The massive property tax increase coming our way as the result of an education funding system gone out of wildly control poses the very real threat of forcing some – perhaps many – Vermonters out of their homes. It will certainly cause painful choices for household budgets, making it even harder make ends meet in the Green Mountain State.
This is an unacceptable situation that needs to be fixed. It is time for Vermont to cap the level of property tax increase any individual homeowner must absorb year to year.
Perhaps the most famous property tax cap law is California’s Proposition 13, passed in 1978 that set a base assessment of a home’s value at what it was worth in 1975, capped any annual reassessment of that value at 2 percent until the time of ownership transfer when a new current fair market value would be applied, and capped property taxes at 1 percent of adjusted assessed value. Even in deep blue California, Prop 13 is still in place.
But California is not alone in figuring out some way of protecting its citizens from the kind of financial body blow Vermonters are bracing for today. Not by a long shot. In fact, out of the fifty states, forty-seven have some form of property tax protection for their homeowners. Only three do not and guess which camp Vermont is in!
Kiplinger Personal Finance did a breakdown of all fifty states’ property tax limitations, listing three categories of protections, explaining:
Each type of property tax cap can help prevent tax bills from spiking, but they are all very different.
- An assessment limit sets a cap for how much the assessed value of your property can increase from one period to the next. (For example, an assessment limit might not allow your home’s assessment to increase by more than 3%, even if the property’s market value increases by 20%.)
- A rate limit sets a cap for the rate at which a jurisdiction can tax your property. This limit can help keep your tax bill from increasing when there hasn’t been a change to your property’s assessment.
- A levy limit caps how much property tax revenue a government can collect. The levy limit refers to all revenue, not only the revenue from one property.
Twelve states utilize one of these tools, twenty-eight employ two, and seven have passed all three. Each state’s formula has its own nuances, of course, tailored to their own needs.
The two states other than Vermont that have no such property tax protections are New Hampshire, which relies on the property tax in exchange for (very much unlike Vermont) having no income or sales tax, and Tennessee, which doesn’t seem to need them. As Kiplinger explains, “Low property tax bills in Tennessee can result from a number of factors, such as property tax freezes and exemptions offered to eligible homeowners. Lower home values in the Volunteer State may also be a contributing factor.” The median property tax bill in Tennessee is $1,270.
So, rather than trying to “solve” Vermont’s property tax crisis by raising hundreds of millions in other taxes (see: “Solution” to high property taxes is… more higher taxes!), which is just a way of taking the same unaffordable amount of money from us, just out of different pockets, and hoping we don’t figure that out come election time, Vermont lawmakers should be looking at those other forty-seven states for ideas about how to protect us from, well, Vermont lawmakers and their insatiable appetite for our cash.
Of course, limiting the currently unregulated flow of property tax revenues into the State Education Fund will require lawmakers to reexamine our existing whakadoo education financing system – which is also something they should be doing in lieu of raising hundreds of millions in new taxes, which will only make the problem worse!
I’m not going to hold my breath, as I doubt I could, so until November, when we hopefully elect a new crop of lawmakers willing to take this issue seriously. The group we have now isn’t interested.