the fund by the general assembly or received from any other source, private or public, approved by the board.  Unexpended balances and any earnings shall remain in the fund for use in accord with the purposes of this chapter.

* * * JTOC Allocation * * *

Sec. 42.  19 V.S.A. § 11a is amended to read:

§ 11a.  TRANSPORTATION FUNDS APPROPRIATED FOR SUPPORT OF

            GOVERNMENT

The maximum amount of transportation funds that may be appropriated for the support of government, other than for the agency of transportation, transportation pay act funds, the cost of maintaining and staffing rest areas, construction of transportation capital facilities used by the agency of transportation, and transportation debt service, shall not exceed 20.5 19 percent of the total of the prior fiscal year transportation fund appropriations.

* * * Other School Funding Provisions * * *

Sec. 43.  [Deleted]

Sec. 44.  Sec. 38(3) of No. 159 of the Acts of the 1999 Adj. Sess. (2000) is amended to read:

(3)  The excess valuation of property within a tax increment financing district organized and created pursuant to Sec. 37 of this act, to the extent that taxes generated on the excess property valuation are pledged and appropriated for debt service on bonds issued under section 1897 of Title 24 or the funding of reserves under subdivision (2) of this section, shall not be included within the education property tax grand list provided for in section 5404 of Title 32 as taxable property, nor shall the excess valuation of the property be subject to the education property tax imposed under section 5402 of Title 32 until bonds issued under section 1897 of Title 24 are released, discharged, paid, defeased, or fully reserved; provided, however, that 5 percent of the education taxes imposed annually on the excess valuation of the residential property within the district shall be paid to the education fund.  The tax rate assessed on the excess value of property within the district shall be the same rate assessed on property outside the district.  Until the bonds are paid in full or have been fully redeemed or defeased through fully funded reserves and accounts, 100 percent of the municipal taxes assessed against the excess valuation of property within the district shall be pledged and appropriated solely for debt service on the bonds.  For purposes of this act, “excess valuation” means the difference between the current grand list value and the grand list value at commencement of the development on April 1 immediately preceding the date of issuance of bonds under Sec. 38(1) of this act.

Sec. 45.  32 V.S.A. § 5405(d) is amended to read:

(d)  Any determination of fair market value made by the commissioner under this section shall be based upon such methods, as in the judgment of the commissioner, and in view of the resources available for that purpose, shall be appropriate to support that determination.  If the common level of appraisal is calculated using the weighted mean of ratios, any outlier shall be carefully reviewed and deleted if it will significantly affect the weighted mean, particularly if the outlier is a high-value property.

* * * Education Cost Containment * * *

Sec. 45a.  Sec. 10(a) of No. 117 of the Acts of the 1999 Adj. Sess. (2000) is amended to read:

(a)  The general assembly hereby establishes the following targets for

limiting increases in statewide total education expenditures as that term is used in 16 V.S.A. § 2967(b):

* * *

(3)  in for fiscal year 2004 and each year thereafter until a new special education funding formula is enacted, the average annual change in the actual nominal Vermont State Domestic Product for the preceding five years as published by the United States Department of Commerce, plus two percentage points.

Sec. 45b.  EDUCATION MANDATES; REMOVAL OF BURDENSOME                             REQUIREMENTS

(a)  The commissioner of education shall request that the Vermont school boards association, the Vermont superintendents association and the Vermont principals association develop a list of all requirements placed on local school districts which are believed to be unnecessarily burdensome or redundant.  The list shall be finished by November 1, 2003 and should be in the form of a request to remove or revise the requirements.

(b)  For each requirement listed, on or before January 15, 2004, the commissioner shall either remove or revise the requirement, promptly initiate any process necessary to removing or revising the requirement, state that the requirement is statutory and recommend legislative change which would remove or revise the requirement, or state that the requirement should remain because it serves a fundamental need.

Sec. 45c.  3 V.S.A. § 832b is added to read:

§ 832b.  ADMINISTRATIVE RULES AFFECTING SCHOOL DISTRICTS

     If a rule affects or provides for the regulation of public education and public schools,  the agency proposing the rule shall evaluate the cost implications to local school districts and school taxpayers, clearly state the associated costs, and report them in a local school cost impact statement to be filed with the economic impact statement on the rule required by subsection 838(c) of this title.   An agency proposing a rule affecting school districts shall also consider and include in the local school cost impact statement an evaluation of alternatives to the rule, including no rule on the subject, which would reduce or ameliorate costs to local school districts while achieving the objectives or purposes of the proposed rule.  The legislative committee on administrative rules may object to any proposed rule if  a local school cost impact statement is not filed with the proposed rule, or if the impact statement fails to recognize a substantial economic impact of the proposed rule that the committee describes in its notice of objection.  The committee may object one time under this section and return the proposed rule to the agency as unacceptable for filing.  The agency may then cure the defect and adopt the rule, or it may adopt the rule without change.

Sec. 45d. [Deleted]

Sec. 45e.  SPECIAL EDUCATION; COST CONTAINMENT                                                            IMPLEMENTATION PLAN

(a)  The commissioner of education and secretary of human services shall prepare a plan to establish a cost effective system for delivery of special education services to children served by both agencies, including those in transition from school to adult services.  The plan shall describe appropriate roles for each agency and how the two agencies will coordinate service delivery in a way that will ensure high quality, seamless, efficient and cost effective services to special education students. 

(b)  The plan prepared under this section shall be based on a thorough review of existing reports, activities and efforts pertaining to special education services.  Following the review the secretary and commissioner shall make a recommendation based on the review and the following:

(1)  The provisions of the federal No Child Left Behind Act.

(2)  The impending reauthorization of the federal Individuals with Disabilities Education Act.

(3)  The results of the Vermont special education Medicaid audit currently being conducted by the federal government.

(4)  The proposed special education formula requested in Act No. 117 of 2000 which will be presented to the general assembly by January, 2004.

(c)  The plan shall include provisions to contain growth in special education costs, and be written with enough detail to enable the senate and house appropriations and education committees to prepare legislation to implement the plan for introduction in January, 2004.  The secretary and commissioner shall present the plan to the senate and house committees on appropriations and education no later than November 15, 2003

Sec. 45f.  [Deleted] 

Sec. 45g.  [Deleted]

Sec. 45h.  [Deleted]

Sec. 45i.  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, 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.  Any proposed budget shall show the following information in a format prescribed by the commissioner of education:

(A)  all revenues from all sources and expenses, including as separate items any assessment for a union school district or a supervisory union of which it is a member;

(B)  the specific amount of any deficit incurred in the most recently closed fiscal year and how the deficit was or will be remedied;

(C)  the anticipated homestead tax rate and the percentage of household income used to determine income sensitivity in the district as a result of passage of the budget; including those portions of the tax rate attributable to the union school and supervisory union assessments; and

(D)  in the case of a school district other than a union school district, the definition of “education spending”, the number of pupils and number of equalized pupils in the school district, and the district’s education spending per equalized pupil in the proposed budget and in each of the prior three years;           or

(E)  in the case of a union school district, the amount of the assessment to each of the member districts and the amount of the assessments per equalized pupil in the proposed budget and for the past three years.

 

Sec. 46.  [Deleted]

Sec. 46a.  Sec. 43 of No. 144 of the Acts of 2001, Adj., as amended, is amended to read:

Sec. 43.  FINANCE OF SCHOOL CONSTRUCTION

     (a)  Notwithstanding any provisions of Titles 16 and 32, a school district, or a Vermont participant in an interstate school district, may vote to remove spending, including capital debt service, for capital school construction costs certified by the commissioner as eligible for approval under 16 V.S.A. § 3448(a)(8), voted after July 1, 2002, and begun in fiscal years 2003, 2004 or 2005, from the calculation of its local education spending for any fiscal year.  A school district, or a Vermont participant in an interstate school district, which has voted a capital school construction project after April 1999, but before July 1, 2002, and which has begun construction before July 1, 2002, may vote to remove spending for capital debt service on costs which the commissioner certifies would be eligible for approval under 16 V.S.A. § 3448(a)(8), from its local education spending for any fiscal year beginning July 1, 2002 or after.  The legislative body in the municipality shall then assess each owner on the municipality’s education property tax grand list at the rate necessary to raise the capital construction spending amount removed from local education spending, and shall identify the amount of that tax separately with the tax bill.  “School district” under this subsection means a district which pays statewide property tax at the rate rates set under 32 V.S.A. § 5402.

     (b)  A school district other than a Vermont participant in an interstate school district, which votes to remove certified capital school construction spending from local education spending under this section shall not be entitled to state school construction aid under chapter 123 of Title 16 for that capital construction.  The education tax rate of a district that is a member of a union district, and that does not vote to remove capital construction spending from its local education spending under this section, shall remain at a rate unaffected by the removal of spending by any other district in the union; and the commissioner of education shall develop a methodology to implement this provision.

     (c)  For each member of a union district that votes as authorized under subsection (a), the state school construction aid of the union school district shall be reduced by the portion allocable to the excluded capital construction spending of that member; and the allocation of expenses under the union district agreement shall be adjusted accordingly.

     (d)  The Department of Education shall study school construction needs, funding equity and methodologies, and propose a school construction aid formula and budget for the fiscal year 2004 capital construction act that restores substantial equity to all Vermont’s children according to 16

V.S.A. § 1.

     (e)  A school district or a Vermont participant in an interstate school district  which votes to remove school construction spending from education spending under this section may later vote to rescind the removal of construction spending from education spending for any future fiscal year.

 

* * * Streamlined Sales Tax Provisions * * *

Sec. 47.  [Deleted]

Sec. 48.  [Deleted]

Sec. 49.  [Deleted]

Sec. 50.  [Deleted]

Sec. 51.  [Deleted]

Sec. 52.  [Deleted]

Sec. 53.  [Deleted]

Sec. 54.  [Deleted]

Sec. 54a. [Deleted]

Sec. 55.  [Deleted]

Sec. 56.  [Deleted]

Sec. 57.  [Deleted]

Sec. 58.  [Deleted]

Sec. 59.  [Deleted]

Sec. 60.  [Deleted]

Sec. 61.  [Deleted]

* * * Local Option Tax * * *

Sec. 62.  24 V.S.A. § 138(a) is amended to read:

(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;

(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, and all authority to impose a local option tax shall terminate on December 31, 2004; 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  For any municipality which imposes a local option tax under this section, the tax shall be effective beginning with the next tax quarter following 30 days’ notice to the department of taxes of the imposition

* * * Studies * * *

Sec. 63.  [Deleted]

Sec. 64  JOINT LEGISLATIVE EDUCATION COST CONTAINMENT

               STUDY

     (a)  To create a sustainable education funding law, the state is committed to work with school boards to target cost drivers and reduce the cost of education.  Accordingly, 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)  review of teacher-student ratios and class size;

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

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

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

          (7)  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;

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

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

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

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

(12)  alternatives for an inflation index to be applied to the base education payment.

     (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.  The report shall contain recommendations for education cost containment; no more than 10 key indicators of cost effectiveness; and an inflation index for the base education payment which more accurately reflects the components driving school costs.  For purposes of this subsection, a “key indicator” is a measurement which enables analysis of the cost effectiveness of education services.  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. 64a.  COUNCIL ON EDUCATION GOVERNANCE

(a)  The Vermont general assembly declares that:

(1)  it is committed to providing all Vermont students the opportunity for a high quality education in an affordable and cost‑effective manner to meet the expectations of local communities and the requirements of state and federal law; and

(2)  it has a keen interest in addressing the matter of education governance in Vermont in a manner that includes participation by citizens and local education officials; and

(3)  increasing concerns about the rising costs of education and declining enrollments, the ongoing quest for educational quality, and the influences of expanding state and federal policy directives, including those of the No Child Left Behind Act and the Individuals with Disabilities Education Act, add to the necessity for examining Vermont’s education governance system.

(b)  There is established a council on education governance to consist of three members of the senate, not all from the same party, chosen by the committee on committees; three members of the house, not all from the same party, chosen by the speaker; the secretary of administration; the secretary of human services, or designee; a member of the state board of education chosen by the chair of the board; two representatives of the business community chosen by the governor; two parents chosen jointly by the governor and the commissioner of education after consultation with organizations representing parents and children; a representative of school boards chosen by the school boards association; a representative of teachers chosen by the Vermont national teachers association; a representative of superintendents chosen by the superintendents association; and a representative of principals chosen by the principals association.  It is the intent of the general assembly that council members, in addition to having knowledge about the needs and challenges facing people working in and served by Vermont’s education system, shall be individuals who have knowledge of organization and systems development and who have the ability to analyze and communicate economic and educational data.  The council shall receive staff services from the legislative council and the joint fiscal office.  Members not otherwise compensated shall be entitled to per diem and expenses.

(c)  The council shall gather information which will enable it to develop a comprehensive description of Vermont’s current education governance system.  Information gathered should include cost information; federal and state requirements and other factors which influence how services are delivered; efforts in other jurisdictions to achieve equity, affordability, and quality; and an examination of elements in the current system which work well, and those which inhibit effective and efficient delivery of education services.

(d)  The council shall use this information to develop and implement a process for engaging a broad spectrum of Vermonters in a discussion of effective governance structures for delivery of public education with consideration of the need to address rising costs while maintaining Vermont’s high quality education system.

(e)  Following widespread public discussion, if the council determines that greater efficiencies and enhanced quality would result from modifications to the governance structure, it shall recommend legislation for consideration by the general assembly.

(f)  The council shall report to the general assembly in January 2004 and 2005 on its progress together with its recommendations for legislation, including steps which are necessary to comply with the No Child Left Behind Act.

(g)  The council shall hold its first meeting by September 15, 2003 and shall finish its work and cease to exist on July 1, 2005.

(h)  The council shall seek private sources of funding to enable it to gather data and develop a process for conducting a statewide discussion about education governance, and for implementing the process it develops. 

Sec. 65.  [Deleted]

Sec. 66.  [Deleted]

Sec. 67.  [Deleted]

Sec. 67a. [Deleted]

Sec. 67b.  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.

* * * Transitional Provisions * * *

Sec. 68.  Transition Rules for Determining Statewide                                              Education Tax Municipal Liabilities for Fiscal                                            Year 2005

     (a)  Notwithstanding the provisions of chapter 135 of Title 32, the Department of Taxes shall calculate a municipality’s statewide education tax liability (but not individual taxpayer’s education property tax liabilities) for fiscal year 2005 by estimating the equalized value of nonresidential and homestead property, using the equalized grand list published by the Division of Property Valuation and Review in January 2004, as follows:

(1)  Homestead property value shall be deemed in the aggregate to be equal to 90 percent of the value of property listed as R1, R2, MHL, MHU, Farm, or Other (for any properties in the “Other” class which are residential properties), and which is listed as owned by a resident of the municipality;

(2)  Nonresidential property value shall be deemed to be the total equalized grand list value for the municipality minus the homestead value determined under subdivision (a)(1) of this section.

(b)  Determinations made by the Department of Taxes in accord with this section shall not be subject to appeal.

* * * Fiscal Year 2004 Provisions * * *

Sec. 69.  [Deleted]

* * * FY 04 Block Grant * * *

Sec. 70.  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.

* * * Fund Appropriations and Transfers * * *

Sec. 71.  FUND APPROPRIATIONS AND TRANSFERS

     (a)  In fiscal year 2004, the amount of $260,500,000.00 is appropriated and transferred from the general fund to the education fund.  Of this appropriation, $14,022.00 shall be used by the commissioner to issue as payment to the town of Middlebury for a change in valuation in the education tax liability resulting from the change of status of the Addison county community action group property.

     (b)  In fiscal year 2005, $226,600,000.00 shall be appropriated and transferred from the general fund to the education fund.

     (c)  In fiscal year 2006 and thereafter, there shall be appropriated and transferred from the general fund to the education fund the amounts prescribed by 16 V.S.A. § 4025(a)(2).

     (d)  It is furthermore the intention of the general assembly in fiscal year 2008, upon the termination of the education income tax surcharge on December 31, 2007, and the reversion of the meals and rooms tax rate to 9 percent on June 30, 2007, to adjust the general fund transfer to the education fund to maintain equitable distribution of revenues between the funds.

Sec. 72.  TAX DEPARTMENT IMPLEMENTATION

Notwithstanding any other provision of law, there is appropriated from the education fund to the commissioner of taxes in fiscal year 2004, for implementation of the provisions of this act, the sum of $734,472.

Sec. 72a. [Deleted]

Sec. 72b.  CONSOLIDATION OF SCHOOL DISTRICTS; PLANNING

                 GRANTS; SUNSET

(a)  A planning committee created pursuant to 16 V.S.A. § 706 to study the advisability of creating a unified union school district, may apply to the commissioner of education for a grant to supplement the planning budget approved under 16 V.S.A. § 706a.

(b)  The commissioner may award $4000 to a planning committee consisting of two school districts and additional $1000 for each additional school district.  However, no planning committee shall receive more than $7000.

(c)  The secretary of administration shall pay a grant awarded under this section upon a warrant issued by the commissioner of education.  Notwithstanding the provisions of subsection 4025(d) of Title 16, funds for this grant shall be drawn from the education fund amounts appropriated to pay for the base education grant and shall not result in the repeal of chapter 135 of Title 32.  The secretary of administration shall submit a request for funds in the annual budget adjustment act to pay for any grants that may have been awarded under this section.

(d)  This section is repealed on June 30, 2006.

Sec. 72c. [Deleted]

Sec. 72d.  16 V.S.A. § 711a(c) is added to read:

(c)  Beginning in fiscal year 2006, for purposes of this subdivision, equalized pupils shall be calculated for a union school district and its member districts by counting the full-time equivalent enrollment in the union school during the census period pursuant to subdivision 4001(1) of this title, weighting that count for elementary and secondary pupils pursuant to subsection 4010(b) of this title, and dividing the weighted count by the ratio of statewide long-term average daily membership to the statewide long-term weighted average daily membership as calculated pursuant to subdivision 4001(3) of this title.  A budget proposed under subsection (a) of this section shall show:

(1)  the spending per equalized pupil for the union school district, and

(2) the assessment that would be due from each member district if the assessment were based on the equalized pupils from the member district. 

Sec. 72e.  16 V.S.A. § 711(a) is amended to read:

(a)  Unless the member districts shall have made a different agreement among themselves as to the division of the  The expense of building, maintaining and operating schools within the union school district, the expense shall be divided among them in the proportion which the student enrollment in each member district for the previous school year bears to the total number of the students for that year enrolled in all the districts together.  "Student enrollment" as to any given school year, as used herein includes any student, other than a state-placed student, residing in a member district and enrolled in a public school in the union district during the course of the year in the grades which the union district votes to construct, maintain or operate.  A student enrolled for less than the full school year shall be counted fractionally in the proportion which the number of days for which he or she was enrolled bears to the total number of days on which school was in session the member districts in the proportion in which the average of equalized pupils for the last two years in each member district bears to the total number of equalized pupils enrolled in all the districts together.  In this section, “equalized pupils” means the

full-time equivalent enrollment in the union school during the census period pursuant to subdivision 4001(1) of this title, weighting that count for elementary and secondary pupils pursuant to subsection 4010(b) of this title, and dividing the weighted count by the ratio of statewide long-term average daily membership to the statewide long-term weighted average daily membership as calculated pursuant to subdivision 4001(3) of this title.

Sec. 72f.  [Deleted]

Sec. 72g.  32 V.S.A. § 5404(g) is amended to read:

     (g)  If the homestead or nonresidential grand list of a municipality drops more than 15 percent from the prior year, due to extraordinary loss in the tax base and not due to any townwide reappraisal, as determined by the director of property valuation and review, then the departments of education and taxes shall use the most current homestead or nonresidential grand list and the most current common level of appraisal to estimate an equalized homestead or nonresidential grand list to use for purposes of state education tax liability.

Sec. 72h.  STUDENT-TEACHER RATIO RECOMMENDATION

     The Vermont Department of Education, in cooperation with the Associations representing teachers, principals, special education directors and superintendent of schools, are directed to submit recommendations to the Senate appropriations, education and finance committees no later than Jan 15, 2004 that addresses appropriate student to educator ratios for the primary grades (1 to 4), the middle school grades (5 to 8) and secondary school courses according to content area.  These recommendations should consider current research regarding class size, “best practices” for staffing school buildings and supervisory union offices with administrators, support personnel and other professional positions.  The School Quality Standards and their predecessors, the Vermont Public School Approval Standards, should provide some guidance as to the rationale for current staffing levels.  Recommendations as to how to most effectively train schoolboard members and administrators on budget development processes and strategies for meaningful public engagement on budget issues should also be included.

Sec. 72i.  TRANSITION TAX RATES

     Beginning in fiscal year 2005, a manufacturing business with at least 1000 full-time-equivalent employees at two or fewer business locations in this state in fiscal year 2003, shall, in any municipality in which the combined statewide and local share education property tax rate in fiscal year 2003 was $1.45 or less, be subject to education property tax under 32 V.S.A. § 5402(a)(1) at a rate equal to its 2003 education tax rate plus $0.04 for each year after 2004; until fiscal year 2008, at which time it shall be subject to education property tax in that municipality under section 5402(a)(1) at the rate provided in that subsection.

* * * Effective Dates * * *

Sec. 73.  EFFECTIVE DATES

This section shall take effect upon passage, and:

(1)  Secs. 1 through 4a, relating to education property tax, shall apply to fiscal years 2005 and after; except that all after the first sentence of 32 V.S.A. § 5402(b)(3) shall apply to tax bills issued after April 1, 2005; and except that in Sec.3a, in § 5401 (13), the percentage of statewide average spending used to calculate the district spending adjustment in fiscal year 2005 shall be 135 percent, and in fiscal year 2006 shall be 130 percent, and in fiscal years 2007 and thereafter shall be 125 percent.  

(2)  Sec. 5, relating to declaration of homestead, shall take effect January 1, 2004.

(3)  Secs. 6-10, relating to homestead tax adjustments, shall take effect January 1, 2004, and shall apply to claims filed in 2004 and after.

(4)  Secs. 11-15 and 17-25, relating to miscellaneous conforming changes to education property tax provisions, shall apply to fiscal years 2005 and after.

(5)  Secs. 26 and 33-35, relating to sales taxes on telecommunication services and beer, shall apply to sales and uses on and after July 1, 2003.

(6)  Sec. 36, relating to the property transfer tax increase, shall apply to transfers on and after July 1, 2003; and Secs. 39 and 40, relating to the allocation of property transfer tax revenues shall take effect July 1, 2003.

(7)  Sec. 36a, relating to the increase in the meals and rooms tax, shall take effect July 1, 2003, and shall terminate July 1, 2007 at which time the rate shall revert to nine percent; and Sec. 36b, relating to reference to meals and rooms tax rates, shall take effect upon passage.  The ten percent rate effective July 1, 2003, shall apply to sales of meals and rentals of rooms on or after July 1, 2003, provided, however, that receipts from meals and occupancies reserved pursuant to a written contract entered into prior to May 15, 2003, and occurring prior to January 1, 2004, shall be taxed at the rate of nine percent.

(8)  Sec. 36c, relating to use tax collections on the individual income tax, shall take effect July 1, 2003.

(9)  Sec. 36d, relating to the tobacco products tax, shall take effect July 1, 2003.

(10)  Secs. 37, 38, 39, 40, 41, and 42, relating to the dedication of revenues, shall take effect July 1, 2003.

(11)  Secs. 43-45, relating to other school funding provisions, shall take effect upon passage.

(12)  Secs. 45a, 45b, 45c, 45e, and 45h relating to education cost containment, shall take effect July 1, 2003.

(13)  Sec. 45i shall take effect upon passage, except it shall apply to union school districts and their member districts beginning July 1, 2005.  It is the intent of the general assembly to ensure that the information requested in this section will be provided to voters.  Therefore, during the next legislative session general assembly shall consider how to assign an equalized pupil count to union school districts, and provide union school districts with direct state aid so that voters will be able to determine exactly how much of their tax revenues are allocated to the union school.  In addition, the general assembly will be closely monitoring the governance study required under this act to ensure that if school districts are reorganized, that voters will be provided with information that will enable them to make informed thoughtful education budgetary decisions.

(14)  Secs. 62 , relating to local option taxes, shall take effect upon passage.

(15)  Secs. 64 and 64a, relating to studies, shall take effect upon passage.

(16)  Secs. 70, 71 and 72 relating to fiscal year 2004 provisions, shall take effect upon passage.

(17)  Secs. 72d and 72e, relating to the calculation of equalized pupils, shall take effect July 1, 2005.

    (18)  [Deleted]

(19)  Secs. 72g relating to grand list reductions, shall take effect July 1, 2003.

(20)  Sec. 72h, relating to student-teacher ratio recommendations, shall take effect from passage.

(21)  Sec. 36f of this act, adding 32 V.S.A. § 5822a imposing an income tax surcharge of one and one half percent of income tax liability, shall take effect for taxable years beginning after December 31, 2003 and shall terminate for taxable years beginning after December 31, 2007.  If the emergency board, pursuant to 32 VSA § 305a, adopts an official state revenue forecast at its July 2003 meeting of $887,500,000.00 or greater for the general fund, without the revenue from the income tax surcharge imposed in 32 VSA § 5822a by Section 36b of this act, that income tax surcharge shall not take effect.

(22)  Sec. 36g of this act, relating to interest payments on income tax refunds, shall take effect July 1, 2003.   



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us