The Vermont League of Cities and Towns and the Vermont School Boards Association are worried. Why? Because the Education Fund is projected to have some extra money -- as much as $20 million, according to the tax commissioner.
In lean times, funds with extra dollars are prime targets for raids/loans.
On Dec. 1, Tax Commissioner Tom Pelham
sent a letter to legislative leaders advising them of the projected revenues in the Education Fund for the 2010 budget year at the current property tax rates. He predicted there could be an operating surplus if the residential rate remained 87 cents per $100 of assessed value and the commercial rate remained at $1.36.
By law (Title 32, Chapter 135, section 5402b) the commissioner also is directed to recommend adjustments to the rates. If there is enough money to fill the reserve fund with dollars left over, the commissioner is directed to recommend a rate reduction. A rate reduction is a way to put the over-collection dollars back in taxpayers pockets in a upcoming year. Pelham
didn't recommend a tax rate reduction in his letter to leaders. Instead he said, "Given the extraordinary fiscal choices before us, a recommendation from me regarding the
2010 tax rate may be extraneous or even harmful to the flexibility you and the governor need to craft an overall fiscal course for the state in these times."
That shows intent to use these extra property tax dollars for some other purpose, accused Steve Jeffrey, executive director of the Vermont League of City and Towns, and John Nelson, executive director of the Vermont School Boards Association. The pair wrote Pelham
demanding that he recommend a tax rate reduction --now.Pelham
said his letter is a bureaucratic exercise and said his recommendation on a tax rate is "inconsequential." Lawmakers set the rates and they frequently change them from the numbers tax commissioners propose in December. He disputed the contention he was laying the groundwork for an alternative use for the $20 million surplus. "There is nothing in that letter implying that the money wouldn't be used for property tax reductions."
Still, Secretary of Administration Neale Lunderville
confirms that there has been some discussion of redirecting dollars from one of the current funding streams in the Education Fund to the hurting Transportation Fund instead.
That's clear to stir controversy should it be proposed. Folks don't like "raids" on the Education Fund because it puts pressure on the property tax. Others are determined to make the Transportation Fund whole.
Should be a fun debate, don't you think?