Introduced by Committee on Ways and Means

BILL AS INTRODUCEDH.491

2001Page 1

H.491

Introduced by Committee on Ways and Means

Date:

Subject:Education finance; taxation

Statement of purpose: This bill proposes to increase the statewide education property tax rate; repeal the sharing pool for local share education property tax and provide aid to towns with low local yields; allow towns with above-block spending to raise that amount on their own grand lists; add a property tax surcharge to towns with high local yield and per pupil spending above 150 percent of block; adjust income sensitivity to match the new statewide property tax rate and eliminate income sensitivity for local share tax; increase the homestead value cap for income sensitivity and cap the program at $75,000.00 household income and a $3,000.00 maximum benefit per year; increase the sales and use tax to six percent and dedicate the new revenue to the education fund; and authorize an education funding equity study.

AN ACT RELATING TO EDUCATION FUNDING

It is hereby enacted by the General Assembly of the State of Vermont:

* * * Block Grant * * *

Sec. 1. REPEAL

Sec. 24(a) of No. 60 of the Acts of 1997 (setting the block grant) is repealed as of July 1, 2001.

Sec. 2. FISCAL YEAR 2002 BLOCK GRANT

In fiscal year 2002, the total amount of the general state support grant paid under 16 V.S.A. §4011, the standard mainstream block grant paid under 16V.S.A. § 2961, and the essential early education grant paid under 16 V.S.A. §2948(c) shall be $5,827.00 for each equalized pupil. The amount of the general state support grant shall be the amount per equalized pupil remaining after payment of the standard mainstream block grants and the essential early education grants.

Sec. 3. 16 V.S.A. § 4011 is amended to read:

§ 4011. BLOCK GRANTS AND GENERAL STATE SUPPORT GRANTS

(a) Annually, the general assembly shall appropriate funds to pay for a general state support grant for each equalized pupil and a portion of a general state support grant for each adult diploma student. In fiscal year 2003, the block grant, which is the total amount of the general state support grant, plus the standard mainstream block grant paid under section 2961 of this title and the essential early education grant paid under subsection 2948(c) of this title, shall be for each equalized pupil $7,133.00, increased by the most recent price index, as of December 1, 2001, for fiscal year 2003, for state and local government purchases of goods and services, as provided through the state’s participation in the New England Economic Project. The amount of the general state support grant shall be the amount per equalized pupil remaining after payment of the standard mainstream block grants and the essential early education grants. For each following fiscal year, the block grant shall be: the block grant amount for fiscal year 2003, increased by the most recent cumulative price index, as of December 1, for state and local government purchases of goods and services from fiscal year 2003 through that following fiscal year, as provided through the state’s participation in the New England Economic Project.

* * *

(g) On or before December 15, the commissioner shall recommend to the general assembly an appropriate level of general state support grants to school districts for the next ensuing school year.

For any district which has one or more pupils resident in the district, and which has adopted a budget in which local education spending plus funds from all nongovernmental sources results in per equalized pupil spending less than the general state support grant, the amount of the general state support grant per equalized pupil paid to that district shall be reduced to equal the district’s per equalized pupil local education spending.

(h) Each year the commissioner of education shall calculate the amount of the block grant for the following fiscal year in accord with subsection (a) of this section, and shall report the new block grant amount by December 15 to the general assembly and to each school district.

(i) By December 15, 2004, and every three years thereafter, the commissioner of education shall review the amount of the block grant as determined in accord with subsection (a) of this section, and report to the general assembly the commissioner’s recommendation, if any, for further adjustment to the block grant amount as necessary to achieve substantially equal educational opportunity.

* * * Statewide Property Tax * * *

Sec. 4. 32 V.S.A. §5402(a) is amended to read:

(a) A statewide education property tax is imposed on all nonresidential and homestead property at a rate of $1.10as follows:

(1) For any municipality which has one or more pupils resident in the school district, and which has adopted a budget in which local education spending plus funds from all nongovernmental sources results in per equalized pupil spending less than the general state support grant, the rate shall be: $1.23, multiplied by a fraction, the numerator of which is the municipality’s local education spending plus nongovernmental funds, per equalized pupil, and the denominator of which is the general state support grant amount;but in no case shall the rate be less than $0.92; or

(2) For all other municipalities, the rate shall be $1.23;

per $100.00 of equalized education property value as most recently determined under section 5405 of this title; but the homestead property tax liability shall not exceed the adjusted liability for eligible claimants under chapter 154 of this title.

Sec. 5. Sec. 50a(2) and (3) of No. 60 of the Acts of 1997, as amended by Sec. 8a of No. 71 of the Acts of 1998 and Sec. 89a of No. 49 of the Acts of 1999, are amended to read:

(2) A municipality which has upon its grand list an operating electric generating plant subject to the tax under section 5402a of Title 32, shall be subject to the education property tax under chapter 135 of Title 32 at onehalf the rate provided in section 5402(a)(2) of Title 32; and

(3) IfFor a municipality described in subdivision (2) of this section, the provisions of sections 428 and 511 of Title 16 shall not apply. If such a municipality adopts an education budget with local education spending, as defined in section 4001(6) of Title 16, per equalized pupil which is in excess of its fiscal year 1998 localeducation spending per pupil$7,850.00 (unless the spending increase is due to a change in average daily membership), then the provisions of sections 428 and 511 of Title 16 and Sec. 24(b) of Act No. 60 of the Acts of 1997 shall not apply to that municipality, and itthe municipality shall impose a tax on its education property tax grand list, as defined in section 5401(5) of Title 32, at the rate necessary to raise that excess amount over the 1998 local education spending$7,850.00 per equalized pupil.

* * * Above-Block Spending; Predictable Yield; Surcharge * * *

Sec. 6. 16 V.S.A. §4001 is amended to read:

§ 4001. DEFINITIONS

* * *

(4) “Yield amount”“Predictable yield” means the amount per equalized pupil for local education spending above the general state support grant, per percent applied to the education property tax liability under section 5402 of Title 32:

(A) in fiscal year 2003, $37.27, increased by the percentage growth of the statewide equalized education grand list certified in 2002 over the prior year’s statewide equalized education grand list;

(B) in fiscal years 2004 and after, the predictable yield for the prior year, increased by the percentage growth of the most current statewide equalized education grand list over the prior year’s statewide equalized education grand list, adjusted for the difference between the actual and estimated statewide equalized education grand list growth rate for the prior year as determined by October 1 of each year by the commissioner of taxes under section 4027 of this title.

* * *

(13) “Local yield” means the value of the municipality’s equalized education property tax grand list per equalized pupil, divided by 100.

(14) “Capped yield” means the local yield, but not to exceed the 95th percentile local yield for all municipalities for the prior fiscal year.

Sec. 7. 16 V.S.A. §4027 is amended to read:

§ 4027. DETERMINATION OF YIELD AMOUNT AND AMOUNTS DUE TO OR FROM THE EDUCATION FUND

(a) On September 15 of each year, the commissioner of education shall determine a predictable yield for the following fiscal year, based upon the allocation, if any, to the yield pool by the General Assembly for the following fiscal year, and upon projected local education spending and projected local share income sensitivity costs for the following fiscal year. The commissioner shall calculate the predictable yield so that the estimated amount due into the yield pool, plus the amount allocated to the yield pool by the General Assembly, equals the estimated amount due out of the yield pool. By October1, the commissioner shall report to the General Assembly the data and the calculation used to determine the predictable yield under this subsection.

By October 1 of each year, the commissioner of taxes shall estimate the percentage growth of the statewide equalized education grand list to be certified the following January over the most current statewide equalized education grand list. The commissioner of education shall use this estimated growth rate to estimate the cost of the predictable yield to the education fund for the following fiscal year, and this amount shall be included in the governor’s budget submission. By October 1 of each year, the commissioner of taxes shall also determine the difference between the actual and estimated statewide equalized education grand list growth rate for the prior year.

(b) Annually, on or before June 30, the commissioner of education shall use the predictable yield amount established in subsection (a) of this section 4001 of this title to determine:

(1) the local share property tax percentage a school district which adopts a budget with local education spending in excess of the general state support grant shall collect on properties in the district; and

(2) how much theeach district shall pay into or receive from the education fund. Amounts due shall be:

(1) From the fund. There shall be paid from the education fund, to any district which has adopted a budget with local education spending per equalized pupil in excess of the general state support grant and which has a local yield less than the predictable yield, the amount of education revenue calculated by application of the predictable yield to raise the district’s local education spending on the equalized education grand list, minus the amount calculated by application of the district’s local yield to raise the district’s local education spending on the equalized education grand list.

(2) To the fund. There shall be paid to the education fund, from any district which has adopted a budget with local education spending, plus funds from all nongovernmental sources, minus any budgeted amount for capital construction, per equalized pupil, in excess of 150 percent of the general state support grant and which has a local yield greater than the predictable yield, the surcharge amount determined under subdivision 428(b)(1)(B)(ii) or 511(b)(1)(B)(ii) of this title.

(c) For purposes of this calculation, if, by June 1, any school district has failed to adopt a budget for the school year beginning the next July 1, the commissioner shall use the local education spending portion of the school district’s most recently adopted budget. If a union school district or joint contract district of which the school district is a member has failed to adopt a budget by June 1, the commissioner shall use the most recently adopted union or joint contract budget allocated according to the current year’s apportionment, to determine the assessment portion of local education spending. If a school district, union school district or joint contract district subsequently adopts a budget in a different amount,

(1) a district which is due money from the fund shall receive the lesser of the amount due based on the former year’s budget or the amount due based on the actual budget voted; and

(2) a district which is required to pay money into the fund shall pay the greater of the amount due based on the former year’s budget or the amount due based on the actual budget voted.

(d) On or before, June 30, the commissioner of education shall inform each school district which has, by May 1, voted a budget with local education spending in excess of the general state support grant and for which no petition for reconsideration has been filed, how much it will owe to the education fund or how much it will receive from the fund. If a petition for reconsideration has been filed, or the district has not voted a budget by May 1, and subsequently votes a budget with local education spending in excess of the general state support grant, the commissioner shall inform the district how much it will oweto or receive from the fund within 10 days of receiving a report from the superintendent pursuant to subsection (e) of this section.

(e) Annually, on or before June 1, each superintendent shall report to the department of education, on a form prescribed by the commissioner, each local education budget adoptedwhich was adopted by May 1 for the following fiscal year by the member districts of the supervisory union and for which no petitionfor reconsideration has been filed. A superintendent shall report a budget adopted following May 1, to the department of education, between 30 to 40 days following adoption, or, if a petition for reconsideration has been filed, within 10 days of final adoption of the budget. Any report under this subsection shall include an itemization of all sources of funds in the budget.

Sec. 8. 16 V.S.A. §428(b), (c) and (d) are amended to read:

(b) Following adoption of a budget by the electorate and calculation of the yield amount pursuant to section 4027 of this title, if the district has voted a budget with local education spending in excess of the general state support grant amount, the commissioner of education shall determine the district’s local share property tax percentage.:

(1) The selectboard shall set a tax rate as follows:

(A) If the district has a local yield equal to or less than the predictable yield, the rate shall be the rate necessary to raise an amount equal to the local education spending in excess of the general state support grant amount per equalized pupil, divided by the predictable yield, divided by 100, multiplied by the equalized education grand list;

(B) If the district has a local yield greater than the predictable yield, the rate shall be:

(i) the rate necessary to raise the amount of local education spending in excess of the general state support grant; plus

(ii) the rate necessary to raise a multiple of the amount of local education spending, plus funds from all nongovernmental sources, minus any budgeted amount for capital construction, in excess of 150 percent of the general state support grant. That multiple is equal to the multiple of the district’s capped yield as related to the predictable yield, minus 1. The formula for this calculation shall be:

capped yield -1

predictable yield

(2) The selectboard shall then bill each property taxpayerowner of property on the education property tax grand list for the local share property tax amountlocal education spending in excess of the general state support grant amount, plus any surcharge, at the rate determined under subdivision (1) of this subsection, and may use tax classifications if authorized. Homesteads shall be billed without regard to the income sensitivity calculation under chapter 154 of Title32.

(c) Local share property tax amount is the education property tax liability due under section 5402 of Title 32, times the local share property tax percentage, minus any amount of education property tax assessed for that year on an electric generating plant subject to tax under chapter 213 of Title 32. Local share property tax percentage means the percentage of the liability under chapter 135 of Title 32 necessary to raise per equalized pupil local education spending in excess of general state support amount, divided by the yield amount. Local education spending shall have the same meaning that it has in subdivision 4001(6) of this title. The definitions of section 4001 of this title shall apply to this section.

(d) The treasurer of each school district which has a local yield in excess of the predictable yield and which has voted a budget with local education spending, plus funds from all nongovernmental sources, minus any budgeted amount for capital construction, in excess of 150 percent of the general state support grant and which can raise more than the yield amount shall, on December 1 in the year in which the tax is levied and on June 1 of the following year, pay to the state treasurer for deposit into the education fund one-half of the municipality’s education property tax liability net payment, as determined by the commissioner of education. Payment shall be accompanied by a return prescribed by the state treasurer in consultation with the commissioner of education. Any portion of local share property tax liability due to the treasurer and paid before the due date shall be discounted on a per diem basis at an annual rate of six percent. A district which has not voted a budget and for which the commissioner has used the most recently adopted budget in calculating the yield amount under section 4027 of this title, shall be subject to this subsection, based on its most recently adopted budget and shall borrow the funds necessary to make payments to the state treasurer.