In hopes of reducing education spending, the Vermont House suspended its rules Wednesday to fast-track legislation that would amend the state’s education finance formula and enable school districts to postpone their budget votes until after Town Meeting Day.
Property taxes are forecast to increase by more than 20% this year – a figure deemed unacceptable by both the Legislature’s Democratic leaders and Republican Gov. Phil Scott. And while schools face a slew of intense inflationary pressures, lawmakers also believe a temporary tax cap written into law two years ago is a key factor driving up spending.
To mitigate the problem, lawmakers have scrambled to write legislation that would repeal that tax break and give school districts extra time to draft new spending plans.
St. Johnsbury Republican Rep. Scott Beck, who presented the bill on behalf of his colleagues on the tax-writing Ways and Means Committee, remarked at the start of his floor speech Wednesday afternoon just how “terribly unusual” the situation was.
“We understand – I understand – how difficult this will be for school boards and school districts and their voters,” he said. “It is a lot to ask volunteers that have spent a tremendous amount of time in what is normally a very difficult process, to make a change at this point. And we fully understand that.”
The legislation, H.850, would give schools until April 15 to reschedule their budget votes – should they choose to do so – and sets $500,000 aside to reimburse districts for related costs. It would also require town clerks to mail a new ballot to anyone that’s already requested an absentee ballot.
The bill passed out of the chamber on a voice vote and now heads to the Senate. The governor has already indicated support for the measure, although Scott also wants all voters to receive mail-in ballots if the vote is postponed.
The tax break repealed by H.850 was a provision of Act 127, a much larger education funding reform passed in 2022 that was intended to encourage schools to spend more on higher-need students. To advance that goal, the statute allowed districts with large numbers of students who were rural, low-income, or learning language to raise spending without seeing a commensurate hike in their tax rate. The cost of that, however, would be that more affluent districts would experience the opposite effect.
To ease in districts that would be disadvantaged by the law, Act 127 included a provision that capped property tax rate increases for homeowners during the first five years of the law’s implementation. But this year — the first year in which Act 127 came into effect — far more districts hit the cap than was expected. Because all school budgets are funded from the same statewide pot of money, high use of the cap has had a cascading effect — driving up taxes everywhere else.
Fiscal analysts for the legislature say it’s impossible to predict, at this point, what the financial impact of this new legislation will be, because it’s unknown how many districts will actually adjust their spending plans now that the cap is gone.
But with the cap in place, many school districts found themselves in a strange situation where they could add – or subtract – millions from their budget without seeing any change in their tax rate. H.850 replaces the cap with a much more targeted and less generous discount that’s intended to restore a cause-and-effect relationship between a district’s spending and its taxes.
Still, it’s no guarantee that spending will substantially decrease. Northfield Republican Rep. Anne Donahue told her colleagues on the floor she was reluctantly voting for the bill, which she called “a hope and a prayer.”
Lawmakers have made clear that their work is not done. Key Democrats have said they intend to find some additional revenue to help take the pressure off property taxes, although they have not yet coalesced around a source for this cash or the amount they’re ready to commit.
And legislators also say the moment calls for longer-term conversations about wholesale reform to the state’s preK-12 system. Schools face acute deferred maintenance needs, labor shortages, declining enrollments, and escalating costs, particularly around mental health and special education services.
In recent days, the bill was amended to add language stating that this tax rewrite is an “initial step in ensuring the opportunity to transform Vermont’s educational system.” The language is symbolic – but it nevertheless sends a strong signal about what lawmakers believe is their mandate going forward.
“We’re at a major inflection point, crisis point, crossroads – whatever we want to call it,” House Education Committee chair Rep. Peter Conlon, D-Cornwall, told his committee on Tuesday. “We need to do more than just this one year fix. We need to start having pretty broad conversations.”
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