House committee finalizing Act 60 reform bill

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(Host) The House Ways and Means Committee plans to finalize the details of its new compromise Act 60 reform proposal this week.

VPR’s Bob Kinzel reports:

(Kinzel) The proposal represents a major compromise between the Ways and Means Committee and the Douglas administration. The agreement was reached when the committee dropped its plan to shift some property tax burdens over to the income tax, and the administration dropped its opposition to an increase in the sales tax.

The plan creates a two-tiered property tax system: one rate for residents that will be tied to local school spending decisions, and another fixed rate for all businesses and non residents. A residential rate of $1.10 will pay for a $7,000 block grant for each student. Any local spending above the block grant amount will increase a town’s residential rate. Non residents and businesses will pay a rate of $1.59 and this rate will not be affected by local school spending decisions.

The plan also raises the state sales tax from 5% to 6% and applies the tax to soda and beer. While some of his committee members want to expand the scope of the sales tax beyond soda and beer, Ways and Means Chair Dick Marron (R-Stowe) is not supporting that approach:

(Marron) “I would think that we would have to be rather cautious because we need to have the governor on board on whatever we do as well. So I’m certainly not advocating a lot of new additional taxes.”

(Kinzel) Marron says it’s critical to include some cost containment measures in the bill. He’s looking at a plan that would offer financial incentives to smaller districts that agree to consolidate their operations.

(Marron) “I don’t think we want to really force anyone to consolidate, but we want to encourage it.”

(Kinzel) While the proposal appears to enjoy a fair amount of bipartisan support in the Legislature, the plan is receiving some strong criticism from outside of the Statehouse. Burlington Mayor Peter Clavelle thinks the proposal still relies too heavily on the property tax. Clavelle wants an income tax surcharge to be part of the final compromise:

(Clavelle) “It concerns me as I stand before you the day before our tax returns are due, to see that once again we seem to be missing the point. And the fairest tax, the most progressive tax, has been taken off the table, it seems, in the current property tax debate. And the discussion is focused on taxes that are regressive and unfair.”

(Kinzel) The Ways and Means Committee hopes to finish its work on the bill by the end of the week.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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