State lawmakers on Monday overrode Gov. Phil Scott’s veto of the so-called "yield" bill, the annual property tax legislation necessary to pay for schools.
H.887 will result in an average property tax increase of 13.8%, and the ever-rising cost of education amid a time of declining enrollment once again dominated discussion at the Statehouse this year.
The vote to override was 103 to 42 in the House and 22 to 7 in the Senate. While a handful of Democrats in the House voted against the bill on Monday, votes otherwise fell along partisan lines, with the Republican minority in opposition.
Property taxes were initially projected to rise 18.5%, but three factors — new revenues, surplus funds, and lower school budgets — allowed lawmakers to whittle that down by nearly five percentage points. A separate legislative intervention, earlier in the session, which nixed a tax break that many believed to be partly driving spending, helped head off a worst-case scenario in which property taxes might have risen by more than 20%.
Democratic have sought for most of the legislative session to manage expectations about what they could do, frequently emphasizing that while they technically set property tax rates, local voters — not lawmakers — have the final say on school spending.
In a short floor speech, Rep. Emilie Kornheiser, the Brattleboro Democrat who helms the House’s tax-writing committee, celebrated what tax relief lawmakers did provide while acknowledging that circumstances remained far from ideal.
“We are in a difficult moment, a moment with no perfect path forward,” she said. “I want to live in a Vermont in a community that works for all of us. And unexpectedly high property taxes makes that hard for most of us.”
Scott, a Republican, has used the issue of spiking property taxes to hammer the Democrat-controlled Legislature throughout the session. But legislative leaders have argued that while the governor has enthusiastically used the bully pulpit to bemoan rising property tax bills, he has done little to offer a credible alternative.
The tax bill removes the sales tax exemption on software accessed remotely — like Turbotax — and enacts a 3% surcharge on short-term rentals, which will raise a combined $26 million in ongoing revenue for the education fund. But the legislation also uses just shy of $70 million in one-time surplus funds to buy down rates — an amount that concerns even some of the bill’s supporters, who worry this could set schools up for a fiscal cliff next year.
In a meeting with legislative leaders last week, top Scott administration officials proposed to more than double that sum by using an additional $89 million in one-time money to lower rates — including by zeroing out the education fund’s $47 million stabilization reserve.
Democrats argued that emptying the fund’s reserves would put Vermont in a precarious place in the event of an economic downturn — and would almost certainly further increase property taxes in the future, since the state would be required to replenish the fund’s reserves.
In a floor speech, House Minority Leader Pattie McCoy largely echoed Scott’s talking points, chiding Democrats for dragging their feet on structural reform. The tax bill creates a Commission on the Future of Public Education, which legislative leaders say is the first step toward a thoughtful overhaul. But McCoy said that lawmakers had asked for 38 studies on education since 2000 alone, and that this latest commission would simply result in “another study that will land on a dusty shelf somewhere.”
But while the Poultney Republican criticized her colleagues across the aisle for being unwilling to work with Scott, neither did she wholly embrace his ideas.
“Not all of the governor's suggested strategies need be used,” she said. “I know there is some angst about the education reserve fund and taking all of it. But we could have tweaked that — taken some of it and left some.”
In a statement after Monday’s vote, Senate President Pro Tem Phil Baruth called Scott’s proposals “fiscal non-starters,” adding that his ideas would have guaranteed “even more dramatic spikes in property tax rates going forward” and threatened Vermont’s credit rating.
"Not a single member of the Legislature would choose to raise property taxes if it could be avoided,” the Chittenden County Democrat continued. “But our local districts have sent us the bill that reflects all of the rising costs they face — and pretending that bill doesn't exist, or putting it on the credit card, won't help any of us.”
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