Vt to spend $31M on Act 46 mergers

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Financial analysts say the state will spend $31 million over a three-year period on tax incentives to towns for school district mergers.

In fiscal year 2019 alone, taxpayers will subsidize $16.1 million in tax breaks for towns that merge school districts.

The Joint Fiscal Office says that will be the high water mark year for the incentives. The amount needed for tax breaks will decline in the outgoing years because of the structure of the incentives. In the first year, towns get an 8 cent tax break. That amount drops by two cents a year over a four-year period. More towns will be eligible for the 8 cent tax break in the coming year. Subsequently, the total amount will drop.

Thirty-two new unified districts representing 139 town school districts have taken advantage of tax breaks under Act 46, according to the Agency of Education.

The tax incentives have been factored into the statewide education fund budget and the 7 percent average increase in the statewide property tax rate this year, according to state officials. The cost of the merger incentives for individual districts is borne by all taxpayers across the state.

Brad James, the finance manager for the education agency, says more districts than anticipated have gone ahead with consolidation votes.

"I don't think anyone expected we'd get this far," James said. "We've had bigger demand than folks anticipated."

"Is it a lot of money, yes, but are we going to see a benefit, I certainly hope so," James said.

Act 46, the school consolidation law, is designed to help small town school districts join forces with neighboring towns in unified districts. The restructuring effort also promises to yield savings, lawmakers and state officials have said.

Just how much the mergers will render in savings, however, is not clear. In some cases, local schools have closed, and students are being sent to other towns for schooling.

James said the agency will be surveying business managers to find out what costs would have been if the mergers hadn't gone through.

"A lot of this [savings] is going to happen through attrition," James said. "Everyone wants to see savings overnight, but I don't think that's reasonable and it's not in the best interest of the students."


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