The Property Tax Dispute
I’ve been asked several times during the campaign about the dispute between the governor and the legislature over using one-time money to reduce the non-residential property tax rate. I offer the following explanation of the issue and the role of the legislature in setting the residential property tax rate.
The property tax is truly unique. It is the only tax for which the local voter authorizes the amount to be raised. We do that when we approve our local municipal and school budgets. The state government adds up all the locally-approved school budgets to determine the total amount statewide voters have authorized. That is what needs to be raised. The role of the legislature is to set the tax rate necessary to get that amount.
To keep the math simple, let’s say that in Year One local school budgets statewide add up to a total of $500 million dollars. Using a complex formula, the legislature sets the rate that will yield $500 million. In Year Two, local voters approve a total of $520 million in school spending. The legislature sets the rate necessary to raise that amount. Since the total amount to be raised has gone up, the rate needed to raise that amount will likely also go up. The legislature did not increase the spending, the local voters did.
Local voters determine the amount to be raised; the legislature figures out how to raise it.
Gov. Scott wanted to use one-time money to negate the increased tax on non-residential property. Anyone who has served on a selectboard or a school board knows that using one-time money to pay ongoing expenses is a bad idea.
Here’s why. Let’s say the property tax rate needs to go up 5 cents from $1.00 to $1.05 in Year One to yield the amount voters approved when they passed their school budgets. Let’s also say the administration and legislature agree to use one-time money to cover the increased spending that would have resulted in the 5-cent tax hike. If they do that, it results in no tax increase, but it robs that one-time money fund. Let’s say it happens again in Year Two. Voters approve increased school spending that would require a 4-cent increase. The rate would have to go to $1.09 to cover the combined increases of Year 1 and Year 2. Once again the administration and legislature agree to cover it using one-time money. A total of 9 cents is now being covered and the fund with the one-time money has been debited twice, the second amount nearly twice as much as the first.
In Year Three, local school budgets again go up, requiring a 3-cent increase to raise the extra money. The tax rate would now have to be $1.12 to yield that amount. The one-time money is gone. The taxpayer now has to absorb Year One + Year Two + Year Three for a total increase of 12 cents all at once.
Using one-time money to pay for ongoing expenses saves nothing in the long run and diverts money that could be put to better use. Eventually the taxpayer gets hit twice: once when the big increase kicks in and again by not getting the benefit of whatever the one-time money could have been used for.
Let’s say you win $20,000 in the lottery. That is one-time money. Unless you are astronomically lucky, you are not likely to win another $20,000 soon. You have some choices. You can have a really good time until the money runs out. Hopefully you’ll get $20,000 worth of pleasure.
Economists would advise you to pay off debt. If you apply that $20,000 to a mortgage or a car loan, you’ll get more than $20,000 in value through reduced interest payments.
And that is what the legislature wanted to do with the one-time money Gov. Scott tried to apply to reducing the non-residential property tax rate. Instead of using it in a scheme that feels good but saves nothing in the long run, the legislature wanted to apply the money to the large debt we have in our pension funds. And that is what we did. In the budget that finally passed, we applied $36,231,460 to the pension debt. It will save us over $100 million in future interest payments.
As a taxpayer, which do you prefer – saving nothing or saving $100 million?
Our family, like so many others, has been touched by suicide. Our son-in-law Ted Merchant took his own life in 2000. He was an active duty officer in the Coast Guard, which puts him among the 20 veterans who die by suicide every day. We know firsthand the survivors’ shock, guilt and recrimination. And a wonderful young man is no longer with us.
We Americans are losing ground. The suicide rate in the U.S has increased 30% sine 1999. In Vermont the rate increase is 48%.
I don’t know what is driving the increase, but I do know we must do a better job of identifying and addressing suicide risk.
The VT legislature has nibbled at the edges. This past session we passed bills that would provide paid leave to care for a family member, increased gun safety, increased pay for mental health workers, addressed toxic stress in children, and mandated a review of the states’ suicide data.
Real awareness and prevention starts with friends and family. Don’t dismiss a friend or loved one as “gloomy” or “moody.” Be frank with him/her. Ask direct questions. Be ready to talk. Encourage him or her to seek professional help or even emergency help if it seems a crisis is near.
Be open. There is nothing shameful about suicide or depression. It is a condition any of us can fall prey to.
Be active. Know whom to contact if an issue arises. Support suicide prevention and awareness groups. Learn the symptoms of depression and be willing to lend a hand when you see them.
Let’s get the suicide rate on a downward trend!
National suicide hotline: 1-800-273-8255. Available 24/7.
Campaign Kick-Off Remarks
You’ve just heard from three wonderful women: Helen Head who chairs the committee I serve on and produces great work, our State Treasurer Beth Pearce, who IS a treasure, and Speaker Mitzi Johnson, who presides over the House of Representatives, at times Vermont’s oldest Kindergarten class.
If you want examples that in Vermont women can rise to positions of authority and responsibility, just look at these three.
Thanks to them, thanks to Lara, my daughter and campaign manager. Special thanks to Leslie who not only puts up with all this, she actually encourages me. And thanks to all of you for being here today.
I’m asking for your support. First, let me tell you why you should elect me and other Democrats.
Backed blindly by much of his party, we have a governor who looks good, often sounds reasonable, seems to be a nice guy, but with his actions reveals over and over that he is no friend to working Vermonters and everyday people. He demonstrates that with his veto power.
We passed a bill that would hold polluters responsible for the consequences of spreading their toxic wastes. What happened to it?
Scott vetoed it.
So much for the good folks of the Bennington Area struggling with PFOA in their water supply.
We passed a bill that raised the minimum wage to $15 by 2024. What happened to that one?
Scott vetoed it.
So much for putting more money into working Vermonters’ pockets, reducing the costs of social services, and making Vermont more affordable for those with the lowest incomes.
We passed paid family leave. A working family with a sick child, or welcoming a new child to the family or caring for a dying parent should not have to take time off without pay. What happened to that?
Scott vetoed it.
We passed a budget with only 14 dissenting votes that decreased the tax rates in all income brackets, saving Vermonters $30 million. Can you tell me what happened to that?
Scott vetoed it.
That same budget increased child care assistance so that working families could better afford quality child care. What did Gov. Scott do with that?
Right, he vetoed it.
And in that budget, we increased the income tax exemption for Social Security benefits, easing the tax burden on retirees.
You know what happened to that.
And most of his fellow Republicans jumped on the veto bandwagon. On the budget, nearly 30 of them reversed the position they had taken just two weeks earlier. They were in favor of the budget before the veto, against it after the veto.
So you have to ask: exactly for whom are the Republicans making the state more affordable? Not the waitstaff in our local restaurants. Not the cashiers in our retail stores. Not the childcare workers. Not the young people burdened with college debt, struggling to pay the rent and start a family. Not our seniors who want to stay in their homes.
And, Ladies and Gentlemen, that is why you should support me and other Democrats in this election. We want a Vermont that works for all Vermonters not just the wealthy few.
I did not grow up in Barre. I came here in 1967 to teach at Spaulding. Leslie and I began our married life together here. We have lived in other places, but it is to Barre we returned and made our home. We choose to live here because it is a wonderful place. We can make it better. You can help me create a cleaner, safer, healthier and more prosperous Barre and Vermont.
How can you help? There are many ways.
Campaigns are expensive and donations are always welcome.
There are other ways you can help.
Put a Tommy Walz sign on your lawn.
Write a letter to the editor.
Post support on social media.
Participate in a honk n’ wave.
March with us in the Heritage Festival parade.
Tell your friends and neighbors: “This Tommy Walz is a good guy. You should vote for him.”
Best of all vote! Vote in the August primary and the November general election.
My thanks to all of you. I’ll see you on the campaign trail.