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Killington Town looks at effects of Act 60 and 68 on the economy

KILLINGTON- The Tax Reform Committee has recommended four courses of action for the Town of Killington, which it presented at the Aug. 28 selectboard meeting. The committee was formed in response to the strategic operating plan adopted by the Killington selectboard unanimously on April 10, 2012. That plan outlines four goals: maintain fiscal strength and low municipal taxes; provide efficient municipal services; increase tourism and year-round employment; and maintain strong educational and cultural institutions.

The Tax Reform Committee was asked to research options to most efficiently meet these goals and to make specific recommendations to the selectboard based on their findings. The committee members include Jim Haff, Mike Solimano, Bob Montgomery, Patty McGrath and Seth Webb. Ed Fowler and Vito Rasenas also contributed.

The committee recommended the following four actions:
1)  Create case studies to help educate lawmakers and citizens about the effects of Act 60/68.
2)  Seek to retain 100 percent of the local option tax to use for capital reinvestment/economic development (as it effectively helps counter-act the negative effects of Act 60/68.) Currently, state law keeps 30 percent of the tax and the town keeps the other 70 percent.
3)  Consider dedicating the personal property tax to support the beautification of Killington Road. (Since this is a business tax, it should support an important issue for businesses. This tax currently generates about $100,000/year.)
4)  Consider/analyze making a payment from the Town to the School (to effectively lower the per pupil rate and thereby the corresponding tax burden.)

The committee has begun to tackle the first of these recommendations. It has completed three case studies to demonstrate how significantly the state property tax burden has increased since Act 60/68 was passed in 1997. The committee analyzed the effect on Ed Fowler, a private resident; The Inn at the Long Trail, a small business; and Killington Resort.

The committee reported that Fowler's property taxes increased 491 percent from 1997 to 2012. Patty McGrath, the owner of the Inn at the Long Trail, reported a rise of 394 percent from 1994 to 2012 for her small business and Killington Resort saw a 345 percent property tax increase from 1996 to 2012. For the Resort, that difference amounted to $554,000 in additional property taxes-$780,000 in 2012 compared with $226,000 in 1996. (Inflation, of course, would have increased taxes at the rate of school spending in any case; no matter how the taxes were raised. If school spending during that time went up 10 percent, for example, over 15 years, that's 150 percent. So Act 60-68 increased it by that much more.)

The effects of such high increases, the committee noted, were manifold including:
•    Limiting retirees' ability to live comfortably in Killington (if on a fixed income or for those who may not qualify for income sensitivity- that limit is currently $90,000 for a household.)
•    Limiting funds to reinvest infrastructure to maintain/improve property.
•    Creating major barriers to selling.
•    Limiting funds for marketing.
•    Hindering the resorts ability to maintain competitive edge as Killington's competition is not limited to Vermont, but also includes resorts in Maine, New Hampshire, Colorado, Utah and California.  

"One of three pillars of Vermont's economy is tourism. Resorts like Killington are the drivers of tourism," the committee emphasized in the report, also noting that during the same time period, Vermont reduced its commitment to funding tourism while New York, New Hampshire and Maine all significantly outspent Vermont.

"Property tax reform could support tourism," said Town Manager Seth Webb. "The state should look at this."

To address the tax burden of Acts 60 and 68, the committee is also reviewing the initial purpose of the law. Here's a brief overview:
•    Act 60 also known as The Equal Educational Opportunity Act was passed in June 1997 by the Vermont legislature. It was drafted in response to a Vermont Supreme Court decision, Brigham vs. State of Vermont case, which stated that Vermont's existing educational funding system was unconstitutional because it did not provide an equal opportunity for all Vermont youth to educated, favoring towns with higher real estate values over those that were property poor. At the time, property rich towns paid very little in property taxes to support their town's educational system compared to other towns in Vermont that paid several times more than Killington, Manchester, Stowe, Woodstock, South Burlington, Essex Junction and several other property rich towns.
•    A summary paragraph in that ruling stated:
"The current system for funding public education in Vermont, with its substantial dependence on local property taxes and resultant wide disparities in revenues available to local school districts, deprives children of an equal educational opportunity in violation of the Vermont Constitution."
•    As a result of Act 60 students were more assured of an equal opportunity to get an education by essentially leveling the playing field - in terms of taxation - for all towns. The Legislature did that by providing a mechanism to pool all state funding and redistribute the money based on residents' ability to pay, including rebates for those whose real estate value exceeded their ability to pay the taxes. Prior to this court decision Vermont used a foundation formula to provide state aid to augment local school district property taxes, but it was regularly underfunded by the Legislature that created large disparities in town wealth.
•    In 2003, Act 68 was passed amending Act 60, to correct some shortcomings in the original law.