Republican Gov. Phil Scott wants to once again use state funds to reduce property taxes for Vermonters next year, but Democratic lawmakers are expressing skepticism about the plan.
The Scott administration told members of the House Appropriations Committee Tuesday that it wants to use nearly $75 million in surplus revenue to blunt the impact of a projected 12% average increase in property tax bills next year.
“The governor has been crystal clear that a 12% average increase in property taxes would be devastating, so he’s directed his finance team to find ways to stabilize the education fund,” said Adam Greshin, commissioner of the Department of Finance and Management.
Lawmakers and the governor learned earlier this month that several factors, including increased spending by schools, will likely result in yet another double-digit percent increase in property tax bills next year. Vermonters have seen their property taxes jump by an average of 40% over the past five years.
Greshin said the use of $75 million in one-time money would bring next year’s jump down to about 7%. He said the governor “might” propose ways to bring that figure down even further in his annual budget address next month.
“It would make a dent, but it would not make a big enough dent in our opinion,” Greshin said.
Some Democratic lawmakers, however, say the continued use of one-time funds for short-term tax relief is “unsustainable.”
"What I worry about is we’ve gotten so dependent on using one-time money that we’re just kicking the can down the road."Rep. Rebecca Holcombe
Middlebury Rep. Robin Scheu, the Democratic chair of the House Appropriations Committee, noted that lawmakers and Scott allocated nearly $120 million in general fund revenue to avert a 7% hike in property tax bills this year. That decision effectively delayed the impact of increased education costs from last year, and it’s responsible for about half of the projected spike in tax bills next year.
Scheu also said property taxes aren’t the only financial challenge facing Vermonters. Using the bulk of the revenue surplus to address a single problem, she said, limits resources that could otherwise shield residents from things such as the loss of federal health insurance subsidies.
“You know, education is really important, and I understand that it’s one of the governor’s key priorities,” Scheu said. “Health care should be too, in terms of cost, in terms of access, what it’s doing to the health of Vermonters.”
Greshin said the political climate surrounding the looming expiration of Affordable Care Act health insurance subsidies is “too fluid” to address right now.
“If you don’t like what you hear about health care, all you have to do is go to bed and wake up the next morning and the news will be different,” Greshin said.
Once the governor and his team have a fuller understanding of what, if anything, Congress will do to address health insurance costs, he said, “we will certainly respond to that.”
Norwich Rep. Rebecca Holcombe, a Democrat who formerly served as education secretary, said the use of one-time money diminishes the urgency to address the costs driving increased spending by schools.
“What I worry about is we’ve gotten so dependent on using one-time money that we’re just kicking the can down the road,” she said. “But no one’s really supporting or leading the really hard work we have to do in health care and in education to get ahead of some of these cost drivers.”
Greshin said the governor does have a plan to address spending. Act 73, signed by Scott in July, seeks to improve student equity and reduce costs by changing how Vermont pays for and governs its public schools.
“We would not be investing in the education fund if we did not expect to transform it so that we will no longer have to invest general fund dollars in the education fund,” he said.
But many lawmakers say they’ve lost faith in the promise of Act 73. And it’s unclear whether there are enough votes in the Legislature next year to move forward with the critical next phases of the law’s implementation.
