First debate: Opioids.

In last week's journal I described my understanding of what appears to be an 18,6% projected increase in the average homestead education property tax bill for the 2024-25 tax year. I noted that it was my "current position" and that it might not be correct. It wasn't. 

Over the years I have come to realize that when I think I'm the only one that really  understands something and everyone else is wrong, it's me that is wrong. That was the case this time.

There is indeed a very real possibility that Homestead Education Property taxe bills will increase this year by 18% or more. Understanding how that can happen when EVERYONE is trying to make living in Vermont more affordable is not easy. Here are some key understandings. I'm pretty sure I have them right this time.

The 18% increase is a "consensus" projection

The projected 18% was not developed by the Governor, or the Democratically controlled General Assembly. Instead, it was the result of considerable work by the Administration and the Joint Fiscal Office (JFO). The JFO is a non-partisan research arm of the Legislature.

It is also and "average." Many will be lower and many will be higher. 

We are working with projections, not facts.

The Homestead Education Property Tax rate that appears on the bill sent to you by the town is dependent on a surprisingly large number of inputs that are changing all the time. One of those inputs is school district budgets, but there is also the amount the State may receive from the Sales & Use tax, the lottery, and and others. That 18.6% calculation uses projections of what those amounts will be during the 2025 fiscal year (July 1st of 2024 to June 31st of 2025). A lot can change . . . for better or worse. Most school boards are now in the final weeks of budget development. The votes on those budget come during the March town meetings. The full amount needed to pay for Vermont's public education will not be finalized until all those budgets pass. After that, the numbers are crunched and an accurate idea of what tax rates will look like is known, but not set in stone. The Legislature still has a chance to make adjustments. In fact, the bill that sets the final numbers needed to calculate your taxes is one of the last bills to pass each session. That should be in May.

Usually, we take heart in the knowledge that these are just projections and everything can change. We, the Legislature, can make adjustments. But this time things are looking more scary. That 18.6% increase is much larger than usual and is going to be hard to reduce.

Reasons for the projected increase

There are at least six reasons for the projected increase. They all come together in what has been described as a "perfect storm." Some will sound familiar.

1. Inflation - Schools have been hit along with everyone else

2. Health Care benefits - Employee health care benefits and costs have increased due, in part, to care put off during the pandemic.

3. Absence of Federal dollars - Many COVID Federal dollars were used by school districts to fund additional personnel that have proved valuable. School districts are reluctant to cut those staff.

4. Increasing real estate values - Though the assessed value of your house may not have changed, the real market value most likely has, and by a lot. That increase is part of the formula used to calculate your taxes.

5. Demographics - Fewer students in the State does not mean reduced costs. At least not until a school is closed, or staff reduced.  A classroom with 25 students, a teacher and an aid cost about as much as a classroom with 20 students, a teacher and an aid.

6. Special education costs - There may well be the same number of special education students in the system as the previous year, but their needs have increased. Specialized care for students with severe mental health issues is expensive and hard to find. 

What I had Wrong - That 5% cap on the increase in Homestead Property Tax Rates

There were two things in last weeks journal that I had wrong: how the Grand List of property values is updated and what exactly that 5% caps is.

My misunderstanding of the Grand List updates is not that important. The 5% cap is another matter. The following explanation has a bunch of math in it, but it's pretty straight-forward and does show a little of what's involved in calculating your taxes.

I stated that the 5% cap meant that my Colchester Homestead Property Tax rate could not go up by more than 5%. It's capped at 5% by a law passed during the last session of the Legislature. Here's what Act 127 of 2022 says:

If ... a school district’s homestead property tax rate increases by five percent or more over the school district’s homestead property tax rate in fiscal year 2024, then the school district’s homestead property tax rate shall be increased by not more than five percent over the prior fiscal year in each fiscal year for five fiscal years.

That seems pretty clear. But . . . "homestead property tax rate" does not mean what I thought. I thought it was the homestead property tax rate. It's not.

This will take a little explaining. Colchester's Homestead Education Property Tax Rate (TR) is the result of three numbers and two divisions. It's the school district's Per Pupil Spending (PPS) divided by the State's Homestead Dollar Yield (DY) divided by the town's Common Level of Appraisal (CLA) as follows:

PPS / DY / CLA = TR

The PPS is basically the school district budget divided by the number of pupils. Basically. In fact, it's a lot more complicated than that but lets stick with that definition for now.

The DY is a state-wide number set by law each year. How it is determined is a bit complicated but in the end it assures that any towns with the same PPS will have the same tax rate before the CLA division is done. If a town full of rich people with mansions decides to spend $16,000 for each student and a town of low-income people in starter homes decides to spend the same, they will have the same tax rate before those rates are divided by each town's CLA.

The CLA is a town specific number. It is a percent of your home's fair market value that the State thinks your home's assessed value is. If the CLA for Colchester is 75% and your home is assessed at $200,000 then the State is saying that $200,000 is 75% of your home's true market value of $266,666. Seventy-five percent of $266,666 is $200,000.

With those three number you can calculated your tax rate and how much you will have to pay for each $100 of assessed value of your home.

What I got wrong was that when the law states that the Homestead Property Tax Rate cannot go up by more than 5% it is referring to the rate calculated BEFORE the CLA is applied. It's the result of the PPS divided by the DY that cannot go up by 5%. This makes a big difference.

Example:

Let's use these numbers for last year's calculation and this year's calculations:

2023-24 PPS = $15,000, DY = 10,000 CLA = 80%   

Tax rate before CLA division = PPS/DY = 15,000/10000 = 1.5

Tax rate after CLA division = PPS/DY/CLA = 15,000/10,000/.80 = 1.876

Tax Rate = $1.876 for every $100 of assessed value 

2024-25 PPS = $15,000, DY = 9,000 CLA = 75%   

Tax rate before CLA division = PPS/DY = 16,000/10000 = 1.6

Tax rate after CLA division = PPS/DY/CLA = 16,000/10,000/.65 = 2.461

Tax rate = $2.461 for every $100 of assessed value

The numbers used for the 2024-25 tax year are a little different from the pervious year. The CLA is a little lower because that's what the trend is in the state. Colchester has not had a town-wide assessment since 2011. Each year your home's true market value is going up but your assessed value is staying the same. Your assessed value is getting further and further from the true market value. The CLA percent is going down.

The PPS is going up because school budget are increasing and the number of students is decreasing: inflation and demographics. That's the trend statewide.

The final tax rate for each year is 1.876 and 2.461. That's a 31.18% difference. (2.461 - 1.876) / 1.876 = .3118. Which, last week, I said would be capped at 5%. But will it? Unfortunately not.

The correct way to apply the 5% cap.

If you use the numbers without the CLA applied you get a preliminary percent increase from 1.5 to 1.6, which is 6.66%. (1.6 - 1.5) / 1.5 = .0666. That's above 5%, so it will be capped at 5%. The real preliminary number will be 5% above the previous year's 1.5. A 5% increase from 1.5  is 1.575. So that's the new preliminary tax rate. When you apply the CLA to that number you get 2.1. The capped tax increases to $2.1 for every $100 or assessed value. The increase from the previous years 1.875 tax rate to this year's 2.1 is 12%. In this case you would see a 12% increase in the homestead education property tax rate, and resulting bill, even though the 5% cap was applied.

The mistake I made was that I was applying the 5% cap AFTER the CLA was used, when actually it is applied BEFORE the CLA is applied. 

Conclusion:

It is very possible that there will be a big increase in Homestead Education Property Tax rates. How big of an increase depends on a lot of factors both local and statewide. Legislators are aware and very concerned. 

The stated purpose of the bill is: "to add coercive controlling behavior as a basis for obtaining a civil abuse prevention order against a family or household member." 

Basically, the bill loosens the criteria whereby a person can seek a Relief From Abuse (RFA) order through the courts. That order can keep the abuser away from the person being abused. 

The bill allows a person to obtain an RFA if that person has been subjected to "Coercive Controlling behavior." That behavior is carefully defined in the bill as follows:

(A) “Coercive controlling behavior” means a pattern of conduct that recklessly causes or has the effect of causing a reasonable person:

(i) to fear for the plaintiff’s safety or the safety of a family member; or

(ii) to suffer substantial emotional distress.

(B) “Coercive controlling behavior” does not include:

(i) conduct between a child under 18 years of age and the child’s parent or guardian involving the exercise of a parent’s constitutional right to the care, custody, and control of the parent’s child;

(ii) conduct taken by a plaintiff to protect themselves, the plaintiff’s family or household members, or an animal that is connected to the family from the risk of present or future harm; or

(iii) constitutionally protected activity.

Note that the definition says there must be a "pattern of conduct." It's not just a single incident.

On Wednesday the bill passed for 2nd reading on a voice vote with a little grumbling from some legislators. On Thursday when it came up for 3rd and final reading, I was surprised by a call for a rollcall vote. The bill passed 106 to 31 along party lines. Here are the votes. I voted in favor. Such coercive behavior is often the precursor to physical violence and the crime of domestic abuse. I will do what I can to prevent and punish such abuse

Having passed the House, this bill is now off to the Senate.

We all knew there  would be controversy around H.72 - "A harm-reduction criminal justice response to drug use." That was the title of the bill. It doesn't tell you much. The fill came up for consideration at about 3:30 in the afternoon. We did vote on it until about two hours later. You can watch the full two hours here. 

There were two parts of the bill that were controversial:

1. The bill funds a pilot project to set up two "spaces supervised by health care professionals or other trained staff where persons who use drugs can consume pre-obtained drugs." The $2 million cost of the two facilities will not come from tax payers. Instead, the money will come from an existing 1.78% tax pharmaceutical companies pay Vermont when supplying drugs for those on Medicaid, Dr. Dynasaur, or VPharm.  The bill increases that 1.78 to 2.25 percent. A portion of that fund will be used to finance the Harm Reduction Centers.

2. Those that use drugs at the Harm Reduction Centers will be immune from prosecution for possession of the drugs they bring to the center.

The arguments against the bill were:

• Such centers encourages drug use.

• The drugs are illegal federally so the centers are committing criminal acts.

• There is no age limit. A young teenager could come to the center and use drugs without consequences.

• The centers will be hubs of criminal activity and ruin a neighborhood.

The arguments for the bill were:

• It will save lives. Health care personnel will be available to treat overdoses.

• Those that come to the centers will be encouraged to seek the services available to them to reduce their drug use.

• There will be fewer ambulance calls to treat overdoses.

• Those that use drugs will not be using them in public places. 

• Diseases passed by dirty needles will be less likely to be transmitted as clean needles will be provided and dirty ones disposed of properly.

The debate was emotional, with many House members relating stories about relatives and friends that have died of drug misuse. After the two hours of debate a rollcall vote was called and the bill passed on second reading by a vote of 96 to 35. I voted in favor. Here's how  all the members voted.

The bill came up for third and final reading Thursday afternoon. It was slightly amended and debated again for another couple hours. It then passed on a voice vote along party line. I vote to approve. I believe it will save lives and bring more people into existing services that combat the State's illegal drug epidemic.

Having passed the House, this will proceed to the Senate for consideration.