Capitol Recap: Vermont lawmakers advance school tax rewrite to tamp down spending
Since lawmakers reconvened in Montpelier, one topic has dominated the rest: property taxes that are forecasted to climb 20% next year because of unexpectedly large school budget proposals
And this week, the conversation took a very unexpected turn. With Town Meeting Day just one month away, Democratic lawmakers announced a plan to rewrite the state’s education tax laws to induce at least some districts to go back to the drawing board and cut spending.
If this proposal passes, some school budget votes will be postponed until later in the spring. For this week’s edition of the Capitol Recap, Vermont Public's education reporter Lola Duffort broke it down for Mitch Wertlieb.
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 why are lawmakers contemplating such a drastic measure?
Lola Duffort: Well, there are a lot of reasons why school spending is up so much this year. But lawmakers believe that a key culprit is a temporary tax break that they approved two years ago. They worry it’s encouraging school districts to maximize spending this year.
Mitch Wertlieb: Why did lawmakers create this tax break in the first place?
Lola Duffort: So it was part of Act 127 — a much larger revamp of the education finance formula. The goal was to encourage poorer, more diverse, and more rural districts to spend more on higher-need students. But the cost of that was that more affluent districts would be taxed at a higher rate.
In order to give more affluent districts a chance to adjust, lawmakers capped property rate increases for homeowners during the first five years. The concern now is that this across-the-board cap was a big mistake — particularly because it coincided with all these other really intense inflationary pressures hitting school budgets.
Mitch Wertlieb: How come?
Lola Duffort: It’s a bit like if a grocery store told you that no matter what you buy during this week’s trip, your bill is capped at $100. And, because of inflation, just getting the basics is going to cost you $100 anyway. So it’s going to be really hard to spend, say, just $50, even if you wanted to be frugal. Wouldn’t you tell yourself, “Well, I’ll spend $100, but I’ll get this week and next week’s groceries at the same time?”
And so lawmakers are now scrapping this cap, and proposing to replace it with a different transition mechanism — one that’s far less generous, and much more targeted.
"When we rely so heavily on just property taxes, it automatically pits towns against schools, and school districts against school districts in this particular instance. And it doesn't feel good to be on either end of that equation."Elaine Collins, superintendent of the North Country Supervisory Union
Mitch Wertlieb: How is the education community reacting to this?
Lola Duffort: School districts are not unified here. Lawmakers really hate it when it’s put in these terms, but Act 127 was set up to create winners and losers. Because the cap encouraged all this spending at once, it inadvertently made everyone a loser. What this fix does, in theory, is create winners and losers again. So there are some districts, like Springfield and Winooski, that like this change. And there are those, like Stowe, that are apoplectic.
But what school officials are unanimous about is that there are reasons they are spending more that go beyond this tax break. Things like children’s mental health needs, soaring health insurance costs, and old buildings that need very expensive work.
And so they really want lawmakers to continue the work that they originally set out to do — which is to find some additional revenues to take the pressure off property taxes.
I talked to Elaine Collins, the superintendent of the North Country Supervisory Union in Newport. Her districts would benefit from Act 127 and from these changes, but she isn’t exactly cheering.
Elaine Collins: When we rely so heavily on just property taxes, it automatically pits towns against schools, and school districts against school districts in this particular instance. And it doesn't feel good to be on either end of that equation. It doesn't feel good to be a loser. And it really doesn't feel good to be a winner.
Mitch Wertlieb: So if my city usually votes on March 5, would this bill mean that Town Meeting is canceled that day?
Lola Duffort: No. Municipal elections and budget votes would go on as originally scheduled. Nothing would change there.
On the school side of the ballot, the bill under consideration gives school districts the option to reschedule. It doesn’t require them to.
Now if they decide they do need to adjust their budget, then they can schedule a delayed vote on it. But other school-related ballot items, like school board elections, would go on as originally scheduled.
Will Senning, from the Secretary of State’s office, stated the obvious:
William Senning: This will be messy for them, for those that have already warned budget votes to occur on March 5. It’s going to be confusing to voters, to some extent at least — we’ll do everything we can to limit that confusion. And it’s going to be a burden to clerks who are administering that election.
Mitch Wertlieb: Where does Gov. Phil Scott stand on all this?
Lola Duffort: He’s said scrapping the cap is the right move. The governor is also OK with delaying school budget votes, but he is advocating for universal mail-in ballots, because he’s worried about turnout. But that’s not currently in the legislation being considered. And, unsurprisingly, the governor is also using this moment to call for further spending cuts.
Mitch Wertlieb: OK, so, what happens next?
Lola Duffort: Today a key House committee voted unanimously to advance this proposal. It still has to go to the full House, and then the Senate. It’s possible that lawmakers quickly achieve consensus and this is all done in a couple weeks. But it’s possible that the Senate could make big changes. And this could all blow up before it even passes the House. So stay tuned!
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