With state budget shortfalls, the administration and Legislature have
been working on ways to reduce the growing cost of income sensitivity,
which currently caps state education taxes at 2 percent of household
income. Many people pay more than 2 percent, however, because local
education spending that is higher than the state average per pupil
spending increases local taxes exponentially.
When the bill came before Greshin last month, he amended the $400,000
property appraisal cap to $425,000. Even at that rate, he said, he had
doubts that it was the solution to controlling education costs and
taxes.
"Many people live in what have become expensive homes, especially in ski
towns, and they may not have comparable incomes. That was my biggest
concern. But we have to address the fact that income sensitivity has
grown every year, the cost of it. One way to fix that is to reduce the
subsidy," he said.
"When Act 68 was passed to fix problems with Act 60, income sensitivity
put the maximum amount of tax for education at 2 percent of household
income. That percentage has been reduced every year and is now at 1.8
percent. When you add back in the impact of local spending, the number
is closer to 2.5 percent of household income. When we looked at how
other states provide property tax relief we found that the elderly and
the very low income were receiving property tax subsidies and that
Vermont has been subsidizing more people and at higher income levels
than other states," he said.
Greshin said that his research into the impact of the $425,000 cap on
local taxpayers showed that the median homestead value in Warren and
Waitsfield was $334,000 and in Fayston it was $370,000. Averages in
those towns were a bit higher with Fayston averaging over $400,000 and
Warren and Waitsfield average about $350,000.
There are approximately 170 households in the three towns that would be
impacted by the $400,000 cap and about 155 impacted by the $425,000 cap.
"And those are not necessarily people who qualify for income
sensitivity. But if you take a guess, based on average household income
per town, 65 percent of homesteaders are receiving income sensitivity,"
Greshin said.
"So two-thirds, or about 100, of the 150 or so households, would be
affected by this cap," he said.
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