April 13, 2020 – VLCT Advocacy has forwarded to the appropriate legislative committees – House Ways and Means, Senate Finance, and both Government Operations – a letter from Colchester Town Manager Aaron Frank urging the state to borrow the amount of unpaid education property tax dollars that are necessary to make the education fund whole, instead of individual municipalities. Aaron's letter (the PDF below) describes very well the situation many towns will face with their constituents if education property taxes are not paid in full in a timely manner – as we fully expect will be the case. The requirement that towns and cities incur the cost of borrowing to pay for the operation of schools, which are separate governmental entities with separately adopted budgets, is not acceptable under current circumstances.
We ask VLCT members to join us in urging the legislature to:
- Authorize local legislative bodies to vote to waive interest and penalties on property tax payments that are due from resident and non-resident property taxpayers who pay their taxes late during the COVID emergency in spite of penalties that may have been adopted by the voters or are in charters. Some communities will waive those penalties and interest on a case by case basis ,and some will make the determination that penalties and interest need to be waived for a certain amount of time across the board.
- Authorize local legislative bodies to lower current tax rates in the face of potentially reduced municipal spending, which would relieve some pressure on taxpayers.
- Enact legislation that eliminates the severe penalties that would ordinarily accrue to towns which make incomplete education fund property tax payments to the school district or education fund. The reason that cities and towns would make incomplete education fund payments in 2020 is that people have no capacity to pay.
- Require the state to borrow the dollars that are needed to make the Education Fund whole in June, or in September if need be. As the Treasurer stated, the state has the capacity to make an interfund loan to itself as no interest cost. If it had to go out to the market for a short-term loan, the interest rate will likely be lower and the ability to secure a loan stronger than for any individual community.
We need to find a way through the COVID-19 pandemic that is most protective of taxpayers and residents.