An issue between Bethel and the Redding and Region 9 Boards of Education dating back to 2011 has been resolved. The Bethel Tax Assessor was charging the Boards $55,000 for parking 45 buses at the depot on Durant Avenue. At the Bethel Board of Selectmen meeting last week, members approved the Tax Collector's request for a tax refund totalling $182,733 dollars to the Region 9 and Redding Boards of Education for three years worth of vehicle property tax and interest.
School official said when they used First Student, the fleet was leased. Bethel taxed the leasing company. The Boards switched to DATTCO, bought the fleet, and Bethel taxed the Boards. But they argued they are tax exempt. First Selectman Matt Knickerbocker says this form of lease-ownership hadn't been tried before, and will probably cause towns across the state to restructure their school buses leases.
The Bethel Board of Assessment Appeals denied their exemption request. The matter then went to Superior Court. A judge did not rule in Bethel's favor.
Under the decision issued June 26th, the judge considered two issues. Who owned the school buses garaged in Bethel, and whether the Boards of Education were exempt from personal property tax.
Bethel argued that the buses were owned by DATTCO or TD Equipment Financing Incorporated based on interpretation of a Lease Purchase Agreement. The Boards countered that it was a financing agreement in order to purchase the buses. The Judge said that Bethel couldn't point to any document that would show the buses were purchased by TDEF from the vendors, and since Bethel was not a party to the Lease Agreement, couldn't speak about the intent.
Knickerbocker says by changing the language on the registration documents, the Boards thought they would escape the local tax. Knickerbocker says the Assessor did the right thing, but this changes leasing for municipal purposes across the state.
The ruling says a tax exemption applies to Boards of Education since they fulfill a public purpose required by state statute to transport children to and from school regardless of where the buses are garaged.
Knickerbocker called it a landmark case.
He says the General Fund balance is healthy, and this won't create a problem. But he notes that this will have to be reconciled within the overall budget at the end of the year.
