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Clarifying the Act 60 debate

03/10/03 12:00AM By Allen Gilbert
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(Host) Commentator Allen Gilbert takes a look back at Town Meeting, and at the misperceptions surrounding Act 60.

(Gilbert) Act 60 took it on the chin at town meeting this year. But lost in the stories and editorials were several crucial details. Examine these details, and a slightly different picture of what's going on with Act 60 emerges.

The common level of appraisal may be inflating the value of our homes, but it's not raising taxes for most of us. That's because about three-quarters of Vermonters pay their school taxes based on income, rather than on just the value of their homes. Take an average family whose income is $50,000 and whose homestead property - a house and two acres - is worth $110,00. Even if the common level of appraisal doubles the value of their house to $220,000, the family won't pay more in school taxes. True, their tax rate might be adjusted upwards, and the tax bill they receive might be higher. But the prebate and rebate system adjusts what they owe according to their income. It's businesses, second-home owners, and wealthier Vermonters who are getting hit with higher taxes because of the common level of appraisal. Maybe that's an argument to lift the cap on income-sensitivity, or to limit CLA increases.

The most important factor determining whether your school taxes rise is the amount your town votes to spend per pupil. Per-pupil spending is determined by dividing your town's total school budget by the number of kids in the school. If enrollment at your school falls, your taxes will go up even if your school's budget remains steady. That's because the same pie of expenses is being divided into fewer slices, so the slices are fatter. Fatter slices mean higher taxes.

Per-pupil spending is a cost-control mechanism. When Act 60 was drafted, then-Governor Howard Dean and Republican legislators wanted to put a brake on school spending. They pushed for a unit-pricing system, such as might be used in manufacturing, to encourage efficiency. But it's hard to apply this system to schools. Schools can't easily trim expenses when enrollment dips by just a few students.

Ironically, the day after town meeting, Governor Jim Douglas stressed the need for containing school costs. Act 60 has the very feature the governor wants, and some of last week's budget defeats were probably the result of voters doing what the governor was advocating. I also found it ironic that Governor Douglas repeated the misperception that Act 60's income-sensitivity provision allows voters to approve higher and higher school spending without paying more. Here's the reality: If a town votes to increase per-pupil spending, everyone's taxes rise. The cap on how much of your income can go to pay school taxes rises in direct proportion to how much you raise spending.

Act 60 is in a vulnerable position right now. Critics have muddied the waters with misperceptions of how the law really operates. I'm suspicious about the sorts of "changes" that critics have in mind. Hold on to your pocketbooks and wallets.

This is Allen Gilbert.
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