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Governor Dean and the Property Tax

02/11/02 12:00AM

Governor Dean may be a long shot for the presidency, but thanks to his fiscal 2003 Vermont state budget, he is more likely to be elected president than selectman.

Back before Act 60, year after year, Governor Dean cut state aid to schools. As school costs rose and state support shrank, local property taxes shot up to fill the gap. As school budgets became more dependent upon the property tax, the funding gap between property poor and wealthy districts widened. Dean's shift of school costs onto the property tax led, in part, to the Supreme Court's Brigham decision, which in turn led to Act 60.

Act 60 converted the local school property tax into two state property taxes, with the promise of substantial property tax relief and a fair distribution of revenues among schools. Bucket loads of state surplus dollars were plowed into school funding, but by 2001 school property taxes had climbed to record levels - even after subtracting "income sensitivity" and other rebate payments.

Throughout, state property tax rates have continued to climb. The average Vermonter paid a school tax rate of $1.34 in '97, the year Act 60 was passed. According to the legislature's Joint Fiscal Office, that rate is now $1.61, and it will grow to $1.91 by 2006. And this assumes that the governor's proposed school funding cuts are overturned by the legislature.

The governor's 2003 budget reduces non-property tax school funding by five and one half million dollars. He is proposing to level-fund the state education block grant, effectively forcing a three-cent hike onto the property tax. And he is proposing to reduce or eliminate income-based property tax relief for 9,000 Vermont families.

As predicted, Act 60 has become the perfect property tax eating machine. School property taxes are growing almost twice as fast as school budgets, and school budgets are growing almost three times as fast as inflation.

But it doesn't stop with the schools. The other major area of revenue sharing between the state and local governments supports town highways. Dean has called for an unprecedented 70 percent cut in town highway grant programs, shifting nearly 17 million dollars from the state to towns and cities. Municipalities must choose between a four-cent average highway tax increase, or a 15 percent increase in the deterioration of roads.

When faced with a similar deficit in '91, Governor Richard Snelling proposed a budget that included a combination of state tax increases, spending cuts and short-term, planned deficits. Snelling's plan did not shift the burden onto the property tax. When Snelling died, Dean experienced both fiscal and political success by carrying out his predecessors plan. Governor Dean should consider applying that strategy again today.

This is Jeff Wennberg in Rutland.

--Jeff Wennbert is a former mayor of Rutland.
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