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Vermont House Approves 4 Cent Increase in Homestead Rate

Montpelier — The Vermont House voted Thursday to increase school property taxes after rejecting an amendment to scrap the state’s current school funding system.

The bill before the House, which is expected to win final approval today, would raise the rate on a house and up to 2 acres from 94 cents to 98 cents for every $100 of the property’s value. The tax rate on nonresidential property would go from $1.44 to about $1.52 per $100 of value.

Thursday’s preliminary approval of the bill came amid increasing clamor around the state for something to be done about sharply rising school taxes at a time of declining student enrollment. Thirty-four Vermont school districts voted down their budgets on Town Meeting Day, the largest number since 2003.

The voice vote advancing the bill came after the Democrat-dominated House defeated an amendment offered by Rep. Heidi Scheuermann, R- Stowe, that would have repealed laws that created the current school funding system and require lawmakers to come up with substitute legislation by 2016.

“It makes no sense to me ... to repeal the existing system without first proposing a system to take its place,” said Rep. Mike Yantachka, D-Charlotte, after the 49-83 vote against Scheuermann’s amendment.

Vermont’s school funding system raises a combination of state and local property taxes. The homestead rate — on a primary residence and up to 2 acres — would be the 98-cents-per-$100 value under the statewide tax described in the bill. The tax revenue would pay the “base education amount” of $9,392 per pupil.

Most districts spend more than the base amount for each pupil, and the balance comes from a school district rate charged to local homeowners, who end up paying a combined state and local levy at an average rate of about $1.49 per $100 of value, said Rep. Dave Sharpe, D-Bristol, a member of the House Ways and Means Committee.

For nonresidential properties, which range from business and rental properties to vacation homes, the bill would apply a rate of $1.51 plus a half cent per $100 of value, without the additional local district tax. Both residential and nonresidential property owners pay municipal property taxes for police, fire and other services.

The House bill also would change “income sensitivity” provisions of the school tax law, raising somewhat the limits on household income people can have to still be eligible for a school property tax break. At the same time, it would lower the maximum size of that break for any homeowner younger than 65 from $8,000 to $6,000.

The bill would phase out a system of “small school grants” by 2021. Lawmakers said those grants, totaling about $8 million a year, had the effect of lowering tax rates in some of the state’s rural areas, but were subsidized by other districts. The House rejected an amendment offered by Rep. Vicki Strong, R-Albany, to restore the small school grants.