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BILL AS INTRODUCED 2007-2008

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H.109

SHORT FORM

Introduced by Representatives Otterman of Topsham, Jerman of Essex, Pearson of Burlington and Potter of Clarendon

Referred to Committee on

Date:

Subject:  Education finance  

Statement of purpose:  This bill proposes to shift a portion of the education tax from a homestead property tax base to a resident income tax base; to reduce homestead education property taxes by $137 million; to eliminate the prebate portion of property tax adjustments; to create an education income tax; to diminish the impact of common levels of appraisal on education taxes; to provide a disincentive to excessive education spending by local school districts by increasing the homestead tax rate by a factor of three times the percentage of spending in excess of the base education payment; to simplify administration of the education property tax; and to add no new tax burden to nonresident owners of Vermont property.

The bill would:

(1)  Significantly lower the homestead property tax base rate.

The rate could be as low as $0.25.  This lower rate will also diminish the effect of the common level of appraisal on tax bills.

This $0.25-base property tax rate is then adjusted upward by three times the district’s education spending in excess of base education payment per pupil.  For example, if the district spends 10 percent more per pupil than the base education payment, the $0.25 rate is increased by 3 x 10 percent, or 30 percent, to $0.325. 

(2)  Create an education income tax on Vermont residents, at a rate that could be as low as 1.5 percent of taxable income.

(3)  Simplify the property tax adjustment program.

With the education income tax and the very low education property tax, there will no longer be a need for the “prebate” portion of the property tax adjustment program. 

The “rebate” portion of the property tax adjustment would be retained, but would not include the education income tax in the calculation.

AN ACT RELATING TO EDUCATION FINANCE “PROPOSAL 1”

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

(TEXT OMITTED IN SHORT-FORM BILLS)



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us