Supreme Court hears property tax case

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(Host) The Vermont Supreme Court heard arguments Thursday in a case that could force the state to overhaul how it calculates the statewide education property tax.

VPR’s John Dillon reports:

(Dillon) The justices met for their annual session at Vermont Law School. They’ll decide a case that potentially affects every property taxpayer in the state.

At issue is the way the state determines property values when it sets the statewide property tax rate that’s used to fund schools. In September, a lower court judge ruled that the state’s method of figuring the fair market value in the town of Killington was fundamentally flawed. The court said this system was “about as rational as rolling dice.”

Judge William Cohen’s decision only applied to Killington, and only to the methodology the state used to set the value in 1997. But the case has tremendous statewide implications. The lower court ruling called into question the appraisal process that the state uses to determine any town’s education property tax payments.

Mark Sperry, the lawyer for the town of Killington, told the justices that the lower court ruling should be applied to all 246 Vermont cities and towns:

(Sperry) “It’s not fair to leave just Killington by a correct methodology and everybody else hanging out there appraised by a methodology that’s as rational as rolling dice.”

(Dillon) The statewide property tax for education raises about $480 million. But because towns use different appraisal levels and practices, the state attempts to standardize the total value of each town’s grand list. It was this equalization system that Killington challenged, arguing there was no way to tell whether the residents paid too much or too little.

The case turns on complex statistical methodologies. Lawyers presented arcane algebraic formulas and discussed assessment ratios and confidence levels. Associate Justice Marilyn Skoglund told Sperry that few things in life are more scary than statistics because the numbers can be manipulated so easily. And Skoglund questioned whether the lawyer cited his figures selectively.

(Skoglund) “So you can’t just separate out just little pieces of statistical data and proclaim that the entire picture is skewed.”
(Sperry) “Well, the evidence in this case, your honor, is that there were 107 municipalities which weren’t reliably equalized because of that.”

(Dillon) The state’s lawyer, Charles Merriman, argued that the Tax Department’s method was statistically sound. Merriman said the lower court overstepped its bounds and should have left the issue for the tax commissioner to decide:

(Merriman) “The trial court substituted its judgment for the judgment of the commissioner, who is the expert and is responsible for determining a methodology that fulfills the policy objectives of equalization.”

(Dillon) The Vermont League of Cities and Towns has also weighed in on the case. The League wants the Supreme Court to throw out the state’s system of equalizing property values. The League says the issues raised in the Killington case can’t be resolved until the state is forced to re-appraise every single Vermont town using methods that are statistically sound.

For Vermont Public Radio, I’m John Dillon in South Royalton.

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