At the end of the year, Vermont’s tax commissioner released a prediction that made headlines across the state. Education property tax bills were expected to rise an average of 18.5%. Now local school districts are finalizing the budgets they’ll put before voters in March, and lawmakers are back in Montpelier.
Vermont Public’s education reporter Lola Duffort tells Mitch Wertlieb how decision-makers at the Statehouse are reacting to this news. This interview was produced for the ear. We highly recommend listening to the audio. We’ve also provided a transcript, which has been edited for length and clarity.
Mitch Wertlieb: So, to start, can you tell us what’s behind this 18%?
Lola Duffort: There are a lot of variables at play. Like most employers, schools are dealing with inflation, most notably with health care. Those costs are up 16% this year. And because of a labor shortage, educators also had more bargaining power to get better salaries.
But perhaps the single largest factor at play is the retreat of federal aid. Schools got hundreds of millions in additional federal money during COVID, and they used that money to put in a slew of new programs and services. Now that money is gone. But many schools are hesitant to cut those extra supports.
On top of that, the federal money that was sloshing around in the economy also meant that other tax revenues were going absolutely gangbusters for a couple of years. That extra money from things like sales taxes allowed lawmakers to pay for schools without having to rely as heavily on property taxes.
Craig Bolio, Vermont’s tax commissioner, told lawmakers this week that the feds are not coming to the rescue.
Craig Bolio: I’m not trying to scare anybody, but I do think that there’s going to be a real challenge here to address. We’re all going to be eager to see what actual budgets are going to look like as we approach Town Meeting Day. But I think there are real pressures here that are not just going to disappear from a pot of money falling into our laps like they have over some of the last several fiscal years.
Lola Duffort: The next part is kind of wonky, so bear with me. Lawmakers retooled Vermont’s education finance formula in 2022 to encourage poorer and more diverse districts to spend more on higher-need students. In theory, that retooling should also encourage more affluent districts to spend a little less, because they’ll be taxed at a higher rate. But because lawmakers wanted to soften the blow to those districts, they wrote into the law that a district’s tax rate couldn’t increase above a certain rate in the law’s first five years. Because of that five-year runway, there’s a concern that at least in the short term, there might be an incentive for everyone to spend more.
Mitch Wertlieb: OK. So that’s how we got here. What’s the thinking among lawmakers about what to do about this?
Lola Duffort: Many key lawmakers I’ve talked to, including Representative Emilie Kornheiser, who chairs the tax-writing committee in the House, emphasized that it’s voters on Town Meeting Day who have the most power here. They’re the ones with the final say about how much their local schools spend.
Emilie Kornheiser: At the end of the day, local voters are the ones who decide on what tax rate they're interested in. And that is one of the clearest, most direct pieces of democracy that we have available to us in Vermont and actually in the country.
Lola Duffort: But Kornheiser and her counterpart in the Senate, Ann Cummings, both said they’ll look into ways that the Legislature can find some extra money to offset property taxes to a limited extent. But if budgets come in as predicted, lawmakers would need to find upwards of $200 million to fully buy down this projected 18% increase. And Vermont just doesn’t have that kind of money lying around.
Bolio also told lawmakers the governor would be interested in tweaking the education finance formula changes made in 2022. And in his state of the state address, the governor nodded to prior proposals to trim education spending, like additional consolidation, classroom size targets, or a statewide teacher contract. But he has suggested he wants lawmakers to make the first move.
And in general, I think officials will be looking to see whether voters reject school budgets in large numbers in March.
Mitch Wertlieb: Is school construction also playing a role here? We’ve heard a lot about the expenses involved there recently.
Lola Duffort: Absolutely. State officials estimate Vermont needs to spend more than $6 billion over the next 21 years on deferred maintenance in schools. And that number is widely considered to be an underestimate.
There’s been a moratorium on school construction aid since 2007, and districts are really struggling to pass local bonds to pay for projects by themselves. So lawmakers are considering restarting that aid, and a task force is expected to deliver recommendations on Feb. 1 about how to pay for it. Notably, that panel has also been discussing whether to use state school construction aid as an incentive to get local districts to consolidate schools.
I think that’s one of many ways in which this really difficult budget cycle is likely to reignite a longstanding debate — one that was kind of put on pause by the pandemic — about whether Vermont should turn to school consolidation to save money.
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