In re: HS-122
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In re: HS-122, No. 195-5-10 Bncv (Wesley, J., Feb. 4, 2011)
[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
STATE OF VERMONT
SUPERIOR COURT
Bennington Unit
IN RE: HS-122
CIVIL DIVISION
Docket No. 195-5-10 Bncv
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OPINION & ORDER
Petitioner Joseph O’Dea requested a copy of the HS-122 State Payment Report
from the Town of Manchester in accordance with Vermont’s Access to Public Records
Act. This report contains property tax adjustment information based, in part, on the
income of individuals in the town. The Town denied Petitioner’s request and asserted
that the HS-122 report is exempt from disclosure under various provisions of 1 V.S.A. §
317(c). Petitioner appeals this denial. At the hearing on the merits held before the Court
on November 15, 2010, without jury, Petitioner, an attorney licensed in Vermont,
represented himself. The Town of Manchester was represented by Robert Woolmington,
Esq.
As explained below, based on its conclusion that the issue is determined as a
matter of law by resort to statutory interpretation, the Court finds in favor of Petitioner,
holds that the HS -122 report is a public record not subject to any exemption, and directs
the Town to disclose the report to Petitioner in accordance with the Access to Public
Records Act.
Discussion
Vermont residents are required to pay an education property tax on their
homestead. 32 V.S.A. Chap. 135. Residents whose incomes fall below a certain
threshold are eligible for a reduction in local property taxes as a partial offset to the
education property tax. 32 V.S.A. Chap. 154. The Vermont Department of Taxes
calculates the appropriate property tax adjustment for every household. 32 V.S.A. §
6066a(a). The Department transmits this information to each town in an HS-122 report.
The report contains a list of all homesteads in the town which qualify for an offset to their
education property taxes, as well as the amounts of the corresponding property tax
adjustments. The property tax adjustment amounts contained in the HS-122 report also
correspond to the amounts shown on individual property tax bills. Any household listed
in the HS-122 report has a total income of less than $97,000, the statutory threshold to
qualify for an adjustment.
The Town argues that the HS-122 report is exempt from disclosure because, using
the property tax adjustments listed in the report, one can accurately extrapolate the
household income of virtually every household eligible for an adjustment. See, 1 V.S.A.
§ 317(c)(6)(exempting tax returns and the information on them from disclosure as a
public record). In support of this claim, David Fielding – the Treasurer of the Town of
Manchester and a private tax accountant – testified one can calculate a household’s
income with a high degree of certainty by reference to the property tax adjustment
amounts contained in the HS-122 report. He presented a spreadsheet of calculations,
made using property tax adjustments from the HS-122 report, by which he was able to
determine the income of nine households to within fifteen dollars. Mr. Fielding was able
to verify his calculations because he had access to the individuals’ tax returns in his
capacity as a private accountant.
Petitioner argues that, despite Mr. Fielding’s analysis derived from a limited
sample of Manchester residents, one cannot invariably or confidently determine
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household income solely from the information in the HS-122 report. Furthermore,
Petitioner contends that the legislative history makes clear that property tax adjustment
amounts must be deemed public information. In response to the Town’s position,
Petitioner further argues that the adjustment amounts contained in HS-122 are derivative
information not exempt from disclosure under Finburg v. Munane, 159 Vt. 431 (1990).
Petitioner called Donald Keelan, C.P.A., who testified that one could not reliably
determine the income of a household knowing only the property tax adjustment amount
found in the HS-122 report. He explained that any calculation would be imprecise
because the property tax adjustment amounts contained in the HS-122 report are a
function of several factors, and not derived solely from the particular household’s
income. He explained that an attempt to extrapolate from the adjustment reported in the
HS -122 report to derive the income at a particular household could be skewed by various
circumstances, such as when an individual opts to have a refund carried over to pay
future tax bills, or when some portion of the credit is subject to tax offset to satisfy
outstanding liens or statutory obligations.
The stipulated record includes an excerpt from a House Committee Report
indicating that the Legislature specifically considered and addressed the concerns raised
by the Town. House Legislative Study Committee on Income-Based Education Property
Tax for Vermonters, p. 15 (December 15, 2005) (“House Report”). The House Report
addresses the possibility that education income sensitivity adjustments sent by the Tax
Department to the towns might “provide enough information for town officials to
estimate the taxpayer’s amount of household income.” Id. The Committee considered
several solutions to this potential confidentiality problem including (1) recommending
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that property tax bills which contain property tax adjustments be exempted as nonpublic
documents, or (2) adding components to the property tax adjustment not disclosed in the
transmission to the towns which would limit the ability of third parties to compute
household income.
The Committee ultimately recommended making the property tax adjustment an
amalgam of different possible inputs, reasoning that officials and others “would have no
idea which components (prebate, rebate, refund, withholding) make up the amount the
Tax Department reports for that taxpayer.” Id. Considering the bill as enacted, it is
apparent that the Legislature accepted the Committee’s recommendation, since the act did
not declare tax bills which include a property tax adjustment amount to be “nonpublic”,
nor otherwise amend the exceptions specified in the Access to Public Records Act, 1
V.S.A. § 317(c), to include the information reported in HS-122 reports.
Petitioner also submitted into evidence an opinion letter from the Chief Assistant
Attorney General dated October 12, 2007. The Attorney General concludes that property
tax adjustment information located on property tax bills is public information and not
exempt from disclosure under 1 V.S.A. § 317(c). Since the HS-122 report is a
compilation of these property tax adjustments for each town, the Attorney General’s
reasoning applies to HS-122 reports as well.1
1
Curiously, in light of this opinion, the Town placed in evidence its request made to the
State Department of Taxes for the HS-122 report for the town of Dorset. In response, the Tax
Department stated “[since] the information you seek is on property tax bills available at the
Dorset Town Clerk’s office, your request is denied.” Given the Attorney General’s opinion, as
well as the legislative history, there is plainly some irony in the Tax Department’s refusal to
disclose the HS-122 information, deferring instead to its presumed availability through the towns.
After all, if the information is public it ought to be available from the state agency from which it
emanates originally. Yet, the Department is not a party to this suit, and this titillating bit of buckpassing by the Department is not particularly relevant to the duty of the Town once it receives a
request for public information.
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The Public Records Act represents a strong policy favoring access to public
documents and records. Trombley v. Bellows Falls Union High Sch., 160 Vt. 101, 106-07
(1993). Exceptions to that general policy of disclosure are listed in 1 V.S.A. § 317(c).
These exceptions are strictly construed against the custodians of records and any doubts
must be resolved in favor of disclosure. Id. at 107. The burden of showing that a record
falls within an exception is on the agency seeking to avoid disclosure. Finberg v.
Murnane, 159 Vt. 431, 434 (1992). The agency meets that burden by making a specific
factual showing and not merely by averring conclusory claims. Id. at 438.
The Town of Manchester is a public agency subject to the disclosure requirements
of the Public Records Act, pursuant to 1 V.S.A. § 317(a), and the records sought are
“produced or acquired” in the course of municipal business. 1 V.S.A. § 317(b).
Therefore, Petitioner is entitled to the records requested unless an exemption to the
Access to Public Records Act applies.
1 V.S.A. § 317(c)(6) exempts from disclosure “a tax return and related
documents, correspondence and certain types of substantiating forms which include the
same type of information as in the tax return itself filed with or maintained by the
Vermont department of taxes or submitted by a person to any public agency in
connection with agency business.” (emphasis added). “Return information” is defined in
the tax code as including the “…amount of a person's income, payments, receipts,
deductions, exemptions, credits.” 32 V.S.A. § 3102(b)(2).
The Vermont Supreme Court considered this exception in Fineburg v. Murnane,
157 Vt. 431 (1990). By its ruling in that case, the Court explained that the exemption
On the other hand, the fact in evidence that Petitioner was able to secure HS-122 reports
by direct request of town officials in neighboring Dorset and Danby also counts little in the
Court’s analysis, which proceeds as a matter of law from its interpretation of legislative intent.
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does not cover “derivative documents” which are “made up by the agency from tax
returns, related documents or correspondence.” Id. at 435. The Court noted, however,
that that “to some extent such derivative documents must be covered to avoid disclosure
of information taken from the return and related documents.” Id.
The Town asserts four separate exemptions to the Access to Public Records Act
which it believes compels withholding the HS-122 report. Their principal argument rests
on the exemption under Sec. 317(c)(6) for information contained in tax returns, as well as
the belief that the HS-122 report represents the type of “derivative document” which is
so intrinsically related to information taken from the return that it must come under the
exemption, as suggested by Fineburg v. Murnane. Each aspect of the Town’s argument,
however, is based on the premise that one can accurately calculate a household’s income
–thus, “the same type of information as in the tax return itself” - using the property tax
adjustments found in the HS-122 report.
The parties and their experts dispute the degree of accuracy to which one can
estimate household income using the property tax adjustment amounts found in the HS122 report. Consideration of Mr. Fielding’s testimony, augmented by common sense,
strongly suggests that in the substantial majority of instances there will be a
straightforward mathematical relationship between any reported adjustment on the HS122 report and the income of the household entitled to that adjustment. This is because
the “other factors” which might affect the adjustments reported in the HS-122 report
rarely come into play as to most property tax adjustments.
Nevertheless, the Legislature was not ignorant as to this concern or its potential
consequences. House Report at 15. Relying on the efforts of the House Legislative Study
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Committee on Income-Based Education Property Tax for Vermonters, the final bill
rejected any direct protection of tax return information which might be derived from the
HS -122 reports. Rather, the bill adopted the Committee’s recommendation that the
process be subject to certain other inputs, including non-public factors such as liens,
offsets and applying credits forward, which when applicable would somewhat complicate
the otherwise simple formulaic relationship between an adjustment and the income of the
household eligible to receive it. As noted, the Court concludes that the Committee’s
recommendations produced a camouflage that is virtually transparent in the few cases
where other factors are present, and non-existent in the vast majority of cases where the
adjustment is solely a function of income. However, the Court also infers that the
Legislature doubtless understood that to be the case, and elected against any explicit
protection for the information generated by the process it was creating.2
While the Town questions the effectiveness of the Legislature’s solution to the
confidentiality problem, the Court is bound by the clear import of legislative intent that
emerges from consideration of the language of the final bill, as informed by the report of
the study committee. Whatever its actual effectiveness in affording a disguise to eligible
taxpayers against the computation of their household incomes, the bill represents a
considered compromise of competing interests, in which explicit confidentiality was
rejected. Against this history, the Town’s attempt to fit HS-122 information into the
exemption protecting tax returns strains the bounds of an exclusion that must be narrowly
construed. The doubts raised by the Town must be resolved in favor of disclosure.
Trombley, 160 Vt. at 107.
2
In reaching this conclusion, the Court finds persuasive the Attorney General’s opinion which also
concluded that property tax adjustments are public. The opinion letter states that the “legislative history
reinforces the language of the statutes and confirms that property tax records are public documents.”
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Based on the foregoing, it is hereby ORDERED:
The Court DECLARES that property tax adjustments are public information and
that HS-122 reports are public information. The Town shall produce this information to
Petitioner forthwith as required by the Access to Public Records Act.
Dated
2011 at Bennington, Vermont,
______________________
John P. Wesley
Presiding Judge
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