COVID-19 Impact on Property Taxes Not Clear – but Big

April 2, 2020

By Rob Roper

The legislature is supposed to set the “yield” rate for Vermonters’ property taxes, but the economic chaos set off by the COVID-19 response has left the bean counters shrugging their shoulders. There is a great deal of “we don’t know what we don’t know.”

What we do know, according testimony before the House Education and Ways and Means Committees, is that the FY2020 education budget is suddenly looking at revenue downgrades of about $40 million. There is some confusion about whether $31 million in federal bailout money can be used for 2020 expenditures, which would go a long way toward filling that hole, or if it needs to be used for FY2021. Still, most of the property tax money needed to pay for the 2020 school year has already been collected, and we should be able to weather the storm in the short term.

However, FY2021 looks like a real nightmare. Almost all the local school budgets for 2021 have already passed, and these created a total statewide spending increase of $70 million – an expensive nut to crack even before the crushing loss of tax revenue brought about by shutting down the economy. The reserve fund, estimated in January 2020 at just under $13 million, is expected to be entirely wiped out this year dealing with the crisis, so we will start 2021 with nothing in it. Additionally, lawmakers changed the always controversial budgetary practice of requiring a transfer of money from the general fund to the education fund in favor of a system that filled the Ed fund with dedicated revenue streams – the sales & use tax, vehicle purchase and use tax, rooms and meals tax, and lottery sales. All of these sources are going to be massively down, which will put tremendous upward pressure on the property tax.

This will be particularly problematic for property taxpayers because they will not be able to claim income adjustments paying their property taxes until 2022, even if, in the meantime, they’ve taken a major income hit. There is an expectation that many Vermonters will simply not be able to pay their property taxes.

Schools in the meantime are not saving money despite being closed, and, as Brad James, Finance Manager at the Agency of Education, pointed out, aren’t likely to moving forward as most of the education dollars are locked up in salaries and benefits guaranteed in union contracts. The only option would be a reduction in force (RIF) or a re-votes on local school budgets – an option James says is possible as school boards have the power to call for new votes. Perhaps they should!

You can watch the Committee discussion HERE

Rob Roper is president of the Ethan Allen Institute.

{ 6 comments… read them below or add one }

H. Brooke Paige April 2, 2020 at 10:19 pm

We have heard about relief from mortgaged property owners and renters but not a word about relief for homeowners having to pay oppressive school taxes !

At least one would think that the school districts would furlough employees to shift some of their costs to the UCC fund !

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Donna Kelly April 6, 2020 at 12:35 pm

Anyone that voted to approve their school budgets must LOVE paying taxes and getting nothing out of it. If staff is not cut dramatically and students merged into bigger classrooms (like ACT 46 was enacted to do), we will only see our property taxes go higher and people will be moving away.
This Progressive Legislator must also be voted out. We didn’t vote for Representatives to create Bills to legalize prostitution.
The taxpayers already fund public assistance to help the needy so why are they now trying to pass a Bill to have the taxpayers fund Breakfast and Lunch for EVERY student in VT?
We have Representatives that are responsible for overseeing diversity so why did we need to create yet another Title to pay a six figure salary to address a problem that is already being addressed?
Why are we paying a Representative in Addison County to push a Bill so the taxpayers have to pay for the college educations of students, even if they decide to quit in the middle of the semester?
I guess I should be happy…..I am supporting all these children and I never had to feel one labor pain. The only problem is….I am going to go broke and lose my home if it continues going down this destructive path.

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P Ludlow April 11, 2020 at 11:40 am

Vermont loves to spend $$$ for pie-in-the sky look-good stuff without doing diligence on where the $$ will come from (DEFAULT THE TAXPAYERS) or what the realistic benefits / drawbacks are.
THANK THE PROGRESSIVES: Progressive = PROGRESSIVE POVERTY!!!
The taxpayers don’t do diligence regarding legislation and budgets (school, and town) voting and engaging the spenders. GET OUT and VOTE!!!
Now we have an unplanned crisis due to failure to recognize the consequences of living the fun life parading and socializing while trolling for viruses to infect the rest of society. The consequences of this behavior has cut the legs off of diligent workers leading to low to no wages, no taxable income, businesses with closed doors and furloughed workers . This results in almost non-existent taxable income which is needed to feed the spenders.
It seems to me that we are headed for a bankrupt state and everyone will suffer more.

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John French April 11, 2020 at 12:25 pm

Until ,”We the people” start shouting and screaming and taking action the people in power will do nothing. The thing is… how far into the corner are we to be pushed? You can push a man to the point that he will fight, or will succumb. what will it be for us.

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Steve Hearne April 12, 2020 at 1:55 am

All the above plus the massively underfunded pension plans. Another reason we need to get back to work, these plans rely on the stock market to keep viable. Vt. state plan is based on an unlikely 7% return to haul its freight. All other plans also are dependent on good returns to keep from going into default. That includes the Teamster pension fund.
Those on retirement from these plans will be out under a bridge sleeping under a sheet of paper if we don’t get back on track. There are many jobs and projects I can think of that could be performed safely with proper PPE and good dispersion as well as good hygiene. What better time than now to do paving and bridge work? Just two examples.

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Mike April 12, 2020 at 12:38 pm

Why is that when there is a real or perceived need for funds in Montpelier, the first knee jerk reaction is to empty the pockets of the hard working tax payers?? If union contracts require payments regardless of circumstances with no contingency to deal with the unforeseen, have to wonder what idiot or incompetent individual or team gave away the store at tax payers’ expense. If we have a shortfall, how about layoffs or terminations??? When oh when will we get some folks with brains and plain ole common sense to take charge???? As for budget short falls, suck it up and CUT the budget. That’s what the folks are forced to do when times get tough!!!

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