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H.504

AN ACT RELATING TO APPRAISALS AND EDUCATION FINANCE

It is hereby enacted by the General Assembly of the State of Vermont:

* * * Grand List Issues Study * * *

Sec. 1.  32 V.S.A. § 3481(1) is amended to read:

§ 3481.  DEFINITIONS

The following definitions shall apply in this Part and chapter 101 of this title, pertaining to the listing of property for taxation:

(1)  “Appraisal value” shall mean, with respect to property enrolled in a use value appraisal program, the use value appraisal as defined in section subdivision 3752(12) of this title, multiplied by the common level of appraisal, and with respect to all other property, the estimated fair market value.  The estimated fair market value of a property is the price which the property will bring in the market when offered for sale and purchased by another, taking into consideration all the elements of the availability of the property, its use both potential and prospective, any functional deficiencies, and all other elements such as age and condition which combine to give property a market value.  Those elements shall include a consideration of a decrease in value due to a housing subsidy covenant as defined in section 610 of Title 27, or the effect of any state or local law or regulation affecting the use of land, including but not limited to chapter 151 of Title 10 or any land capability plan established in furtherance or implementation thereof, rules adopted by the state board of health and any local or regional zoning ordinances or development plans.  In determining estimated fair market value, the sale price of the property in question is one element to consider, but is not solely determinative.

Sec. 2.  STATEMENT OF INTENT

It is the intent of the general assembly to enhance voluntary lister training provided by the state, in order to support local listers in executing their jobs and to improve the quality and uniformity of appraisal methodology and grand list maintenance.  Therefore, the general assembly proposes to amend the law pertaining to lister training and to appropriate additional state funds to support this training as follows in the next two sections of this act.

Sec. 3.  32 V.S.A. § 3436 is added to read:

§ 3436.  Assessment Education

(a)  The director shall provide an assessment education program for municipal listers and assessors at convenient times and places during the year and is authorized to contract with one or more persons to provide part or all of the assessment instruction.  On an annual basis, the director shall provide, to the extent allowed by available resources, instruction in lister duties, property inspection, data collection, valuation methods, mass appraisal techniques, and property tax administration.

(b)  The director shall determine the necessary course work or evaluation of equivalent experience required for designation as Vermont lister/assessor, Vermont property evaluator, and Vermont municipal assessor.  Designation for any one level shall be for a period of three years.

(c)  Designation obtained under subsection (b) of this section may be renewed for three-year periods upon completion of requirements as determined by the director.

(d)  The director shall also notify all towns annually of any new approaches which the division of property valuation and review is aware of for obtaining or performing mass reappraisals and for grand list maintenance.

Sec. 4.  IMPLEMENTATION

(a)  The director of property valuation and review shall develop a lister training program for the purpose of assuring accuracy in grand list maintenance through assessment education in fiscal year 2006, including obtaining instructors and classroom space and materials and production of videotape and computer courses.  Payments by towns from the lister training subaccount to the director shall be in addition to and shall not supplant any portion of the property valuation and review budget to be used for lister education programs offered in fiscal year 2006 that were provided by the division during fiscal year 2005.  These payments shall not be used for any activities of a municipality or the division of property valuation and review other than lister training.

(b)  In designing the overall program and course offerings to be offered as required under 32 V.S.A. § 3436, the director shall consult with the Vermont Assessors and Listers Association and other persons the director deems appropriate.  The director shall report on January 15, 2006 and January 15, 2007 to the house committees on ways and means and appropriations and to the senate committees on finance and appropriations on the current status of the lister education program, including courses offered, level of participation in the program, and level of participants’ satisfaction with the program.

Sec. 4a.  16 V.S.A. § 4025(c) is amended to read:

(c)  An equalization and reappraisal account is established within the education fund.  Moneys from this account are to be used by the division of property valuation and review to assist towns with maintenance or reappraisal on a case-by-case basis; and for reappraisal payments pursuant to section 4041a of Title 32.  A lister training subaccount within the equalization and reappraisal account is established.  Each municipality is authorized to draw from its own portion of the subaccount such amounts as it determines necessary for lister training, and shall pay this amount to the director of property valuation and review for lister training services provided.  A municipality may withdraw funds from this subaccount upon warrants issued by the commissioner of finance and management.  Unused funds in the subaccount at the end of the fiscal year shall revert to the education fund. 

Sec. 5.  32 V.S.A. § 4001(a) is amended to read:

(a)  Annually on April 1, at the expense of the state, the director shall furnish to the several town clerks and boards of appraisers for unorganized towns and gores inventory forms sufficient in number to meet the requirements of this chapter.  Such forms shall be formulated by the director, and, among other things, shall contain suitable interrogatories requiring each taxpayer to furnish therein a brief statement of all his of each taxpayer’s taxable property, real and personal, and such other information, including income and expense information with respect to any income-producing properties, as will enable the listers or appraisers to appraise such part thereof as is required by law to be by them appraised, and to make up the abstract of individual lists and grand list in the manner prescribed by law.

* * * Late-Filed Homestead Declaration * * *

Sec. 6.  32 V.S.A. § 5410(h) and (i) are amended to read:

(h)  The filing of a new or corrected declaration or rescission of an erroneous declaration, on or before December 1 July 15 of the property tax year that is not reflected in the first education fund payment under 16 V.S.A. § 4028 for that fiscal year or in a municipality’s first payment to the education fund under subsection 5402(c) of this title for that fiscal year shall be reflected in the final net payment to or from the education fund for that fiscal year.  The municipality may retain one-eighth of one percent of the tax collected.  Any reduction in tax paid to a municipality due to a new, revised, or rescinded declaration shall be paid by the municipality to the taxpayer no later than May 15 of the fiscal year.  No later than June 1, each municipality shall provide to the state treasurer a list of taxpayers who filed late or corrected declarations or rescinded declarations, the amount of the change in education tax, and the amount of any interest and penalty billed the taxpayer.

(i)  An owner filing a new or corrected declaration, or rescinding an erroneous declaration, on December 1 or after July 15 shall not be entitled to a refund resulting from the correct property classification; and any additional property tax and interest which would result from the correct classification shall not be assessed as tax and interest, but shall instead constitute an additional penalty, to be assessed and collected in the same manner as penalties under subsection (g) of this section.  Any change in property classification under this subsection shall not be entered on the grand list.

Sec. 7.  32 V.S.A. § 6061(13) is added to read:

(13)  “Homestead” means a homestead as defined under subdivision 5401(7) of this title and declared on or before July 15 in accordance with section 5410 of this title.

* * * Per‑Parcel Payments to Towns * * *

Sec. 8.  32 V.S.A. § 4041a(a) is amended to read:

(a)  A municipality shall be paid $6.00 $8.80 per grand list parcel per year, from the equalization and reappraisal account within the education fund and $8.50 per parcel of this amount shall be paid to the town, to be used only for reappraisal and costs related to reappraisal of its grand list properties and for maintenance of the grand list; and $0.30 per parcel of this amount shall be paid to the lister training subaccount, to the credit of the town in which the parcel is located.

* * * Homestead Parcel and Replacement-Value Appraisals * * *

Sec. 9.  STUDY OF PARCEL DEFINITION AND REPLACEMENT-VALUE

             APPRAISALS

(a)  The Joint Fiscal Office and Legislative Council, in consultation with the Vermont League of Cities and Towns, Vermont Assessors and Listers Association and the Division of Property Valuation and Review, shall study:

(1)  options for redefining the homestead “parcel” to take into account all land which is either underlying or contiguous to commercial improvements; and

(2)  the advisability and impact upon the education fund of adopting a replacement-value basis for property taxation as proposed in H.302 of 2005 for the purpose of increasing taxpayer equity in grand list valuation; and

(3)  shall identify the various circumstances under which residences may be owned by family-owned entities and consider the effects of taxing these residences as homestead; and

(4)  the advisability of restoring the homestead classification under 32 V.S.A. § 5401(7)(E) for a dwelling owned by a farmer, located on the farm parcel, and occupied as the permanent residence by a member of the farmer’s family.

(b)  The study group shall report its findings and recommendations, including proposed legislation, by December 15, 2005, to the chairs of the House Committee on Ways and Means and the Senate Committee on Finance.

* * * Education Operations Consultant * * *

Sec. 10.  16 V.S.A. § 4028(c) is added to read:

(c)  Any district which has adopted a school budget that includes excess spending, as defined in 32 V.S.A. § 5401(12), shall, upon timely notice, be authorized to use a portion of its excess spending penalty in obtaining an education operations consultant, as follows:  The district may employ a consultant for recommendations on how to reduce its future education spending, and the department of education shall pay the consulting costs from the property tax revenue to be generated by the excess spending increase to the district’s spending adjustment as estimated by the commissioner, up to a maximum of $5,000.00.  “Timely notice” for this purpose means written notice from the district to the commissioner within 60 days after the budget is adopted.  The consultant may not be an employee of the district or of the department of education.  A copy of the consultant’s final recommendations shall be submitted to the commissioner, and each affected town shall include in its next town report an executive summary of the consultant’s final recommendations and notice of where a complete copy is available.  No district is authorized to obtain consulting funds under this section more often than once every five years.

* * * Income Sensitivity Technical Amendments * * *

Sec. 11.  32 V.S.A. § 5932(3) is amended to read:

(3)  “Non-debtor Nondebtor spouse” means any individual who is not a debtor, but has filed a joint income tax return, property tax rebate claim or sales tax rebate or claim under chapter 154 of Title 32 with a debtor.

Sec. 12.  32 V.S.A. § 6061(3) is amended 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 principal dwelling 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 homesharing agreement pursuant to a nonprofit homesharing 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.

* * * Legislative Study * * *

Sec. 13.  LEGISLATIVE STUDY OF INCOME-BASED EDUCATION TAX

               SYSTEM

(a)  There is created a legislative committee, to be known as the House Legislative Study Committee on Income-Based Education Property Tax for Vermonters.  The committee shall analyze the current prebate and rebate system, including the renter rebate program, by which most Vermonters pay education property tax based on income, and propose a more understandable and efficient income-based system, taking into account taxpayer confidentiality.  In analyzing and designing its proposals, the committee shall consider:

(1)  whether prebates and rebates are the best method to achieve a transparent and Vermonter taxpayer-friendly income-based system;

(2)  all administrative and taxpayer burdens and costs of the current methods of prebates and rebates, as contrasted with any proposed new system;

(3)  expanding or decreasing the requirements for eligibility for an income-based program, including but not limited to:

(A)  definition of “household income”;

(B)  housesite value limitation;

(C)  qualifying income thresholds and possible inflation index;

(4)  concerns with the amount of benefit available in the circumstance of a taxpayer with very high property tax and very low income, and methods to assure that a taxpayer in such circumstance does not receive an inappropriate benefit (as defined by the Study Committee) without creating a hardship for those in true need; ways to limit manipulation of “household income” eligibility, including income averaging; and balancing of the needs of individual taxpayers against the cost to other taxpayers;

(5)  which of the following options is the best method to have Vermonters pay for education based on income rather than on property tax:

(A)  a bill sent by the town that identifies the education tax due based on income.

(B)  a bill sent by the state that identifies the education tax due based on income.

(C)  eliminate the prebate system and in its place enact an education income tax.

(D)  eliminate the prebate system and modify the rebate system.

(E)  other legislative ideas presented in previous sessions.

(F)  other ideas.

(G)  keeping in place the current system.

(b)  The committee shall include ten members as follows:  six members of the House, not all from the same political party, appointed by the Speaker, three from the House Committee on Ways and Means, one from the House Committee on Appropriations, and two additional members of the House; one representative of the Department of Taxes; one representative of the Vermont League of Cities and Towns; one representative of the Vermont Municipal Clerks and Treasurers Association; and one representative of Vermont tax preparers.

(c)  The committee shall meet no more than eight times and hold at least one public hearing.  It shall report its findings and recommendations, including proposed legislation, by December 15, 2005, to the chairs of the House Committee on Ways and Means and the Senate Committee on Finance. 

* * * Simplified Lister Procedure for Late-Filed

Homestead Declarations * * *

Sec. 14.  32 V.S.A. § 4261 is amended to read:

§ 4261.  Correcting omission from grand list

When real or personal estate is omitted from the grand list by mistake, or an obvious error is found, the listers, with the approval of the selectmen selectboard, before December 31, may supply such omissions or correct such errors and make a certificate thereon of the fact; provided, however, the listers may make a correction resulting from the filing or rescission of a homestead declaration without approval of the selectboard.

* * * Income Sensitivity Claim for a Duplex * * *

Sec. 15.  32 V.S.A. § 6062(c)(4) is added to read:

(c)  When a homestead is owned by two or more persons as joint tenants, tenants by the entirety, or tenants in common and one or more of these persons are not members of the claimant’s household, the property tax is the same proportion of the property tax levied on that homestead as the proportion of ownership of the homestead by the claimant and members of the claimant’s household; provided, however, that

* * *

(4)  if the homestead is a portion of a duplex, and all owners of the duplex occupy some portion of the building as their principal residence, the property tax of the claimant shall be that percentage of the total property tax equal to the ratio of the claimant’s principal residence value to the total duplex building value.

* * * Homestead Property Tax Rate Retained for

Homestead of Decedent * * *

Sec. 16.  32 V.S.A. § 5401(7)(G) is added to read:

(G)  For purposes of homestead declaration and application of the homestead property tax rate, “homestead” also means a residence which was the homestead of the decedent at the date of death, and from the date of death through the next April 1 is held by the estate of the decedent and not rented.

Sec. 17.  32 V.S.A. § 5410 is amended to read:

§ 5410.  DECLARATION OF HOMESTEAD

(a)  A resident homestead owner shall declare ownership of a homestead for purposes of education property tax.

(b)  Annually on or before the due date for filing the Vermont income tax return, without extension, each resident individual homestead owner 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.

* * *

Sec. 18.  32 V.S.A. § 6061(11) is amended to read:

(11)  “Housesite” means that portion of a homestead, as defined under subdivision 5401(7) of this title but not under subdivision 5401(7)(G), which includes as much of the land owned by the claimant 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; and in the case of multiple dwelling units, no more than two acres per dwelling unit up to a maximum of 10 acres per parcel.

* * * Valuation of ANR Land for PILOT Payments * * *

Sec. 19.  32 V.S.A. § 3708(d) is amended to read:

(d)  “Fair market value” in this section shall be based upon the value of the land at its highest and best use determined without regard to federal conservation restrictions on the parcel or any conservation restrictions under a state agreement made with respect to the parcel.

(e)  The selectboard of a town aggrieved by the appraisal of property by the division of property valuation and review under this section may, within 21 days after the receipt by the town listers of notice of the appraisal of its property by the division of property valuation and review, appeal from that appraisal to the superior court of the district in which the property is situated.

* * * Special Education * * *

Sec. 20.  REPEAL

Sec. 10 of No. 117 of the Acts of the 1999 Adj. Sess. (2000), as amended by Sec. 283 of No. 66 of the Acts of 2003, Sec. 42 of No. 68 of the Acts of 2003, and Secs. 272 and 278 of No. 122 of the Acts of the 2003 Adj. Sess. (2004) (special education spending limitation), is repealed.

Sec. 21.  32 V.S.A. § 3412 is amended to read:

§ 3412.  ANNUAL REPORT

Before January 15 of each year, the director shall deliver to the speaker of the house of representatives and to the president pro tempore of the senate copies of an annual report including in that report all rules issued in the preceding year.  The report shall include the rate per dollar and the amount of all taxes assessed in each and all of the towns, gores, school and fire districts and villages for and during the year ending with June 30, preceding, and the value of all exempt property on each grand list as required by subsection 4152(a) of this title.  The report shall also include an analysis of the appraisal practices and methods employed through the state.  The director shall include recommendations for statutory changes as he or she feels necessary.  Copies of the annual report shall be forwarded to the chairman of the board of selectmen of each town.  The presiding officer shall refer the report to the appropriate committees of the general assembly for their review and recommendation.

* * * Effective Dates * * *

Sec. 22.  EFFECTIVE DATES

This section shall take effect upon passage, and the remaining sections of this act shall take effect as follows:

(1)  Sec. 1 (clarification of “fair market value” for appraisal) shall take effect upon passage and shall apply to grand lists for April 1, 2006, and after.

(2)  Secs. 2, 3, and 4 (lister and assessor voluntary education program) shall take effect upon passage.

(3)  Sec. 5 (clarification of information for lister inventories) shall take effect upon passage.

(4)  Secs. 6 (July 15 late-filed homestead declaration date) and 7 (making explicit the rule that income sensitivity claims require homestead declaration) shall take effect January 1, 2006.

(5)  Sec. 8 (increasing the per‑parcel reappraisal assistance payment to towns) shall take effect July 1, 2005.

(6)  Sec. 9 (study of “parcel” definition and of replacement-value appraisals) shall take effect upon passage.

(7)  Sec. 10 (education operations consultant) shall take effect upon passage.

(8)  Secs. 11 and 12 (technical amendments to income sensitivity laws) shall take effect upon passage.

(9)  Sec. 13 (legislative study of income-based education tax system) shall take effect upon passage.

(10)  Sec. 14 (simplified lister procedure for late-filed declarations) shall take effect upon passage.

(11)  Sec. 15 (income sensitivity claim for a duplex) shall apply to claims filed for 2006 property taxes and after.

(12)  Secs. 16, 17, and 18 (homestead tax rate for decedent’s residence) shall apply to homestead declarations related to April 1, 2005, and after.

(13)  Sec. 19 (valuation of ANR land for PILOT) shall take effect upon passage.

(14)  Sec. 20 (repeal of special education limitation) shall take effect for fiscal years 2006 and after.

(15)  Sec. 21 of this act (report of exempt property value) shall take effect January 1, 2007.

Sec. 23.  24 V.S.A. § 2804 is amended to read:

§ 2804.  RESERVE FUNDS; USE

(a)  At an annual or special meeting duly warned, a municipality may establish a reserve fund to be under the control and direction of the legislative branch of the municipality.  The reserve fund shall be kept in a separate account and invested as are other public funds and may be expended for such purposes for which established, or when authorized by a majority of the voters present and voting at an annual or special meeting duly warned, for other purposes.

(b)  If a reserve fund is established under subsection (a) of this section to pay a school district’s future school capital construction costs approved under chapter 123 of Title 16, any funds raised by the district as part of its education spending to pay for those future costs shall be considered “approved school capital construction spending” in calculating excess spending under 32 V.S.A. § 5401(12).  Districts shall submit to the department of education annually a report of deposits into and expenditures from a school capital construction reserve fund.  If the department of education determines that any amount in the reserve fund has not been used for approved school capital construction within five years after deposit into the fund, then 150 percent of that amount shall be added to the district’s education spending in the then-current year for purposes of calculating the excess spending penalty.  The definitions in chapter 133 of Title 16 shall apply to this subsection.

Sec. 24.  32 V.S.A. § 5401(12) is amended to read:

(12)  “Excess spending” means:

(A)  the per-equalized pupil amount of

(i)  the district’s education spending, plus any amount required to be added from a capital construction reserve fund under 24 V.S.A. § 2804(b); minus

(ii)  the portion of education spending which is approved school capital construction spending or deposited into a reserve fund under 24 V.S.A. § 2804 to pay future approved school capital construction costs;

(B)  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 of education.

Sec. 25.  32 V.S.A. § 6066(a)(1)(A), (B), and (D) are amended to read:

(1)(A)  For a claimant with household income of $75,000.00 $85,000.00 or more:

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

(ii)  minus (if less) the sum of:

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

(II)  the statewide education tax rate as adjusted under subdivision 5402(a)(2) of this title, multiplied by the equalized value of the housesite in the taxable year in excess of $160,000.00 $200,000.00.

(B)  For a claimant with household income of less than $75,000.00 $85,000.00 but more than $47,000.00, the statewide education tax rate as adjusted under subdivision 5402(a)(2) this title, multiplied by the equalized value of the housesite, minus the applicable percentage of household income for the taxable year.

(D)  A claimant whose household income does not exceed $75,000.00 $85,000.00 shall also be entitled to an additional adjustment amount under this section of $10.00 per acre, up to a maximum of five acres, for each additional acre of homestead property in excess of the two-acre housesite.  The adjustment amount under this section shall be shown separately on the notice of property tax adjustment to the claimant.

Sec. 26.  32 V.S.A. § 6066(a)(1)(A), (B), and (D) are amended to read:

(1)(A)  For a claimant with household income of $85,000.00 $90,000.00 or more:

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

(ii)  minus (if less) the sum of:

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

(II)  the statewide education tax rate as adjusted under subdivision 5402(a)(2) of this title, multiplied by the equalized value of the housesite in the taxable year in excess of $200,000.00.

(B)  For a claimant with household income of less than $85,000.00 $90,000.00 but more than $47,000.00, the statewide education tax rate as adjusted under subdivision 5402(a)(2) this title, multiplied by the equalized value of the housesite, minus the applicable percentage of household income for the taxable year.

(D)  A claimant whose household income does not exceed $85,000.00 $90,000.00 shall also be entitled to an additional adjustment amount under this section of $10.00 per acre, up to a maximum of five acres, for each additional acre of homestead property in excess of the two-acre housesite.  The adjustment amount under this section shall be shown separately on the notice of property tax adjustment to the claimant.

Sec. 27.  EFFECTIVE DATES

Sec. 25 of this act (household income threshold and housesite maximum) shall apply to claims filed for 2006 property taxes and after.  Sec. 26 of this act (household income threshold and housesite maximum) shall apply to claims filed for 2007 property taxes and after.

Sec. 28.  32 V.S.A. § 3802(11)(A) is amended to read:

(11)(A)  Real and personal property to the extent of $10,000.00 of appraisal value, except any part used for business or rental, occupied as the established residence of and owned in fee simple by a veteran of any war or a veteran who has received an American Expeditionary Medal, his or her spouse, widow, widower or child, or jointly by any combination of them, if one or more of them are receiving disability compensation for at least 50 percent disability, death compensation, dependence and indemnity compensation, or pension for disability paid through any military department or the veterans administration if, before May 1 of each year, there is filed with the listers:

(i)  a written application therefor; and

(ii)  a written statement from the military department or the veterans administration showing that the compensation or pension is being paid.  Only one exemption may be allowed on a property.  Application for an exemption under this section based upon permanent disability is only required to be filed with the listers before May 1 of the first year for which the exemption is sought, and the exemption shall remain on the grand list until title to the property is transferred.

 



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us