Morristown Re-examines Quarterly Tax Installments

by Amy Kolb Noyes

MORRISVILLE - Should Morristown switch from two property tax payments a
year to four? That question was posed to voters last March at Town
Meeting, but the issue was tabled due to extenuating circumstances such
as a new statewide property tax law and a town-wide reappraisal. Now
town officials are again investigating if it would be more expensive to
have tax bills arrive in four installments, rather than two.
Town Clerk Mary Ann Wilson said it would be more work for her office to
process tax payments twice as often. However, she thought savings in
interest might offset the labor costs. In addition to collecting four
times a year, Wilson noted additional expenses in the first year would
include creating and printing new tax bills. She said she would also
advocate for sending out a postcard mailing to remind taxpayers of the
change.
Having property taxes due four times a year would mean the town and
school district would have to borrow less money in anticipation of
taxes. While that sounds as if it would save the town money, the result
would likely be a net loss to the school district. Therefore, the
selectboard has decided not to pursue the issue any farther until they
can discuss the two scenarios with the school board. A joint meeting
between the two boards has yet to be scheduled.
Wilson explained a four installment system might save the town some
interest dollars when borrowing in anticipation of taxes. However, the
school district could potentially lose upwards of $10,000 in revenue due
to arbitrage. Wilson said both the town and the school district borrow
money in anticipation of taxes. The money borrowed is then invested in
an interest-bearing account. Operating funds are drawn from that account
as needed. That investment account actually pays out more interest than
is owed on the borrowed note.
Because the school district borrows roughly five times more than the
town, its interest profits are far more significant. George Cormier,
chief operating officer for Lamoille South Supervisory Union, said he
had not been notified the selectboard was again discussing a
four-installment scenario. However, he said he would expect the
financial impact to be similar to the net loss the school district
predicted when this same discussion arose last year.
"I think we're in, financially, basically the same situation as we were
last year," Cormier commented.
Some taxpayers have been vocally pushing for the town to go to a four
installment system because, they say, taxes are so high that it is a
hardship to come up with that large a lump sum twice a year. However,
Cormier and Wilson both noted taxpayers are not limited to paying tax in
four installments.
"They can pay taxes whenever they want," Wilson commented. "They can pay
once a week or once a month. They don't have to wait until the
installment's due."
Cormier made the same point saying taxpayers now have the choice to pay
in two, four or more installments. If the town switches to a
four-installment system, the option of paying twice a year is taken away.