The Senate gave preliminary approval Thursday to a bill that would raise residents’ property tax rates by 5 cents, setting up a collision course with Gov. Phil Scott, who has indicated he’ll veto anything that would hike taxes.
The legislature typically sets property tax rates at the level required to cover the school budgets approved by local voters. But Scott is insisting this year that the lawmakers use $58 million in one-time money to keep property taxes level.
Three Republican senators — Carolyn Branagan (R-Franklin), David Soucy (R-Rutland) and Randy Brock (R-Franklin) — joined their Democratic colleagues in supporting the bill, which passed 26-3. Three other Republicans — Joe Benning (R-Caledonia), Brian Collamore (R-Rutland) and Peg Flory (R-Rutland) — fell in step with Scott, voting against it. Sen. Richard Westman (R-Lamoille) was absent.
Soucy explained afterward that he felt another part of the bill — which would remove a tax on Social Security benefits for lower-income Vermonters — was so important that he couldn’t vote against it, despite opposing a property tax increase. The governor has also proposed a tax exemption for Social Security recipients in his budget.
“Some people did not want to be on record voting against the Social Security portion," Benning said. "Some people did not want to vote against the governor’s position.”
Senate Finance chair Ann Cummings (D-Washington) said her committee felt “no sense of urgency to rewriting the property tax code” and “couldn’t see that [the House proposal] did anything substantially better, so we didn’t do it.” Scott opposed the House's proposal.
The Senate also decided to remove a cap on a 5 percent tax credit for charitable contributions after an outcry from nonprofits. The House wanted to limit the credit to donations of $10,000 or less.
The legislation also includes a provision that would buffer Vermonters from an unintended tax hike stemming from changes to the federal tax code.
The House and Senate are expected to iron out their differences in a conference committee next week.
Correction, 4:31 p.m., May 4, 2018: An earlier version of this story incorrectly characterized Gov. Phil Scott's proposed Social Security exemption.