Town of Killington v. State

Annotate this Case
Town of Killington v. State (99-286); 172 Vt. 182; 776 A.2d 395

[Filed 20-Apr-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                 No. 99-286

Town of Killington	                         Supreme Court

                                                 On Appeal from
     v.	                                         Washington Superior Court

State of Vermont, 	                         September Term, 2000
Edward D. Haase, Commissioner of 
Taxes and Marc Hull, Commissioner 
of Education

David A. Jenkins, J.

Mark L. Sperry and Devin McLaughlin of Langrock Sperry & Wool, Middlebury, for 

William H. Sorrell, Attorney General, William E. Griffin, Chief Assistant 
  Attorney General, and Mary L. Bachman, Special Assistant Attorney General, 
  Montpelier, for Defendants-Appellants.

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       JOHNSON, J.   In this appeal concerning a transition provision of
  Vermont's school funding  law, we confront a familiar dispute in which one
  side claims the benefit of the common and ordinary  meaning of the
  statutory language, while the other side relies primarily on the
  legislative purpose of  the statute to give meaning to the term at issue. 
  The provision in question capped for a two-year  period the anticipated
  rapid rise in property taxes in the so-called "gold" towns resulting from
  the  passage of the Equal Educational Property Act of 1997 (hereinafter
  "Act 60").  The statute saved 


  appellee Town of Killington (FN1) approximately $1,200,000 in taxes for the
  first transition year  after Act 60 became law.  Killington claimed,
  however, that it was entitled to roughly $500,000 in  additional tax
  savings because the State applied an incorrect methodology in calculating
  Killington's  increase in municipal expenditure growth during the first
  transition year.  The superior court agreed,  ruling that the commonly
  understood meaning of the statutory term "municipal budget" required the 
  State to calculate Killington's municipal expenditure growth in terms of
  the increase in gross  expenditures rather than the increase in
  expenditures funded by taxes.

       The State of Vermont and the Commissioners of the Departments of
  Education and Taxes  ("the State") appeal the superior court's grant of
  summary judgment in favor of Killington.  We  reverse and enter summary
  judgment in favor of the State based on our conclusion that the court's 
  construction of the statutory provision at issue leads to an irrational
  result that is inconsistent with  the spirit of the law and the legislative
  intent underlying the provision.

       The fundamental purpose of Act 60 is "to make educational opportunity
  available to each  pupil in each town on substantially equal terms."  16
  V.S.A. § 4000(a).  The Legislature sought to  attain equal access to
  similar revenues per pupil through a combination of state block grants and 
  local education spending that would allow each school district to "have
  substantially equal capacity  to raise and provide the same amount per
  pupil on the local tax base."  16 V.S.A. § 4000(b).  Act 60  represented
  the Legislature's response to Brigham v. State, 166 Vt. 246, 692 A.2d 384
  (1997), in  which we held that Vermont's educational financing system, with
  its wide disparities in per pupil  spending and property tax burdens
  necessary to fund that spending, violated the common benefits 


  clause, Chapter I, Article 7, of the Vermont Constitution.  The Legislature
  chose to respond, in large  part, by redistributing property tax revenues
  so that an equivalent tax rate in any town in Vermont  produced the same
  per pupil resources for educational spending.  In some towns, the
  maintenance of  the historic level of educational spending would require
  substantial, even dramatic, increases in  property tax rates to fund
  education.  To reduce the shock of property tax increases in the property-
  rich towns, the Legislature chose to phase in these increases over time. 
  This litigation is about one of  those phase-in provisions.

       To produce equality, a fully implemented Act 60 imposes a statewide
  education property tax  on all nonresidential and homestead property in
  every town in the state at a rate of $1.10 per $100 of  equalized education
  property value.  32 V.S.A. § 5402(a).  The law, however, contains a
  phase-in  provision aimed at easing the transition in fiscal years 1999 and
  2000 to the $1.10 rate for towns that  enjoy relatively low property tax
  rates.  See 1997, No. 60, § 50(a) (amended by 1998, No. 71 (Adj.  Sess.), §
  67(a)).  The first component of that provision, which provides a three-year
  phase-in toward  the uniform statewide rate, is not at issue in this

       The second component, the one at issue here, caps at forty percent any
  increase in a town's  combined municipal, school district, and statewide
  property tax rate from fiscal year 1998 to fiscal  year 1999. (FN2)  The
  forty-percent-cap provision assured that no town's combined tax rate would 


  increase by more than forty percent in the first transition year following
  the passage of the new  education funding law.

       The cap provision was intended to protect towns against immediate and
  large tax increases  created by Act 60.  It was not intended, however, to
  protect against tax increases brought about by  extraordinary spending
  increases.  Indeed, if the cap provision allowed extraordinary spending, a 
  town facing a forty-percent property tax increase resulting from Act 60
  could increase spending by 


  forty percent, thereby retaining the benefit of the entire tax increase
  while avoiding a gradual  increase in its burden under the statewide
  property tax rate.  Rather than use the phase-in period, as  intended, to
  gradually ratchet up its increased tax burden under the statewide rate, a
  town could  increase its spending to a level that would allow it to avoid
  any increased payment under the  statewide rate and Act 60's phase-in

       To prevent such a scenario but still allow towns a reasonable increase
  in spending during the  phase-in period, the cap provision included two
  spending control provisions, one on education  spending and one on
  municipal spending.  The former is not involved here.  The latter provides
  that  any increase in the "municipal budget" from fiscal years 1998 to 1999
  that exceeds ten percent may  not be applied in calculating the forty
  percent cap on the increase in the combined tax rate for fiscal  year 1999. 
  In sum, the increase in the combined tax rate of towns from fiscal year
  1998 to fiscal year  1999 was capped at forty percent, except that, in
  relevant part, any growth in the municipal budget  exceeding ten percent
  would not be included in the calculation of the combined tax rate for that

       Looking at the specifics of this case, Killington is a property-rich
  town that faces significant  property tax increases under Act 60.  Thus,
  its increase in property tax rates during the phase-in  period is limited
  by the forty percent cap, however it is construed.  The gist of the State's
  claims is  that Killington has improperly drawn from its forty percent
  property tax increase for the first interim  year by increasing funds for
  municipal spending well above the ten percent limit and intentionally 
  generating a large surplus that can be spent in future years.  Killington
  responds that it is simply  following the letter of the phase-in provision,
  and that the State is distorting its clear language in  pursuit of a
  claimed legislative intent that it has invented.


       The facts giving rise to the claims are these.  Killington had a
  municipal budget in fiscal year  1998 of $1,951,000.  In fiscal year 1999,
  Killington voted a municipal budget of $2,146,100,  precisely ten percent
  above the fiscal year 1998 budget.  Because of different revenue
  assumptions  underlying the two budgets, (FN3) however, Killington voted a
  thirty-eight percent increase in the  municipal property tax rate to fund
  the fiscal year 1999 budget.  The ostensible reason for the large  tax
  increase was the assumption that the entire fiscal year 1999 budget would
  be funded by property  tax payments for current year billing; whereas, the
  assumption in fiscal year 1998 and all prior years  was that a substantial
  part of the budget would be funded by delinquent tax payments and other 
  income not generated by current-year tax payments.


       Not surprisingly, in determining how much Killington was required to
  send to the education  fund, the State noted the discrepancy between the
  ten percent budget increase claimed by Killington  and the apparent
  thirty-eight percent property tax increase.  It determined that the budget
  figures  from fiscal years 1998 and 1999 used by Killington to calculate
  the ten percent increase were not  comparable because they resulted from
  different revenue assumptions.  In the State's view, Killington  simply
  overtaxed itself in fiscal year 1999, thereby lowering its obligation to
  the statewide education  fund and, at the same time, allowing itself to
  enjoy a surplus of municipal funds that could be used  for future

       In resolving the discrepancy resulting from the inconsistent revenue
  assumptions in  Killington's fiscal year 1998 and 1999 budgets, the State
  chose to accept the assumptions made in the  fiscal year 1999 budget and
  contest the asserted fiscal year 1998 budget.  To allow the municipal 
  budgets from fiscal years 1998 and 1998 to be compared so that the
  ten-percent growth could be  calculated, the State considered only that
  part of those expenditures from the fiscal year 1998 budget  covered by
  current-year taxes. (FN4)  The State might well have chosen instead to
  contest the fiscal  year 1999 budget on the ground that it did not include
  non-revenue income and thus was  incomparable to the previous year's
  budget.  In any event, either contest would have reached the  same result.

       In July 1998, Killington filed a declaratory judgment action in
  superior court.  The parties  submitted competing motions for summary
  judgment, and the superior court ruled in favor of  Killington. The court
  concluded that the common and ordinary meaning of the term "municipal 


  budget, " as defined in the forty percent cap provision, comported with
  Killington's position, which  construed the term to encompass the expected
  expenditures and revenues projected for the coming  year.  As for the
  intent of the Legislature, the court opined that if the Legislature had
  intended  municipal growth to be measured in terms of the increase in
  taxes, it would have used the term  "municipal tax rate," as it had in
  other contexts throughout Act 60-including the forty percent cap  provision
  itself, rather than the term "municipal budget."

       On appeal, the State argues that the superior court erred by focusing
  exclusively on the term  "municipal budget" and ignoring the purpose and
  spirit of the education funding law in general and  the forty percent cap
  provision in particular.  In the State's view, the term "municipal budget"
  is  susceptible to several different meanings, but, when examined in the
  context of the forty percent cap  provision, which is aimed at protecting
  property owners from sudden and significant rate increases  resulting from
  the implementation of Act 60, the term can only refer to that portion of
  municipal  expenditures that are funded by taxes.  According to the State,
  a broader interpretation of the term  would allow towns such as Killington
  to manipulate the municipal tax rate so as to create a surplus  of
  municipal funds while lowering their liability to the statewide education

       Killington responds that the plain and ordinary meaning of the term
  "municipal budget" is the  total town expenditures as approved by the
  voters.  Killington asserts that the plain meaning of the  term is neither
  irrational nor inconsistent with Act 60 and thus should be construed as it
  is commonly  understood.  Killington further asserts that its budget
  projections were made in good faith, and that,  in any event, it would be
  improper and impractical for this Court to examine the motives behind a 
  town's budgetary decisions.


       In considering the parties' arguments, we bear in mind that the
  paramount goal of this Court  in construing a statutory provision is to
  give effect to the intent of the Legislature.  See State v.  O'Neill, 165
  Vt. 270, 275, 682 A.2d 943, 946 (1996) (there are many rules of statutory
  construction,  but the paramount one is "to discern and give effect to the
  intent of the Legislature").  If the meaning  of the disputed statutory
  language is unambiguous and "'resolves the conflict without doing violence 
  to the legislative scheme,'" we accept the plain meaning as the intent of
  the Legislature without  looking further.  In re Weeks, 167 Vt. 551, 554,
  712 A.2d 907, 909 (1998) (quoting Lubinsky v. Fair  Haven Zoning Bd., 148
  Vt. 47, 49, 527 A.2d 227, 228 (1986)); see State v. Rafuse, 168 Vt. 631,
  632,  726 A.2d 18, 19 (1998) (mem.) ("The ordinary meaning of [statutory]
  language is presumed to be  intended unless it would manifestly defeat the
  object of the provisions.").  On the other hand, we will  not enforce the
  common and ordinary meaning of statutory language if doing so would render
  the  statute ineffective or lead to irrational results.  In re A.C., 144
  Vt. 37, 42, 470 A.2d 1191, 1194  (1984).  When the plain meaning of
  statutory language appears to undermine the purpose of the  statute, we are
  not confined to a literal interpretation, but rather must look to the broad
  subject matter  of the statute, its effects and consequences, and the
  purpose and spirit of the law to determine  legislative intent.  Merkel v.
  Nationwide Ins. Co., 166 Vt. 311, 314-15, 693 A.2d 706, 707-08  (1997); see
  Perry v. Medical Practice Bd., 169 Vt. 399, 406, 737 A.2d 900, 905 (1999)
  (in  determining legislative intent, court must look to words of statute,
  legislative history and  circumstances surrounding statute's enactment, and
  legislative policy that statute was designed to  implement).

       The term "municipal budget," which is undefined in Act 60, is not a
  term of art with a precise  meaning.  Rather, the word "budget" is vague
  and can have different meanings in different contexts.   The parties
  themselves define the term in various ways that are not entirely
  consistent.  As Killington 


  points out, the State uses the term at times to mean tax rate and at other
  times to mean expenditures  funded by taxes.  Killington alternately
  defines the term to mean, on the one hand, the total expected  expenditures
  approved by town voters and, on the other hand, the total expected
  expenditures as  offset by the total expected revenues.  Indeed, while
  contending on appeal that the ordinary meaning  of budget is total
  expenditures as offset by total revenues, Killington asks this Court to
  affirm the  superior court's judgment on the basis that the plain meaning
  of budget is gross expenditures.

       Moreover, Killington's differing methods of calculating its municipal
  budget before and after  the passage of Act 60 indicate the vagueness of
  the term.  Before 1998, Killington's budget summary  incorporated funding
  not only from current year tax assessments, but also from prior year tax 
  collections and non-tax revenues.  But after the passage of Act 60,
  Killington removed its prior year  taxes and its non-tax revenues from its
  general fund budget calculation.  The law provides that an  increase of
  greater than ten percent in the "municipal budget" of fiscal year 1999 over
  the "municipal  budget" of 1998 will not be included in the forty percent
  cap calculation.  And yet, in effect,  Killington applies inconsistent
  definitions to the same term "municipal budget" to calculate the  increase
  in spending from one year to the other.  Killington then asserts that
  neither the State nor this  Court may examine the changed calculation to
  determine if, in fact, a different methodology is being  applied.

       Rather, Killington would have this Court construe the term "municipal
  budget" in isolation,  without regard to the inconsistency in its use of
  the term or the purpose of Act 60.  Its argument is  essentially that we
  must adhere to the plain and commonly accepted meaning of the term because 
  those are the words chosen by the Legislature.  In response to the State's
  contention that construing  the term broadly would undermine the purpose of
  Act 60 by allowing property-rich towns to 


  manipulate their budgets to create a surplus of municipal funds while
  reducing their liability to the  general education fund, Killington asserts
  that the Legislature's choice of the term "municipal  budget" was the
  result of a legislative compromise.  According to Killington, the
  Legislature chose  the term "municipal budget" rather than "municipal tax
  rate" or some other comparable term to  appease the property-rich towns
  across Vermont that strongly opposed Act 60.

       We find no support whatsoever for Killington's claim that the term
  "municipal budget" was  the result of a legislative compromise.  Killington
  has not provided, and we are unaware of, any  legislative history or other
  evidence indicating that the term was the result of a legislative 
  compromise.  Absent evidence to support such a view, we will not assume
  that the Legislature  intended a broad application of the term "municipal
  budget" to allow property-rich towns to  manipulate their budgets to take
  the greatest advantage of the transition provision aimed at easing the 
  burden of the expected increase in taxes caused by Act 60.  A word as vague
  as "budget" is not plain  enough for us to accept Killington's conjecture
  concerning a legislative compromise that would  undermine not only the
  expressed primary purpose of Act 60 to achieve equal educational 
  opportunity, but also the purpose of the forty percent cap provision to
  buffer the anticipated sharp  increase in the taxes caused by the
  implementation of Act 60.

       We do not feel constrained by the commonly understood meaning of the
  term municipal  budget, assuming that there is one.  See 2A N. Singer,
  Sutherland Statutory Construction § 48.01, at  302 (5th ed. 1992) (plain
  meaning rule cannot be used to thwart judicial inquiry into legislative
  intent  behind statutory language that may appear plain upon superficial
  examination).  Perhaps, if  considered in isolation, the term "municipal
  budget" would be most commonly understood to mean a  balance sheet of total
  expected receipts and expenditures.  But words may have a more precise


  meaning in the context of a special subject than they would otherwise have
  in general usage.  Id. §  47.27, at 242.

       There is little dispute as to the purpose behind the statutory
  provisions at issue here.  From  the broadest perspective, Act 60 is a
  remedial statute designed to rectify the inequality in educational 
  opportunity in Vermont resulting from the state's heavy reliance on local
  property taxes to fund  schools.  See Tarrant v. Department of Taxes, 169
  Vt. 189, 197, 733 A.2d 733, 739 (1999)  (legislative intent must be derived
  from consideration of entire statute); In re Dexter, 93 Vt. 304,  312, 107 A. 134, 137 (1919) (remedial statute is one designed to cure mischief or
  remedy defect in  existing laws).  Therefore, we must construe the statute
  to accomplish that remedial purpose.  State  v. Therrien, 161 Vt. 26, 31,
  633 A.2d 272, 275 (1993); see 3 N. Singer, supra § 60.01, at 147 
  ("Remedial statutes are liberally construed to suppress the evil and
  advance the remedy."); Viscup v.  Viscup, 150 Vt. 208, 211, 552 A.2d 400,
  402 (1988) (remedial purpose for which legislation was  enacted requires
  liberal construction so as to give full force and effect to legislative

       If we narrow our focus, the forty percent-cap provision is intended to
  limit, during a  transition period, the expected increase in property taxes
  incurred by property-rich towns as the result  of Act 60.  But if we narrow
  our focus even further to the component of the forty percent cap  provision
  at issue in this case, that language allows no more than a ten percent
  increase in municipal  growth in calculating the forty percent cap on tax
  increases resulting from Act 60.  Plainly, the ten  percent provision was
  intended to allow reasonable municipal growth within the cap calculation,
  but  to prevent property-rich towns from reducing their liability to the
  general education fund by  increasing municipal growth beyond the
  reasonable ten percent cushion.


       Taken together, the focus of these provisions was on how to deal with
  the expected increase  in the assessment of taxes caused by Act 60's goal
  of creating an equal educational opportunity for  Vermont students.  We
  cannot discern from the record whether the term "municipal budget" resulted 
  from imprecise drafting or, as the State surmises, an attempt to prevent
  confusion with other terms in  the same provision that included the term
  "tax rate."  But we do know that the interpretation favored  by Killington
  is inconsistent with the obvious intent of both Act 60 in general and its
  forty percent  cap provision.  See 2A N. Singer, supra § 46.05, at 103 ("A
  statute is passed as a whole and not in  parts or sections and is animated
  by one general purpose and intent.  Consequently, each part or  section
  should be construed in connection with every other part or section so as to
  produce a  harmonious whole.").  Killington's interpretation would break
  the link between tax rate increases and  the effect of Act 60, and instead
  would allow towns to create surpluses under the protection of the  forty
  percent cap while at the same time reducing their liability to the
  statewide education fund.   Accordingly, we reject Killington's
  plain-meaning analysis of the term "municipal budget."  See id. at  105
  (legislature is presumed to have definite purpose for every enactment and
  has formulated  subsidiary provisions in harmony with that purpose, which
  is limitation on meaning of general terms  and touchstone for expansion of
  narrower terms).

       We conclude that the State's methodology for calculating Killington's
  municipal budget  growth from fiscal year 1998 to fiscal year 1999, which
  applies a consistent definition for the term  municipal budget from one
  fiscal year to the next, comports with the Legislature's intent to limit
  the  amount of municipal budget growth that can be considered in
  calculating the forty percent cap on  increased taxes resulting from Act
  60.  Killington does not deny that its interpretation of the term 
  "municipal budget," in contrast, would allow towns to create such municipal
  surpluses while 


  reducing their liability to the statewide education fund.  Nevertheless,
  Killington contends that it  would be inappropriate and impractical for
  this Court to examine the inner workings of municipal  budgets to determine
  whether local officials are acting in good faith regarding their
  responsibility to  the statewide education fund.  We agree, but this is
  merely one more reason why Killington's broad  interpretation of the term
  "municipal budget" outside of its statutory context would lead to
  irrational  results and would undermine the purpose of Act 60.

       In upholding the State's interpretation of the forty percent cap
  provision, we are following our  well-established rule that "the
  interpretation of a statute by the administrative body responsible for its 
  execution will be sustained on appeal absent compelling indication of
  error."  Mountain Cable Co. v.  Department of Taxes, 168 Vt. 454, 458, 721 A.2d 507, 510 (1998); see Tarrant, 169 Vt. at 195, 733 A.2d  at 738 (same). 
  Further, the State's interpretation of the provision has been, as least
  implicitly,  endorsed by the Joint Legislative Oversight Committee on
  Restructuring Education, which was  expressly created in Act 60 "to conduct
  a continuing review of the actions and policies of the  Department of
  Education, Department of Taxes, school districts and other entities of
  educational  governance in the state in the implementation of the
  provisions of this act."  1997, No. 60, § 90(b);  see also id. § 90 (e)
  ("The Joint Committee shall also review and advise on agency and
  departmental  rules and policies relating to quality and funding of public
  education and the implementation of the  provisions of this act.").

       In a November 1997 letter responding to questions on the forty percent
  cap provision posed  by the Town of Dover, the chair of the oversight
  committee stated that "no matter how high the  increase in municipal taxes,
  only last year's municipal tax rate plus a 10% increase will be used for 
  purposes of [the forty percent cap] calculation."  (Emphasis added.)  The
  chair also made this 


  position known to the members of the Senate Finance Committee in a February
  16, 1998 hearing in  which proposed amendments to Act 60 were being

       Killington protests that the oversight committee was not directly
  responding to a question  concerning the meaning of the term "municipal
  budget," and that it is impossible to tell what  amendments were being
  considered at the time the chair read portions of her letter to the Senate 
  Finance Committee.  Killington also cites State v. Madison, 163 Vt. 360,
  373, 658 A.2d 536, 545  (1995) for the proposition that the post-hoc
  reaction of a committee of lawmakers cannot  retroactively provide
  legislative history for an earlier law.

       We do not find these arguments persuasive.  The official letter of the
  committee established  to oversee Act 60 plainly set forth an
  interpretation of the forty-percent-cap provision that measured  an
  increase in the tax rate rather than an increase in gross
  expenditures-essentially the same position  taken by the agencies
  administering the statute.  Moreover, regardless of what amendments were 
  being considered at the February 1998 Senate Finance Committee hearing, its
  members were at least  made aware of the position taken by the oversight
  committee, and yet no amendment was made to  alter that position.  Finally,
  in Madison, we stated that "legislative intent does not necessarily become 
  apparent from the post-hoc reaction of a committee of lawmakers," holding
  that "the inconclusive  legislative history" relied on by the defendant was
  "insufficient to overcome the plain meaning of the  term" at issue.   Id.
  at 373-74, 658 A.2d  at 545 (emphasis added).  We also noted that, far from 
  creating an absurd result, applying the plain meaning of the statutory term
  would produce a more  reasonable result than that proposed by the
  defendant.  Id. at 374, 658 A.2d  at 545.

       The instant case is easily distinguishable.  Here, unlike Madison, the
  evidence of legislative  intent is from an oversight committee established
  by the very act being interpreted to implement the 


  statute and oversee the rules and policies of the administrative agencies
  and school districts  concerning the act.  Thus, the contemporaneous
  legislative history is entitled to greater weight.  See  Energy Action
  Educ. Found. v. Andrus, 654 F.2d 735, 750 n.74 (D.C. Cir. 1980) (views of
  later  Congress generally form hazardous basis for inferring intent of
  earlier one, but there is reason to give  "greater weight than usual to the
  views of a post-enactment oversight committee charged with  responsibility
  for supervising the administration of the Act"), rev'd on other grounds by
  454 U.S. 151  (1981); cf. United Hosp. Ctr., Inc. v. Richardson, 757 F.2d 1445, 1451 (4th Cir. 1985) (regulations  presented to oversight committee
  by administering agency without disapproval are entitled to  considerable
  weight as expressive of legislative purpose); Fredericks v. Kreps, 578 F.2d 555, 561,  563 (5th Cir. 1978) (deference is especially warranted where
  administrative practice in question  involves contemporaneous construction
  of statute with acquiescence of its construction by  congressional
  oversight committees).  More importantly, in contrast to Madison, the
  legislative  history in this case is being offered to counter a proposed
  plain-meaning interpretation that would  create irrational results and
  thwart legislative intent.

       Killington also contends that the Department of Taxes, Division of
  Property Valuation and  Review's interpretation of the term "municipal
  budget" to mean expenditures funded by taxes is  inconsistent with the
  Department of Education's interpretation of the term "education budget" to 
  mean gross expenditures spent for education.  According to Killington, the
  State's application of  differing methodologies to calculate the increases
  in education and municipal budgets demonstrates  that the State is
  ascribing different meanings to the same word ("budget") in the same
  provision.  We  find no fundamental inconsistency in the methodology used
  by the State to calculate increases in the  municipal and school budgets.


       Under Act 60, as amended by Act 71, the education budget of towns was
  permitted to  increase in fiscal year 1999, and still be within the forty
  percent cap, by the amount of any increase in  the index for state and
  local purchases of goods and services.  1998, No. 71 (Adj. Sess.), § 67(a).  
  That increase was 2.78 percent.  As Killington contends, the Department of
  Education applied the  2.78 percent increase to Killington's gross
  education expenditures.  In the next step of its calculation,  however, the
  Department reduced the sum obtained in the first step by the amounts of the
  general  state support grant and the locally budgeted revenues, including
  anticipated expenditures by non-tax  revenues such as mainstream block
  grants for special education and state aid for transportation.   Thus, the
  Department of Education's methodology, like the one applied by the Division
  of Property  Valuation and Review, ultimately calculated the allowable
  growth under the forty percent cap  provision by measuring the increase in
  expenditures funded by taxes, albeit at a different step in the 
  calculation.  Killington has not challenged the correctness of the
  Department of Education's  calculation with respect to the growth in its
  education budget, and yet the methodology employed by  the Department would
  have yielded essentially the same result as that employed by the Division
  of  Property Valuation and Review with respect to its calculation of the
  growth in Killington's municipal  budget. (FN5)

       In summary, the structure and purpose of Act 60 make it apparent that
  the Legislature  intended to protect, under the transitional forty percent
  cap provision, a ten percent increase in  municipal expenditures funded by
  taxes.  A calculation of the increase in municipal budget growth  based on
  expenditures funded by taxes comports with the Legislature's intent to cap
  tax rate 


  increases only if related to the new educational funding law.  Further,
  such a calculation is  straightforward and would not require the State or
  the courts to speculate as to the propriety of a  town's assessment of
  future tax delinquencies or receipts from non-tax revenues.

       In contrast, Killington's interpretation of the phrase "municipal
  budget" in isolation would  turn an inflation-protection measure into a
  device for willing towns to accumulate a surplus of  municipal funds at the
  expense of the statewide education fund.  Rather than follow this 
  interpretation simply because it applies a broad and common understanding
  of the word "budget," we  uphold the interpretation arrived at by the
  administering agency and acknowledged by the legislative  oversight
  committee-one that plainly gives effect to the legislative intent behind
  Act 60 in general  and the specific provision at issue here.  The State's
  interpretation satisfies the purpose of the  provision to assure that a
  town's tax rate does not increase by more than forty percent as the result
  of  the new education funding law, but to limit the municipal growth that
  can be applied in calculating  that increase.


                                       FOR THE COURT:

                                       Associate Justice


FN1.  After the filing of this lawsuit, the Town of Sherburne changed its
  name to the Town of  Killington.

FN2.  For purposes of the Act, Killington's fiscal year 1999 is the period
  from January 1, 1998 to  December 31, 1998, and Killington's fiscal year
  1998 is the period from January 1, 1997 to  December 31, 1997.

       The original forty-percent-cap provision in Act 60 provided as

    No municipality shall be required to set a combined municipal,
    school  district and statewide property tax rate which is more
    than 40 percent  higher than its combined fiscal year 1998
    municipal and school  property tax rate, provided that any growth
    in the municipal budget of  more than 10 percent in that year
    shall not be included in the  calculation of the combined
    municipal, school district and statewide  property tax rate for
    that year.

  1997, No. 60, § 50(a).

       This provision was later replaced, in relevant part, with the
  following provision, which  sought to add a limitation on the growth of the
  education component of town budgets, in addition to  the municipal
  component, during the transition years:

    If, in fiscal year 1999, in order to fund that portion of a
    municipal  budget which is no greater than 110 percent of its
    fiscal year 1998  municipal budget and to fund that portion of an
    education budget  which is no greater than its fiscal year 1998
    education budget adjusted  by any increase in the index for state
    and local purchases of goods  and services and for any extenuating
    circumstances as determined by  the commissioner, a municipality's
    combined municipal, school  district and statewide equalized
    property tax rate is more than 40  percent higher than its
    combined municipal and education equalized  tax rate in fiscal
    year 1998, then the education property tax rates for  fiscal year
    1999 established by this section for that municipality shall  be
    reduced.  The statewide education property tax rate shall be 
    reduced by an amount which will result in a combined municipal, 
    school district and statewide education equalized tax rate for the 
    municipality in fiscal year 1999 which does not exceed by more
    than  40 percent the combined municipal and education equalized
    tax rate  of the municipality for fiscal year 1998.

  1998, No. 71 (Adj. Sess.), § 67(a).

FN3.  In each of its budget calculations before fiscal year 1998, the year
  following the passage of  Act 60, Killington included non-tax
  revenues-delinquent tax collections, licensing fees, etc.-before  arriving
  at the total amount to be raised by taxes.  Killington's estimated non-tax
  revenue was  $322,000 in fiscal year 1993 and gradually increased each year
  until it reached $360,000 for fiscal  year 1997, with an estimate of
  $378,000 for the coming year.  That year, the $378,000 in non-tax  revenues
  and $30,000 in excess cash was deducted from Killington's projected total
  expenditures of  $1,951,000 to arrive at the sum of $1,543,000 that needed
  to be raised in taxes to pay for those  expenditures.  In fiscal year 1998,
  however, Killington did not, as in past years, subtract the  estimated
  non-tax revenue (listed in the annual report at $458,364) from its
  expenditures before  arriving at the total amount needed to be raised by
  taxes for either fiscal year 1998 or fiscal year  1999.  Unlike previous
  years, non-tax revenue was omitted from the budget summary and thus  simply
  not made part of the equation in reaching the figure for the total amount
  of expenditures  needed to be raised through taxes.  In short, for the
  first time, Killington set its tax rate to fund one  hundred percent of its
  projected expenditures, without reducing that amount to reflect the
  collection  of non-tax revenues.  As a result, Killington set its total
  municipal expenditures at $1,951,000 for  fiscal year 1998 and $2,146,100
  for fiscal year 1999, the latter figure being exactly 110 percent of the 
  former figure.  The State believed that Killington was comparing apples and
  oranges in calculating  the ten percent increase in municipal budget growth
  from fiscal year 1998 to fiscal year 1999.  From  the State's perspective,
  if Killington was not going to include non-tax revenues in the 1999 fiscal 
  year budget, it should have calculated the permissible ten percent growth
  in the municipal budget by  adding ten percent to the amount of
  expenditures from fiscal year 1998 that needed to be funded by  taxes, not
  to the amount of total expenditures from fiscal year 1998, including
  non-tax revenues.   Indeed, Killington's budgeted tax revenues increased
  thirty-eight percent from fiscal year 1998 to  fiscal year 1999. 

FN4.  The State multiplied $1,552,307, the amount of taxes assessed by
  Killington in fiscal year  1998 to fund its gross expenditures, by 110
  percent and arrived at the sum of $1,707,536.  From that  figure, the State
  then calculated Killington's education tax rate and its liability to the
  statewide  education fund for fiscal year 1999.

FN 5.  The State's calculations demonstrate that the methodologies employed
  by the Department  of Education and the Division of Property Valuation and
  Review would have resulted in a difference  in tax rates of less than one
  half of one cent.