Many local school boards across the state are facing a dilemma this Town Meeting Day.
The difficulty that many school boards find themselves in is that while their budgets are rising, on average, by about 3 percent, a much higher property tax increase is needed to support these budgets.
The City of Montpelier is a good example of this situation. The proposed budget in Montpelier calls for a 2.3 percent increase in overall spending but it will take a 13 percent increase in property taxes to support this budget largely because of state education tax policies.
Steve Dale is the director of the Vermont School Boards Association. He says this situation puts many school boards in a very tough spot.
"It is very difficult for citizens to understand why that could possibly be happening." Vt School Boards Director Steve Dale on the difference between the small rise in school budgets and the big increase in property taxes
“It’s very difficult for citizens to understand why that could possibly be happening,” said Dale. “Even with the reduction in budgets or a level funding of budgets tax rates will be going up.”
What accounts for the difference in the budget increase and the tax increase? The biggest factor is the statewide property tax rate which is a major component of local property tax bills.
Mary Peterson is the state’s Tax Commissioner. She points out that the statewide rate is based on a community’s per pupil spending amount.
In Montpelier, the school enrollment is declining. So while the proposed budget is increasing 2.3 percent, per pupil spending is increasing just over 6 percent. Peterson says this is a key reason why the statewide property tax rate is rising higher than local spending.
“So you might actually have a flat budget in a district but if they’ve lost students that means that their per pupil spending has gone up and that’s what the rate is going to be keyed off of,” said Peterson.
There’s another factor. The state relies on several broad based taxes to help support the Education Fund. Peterson says revenue from these sources has not kept pace with the growth in spending. So she says the statewide property tax rate has to make up the difference.
“So that’s partly what’s being seen, part of those increases are supposed to be picked up through homeowners rates going up that was considered when they designed Act 60,” said Peterson. “That people should pay part of the increase of their budget decisions.”
Vermont School Board director Dale is hoping that voters, who might be unhappy with the state’s current funding system, don’t take it out on local school budgets.
“Because it will have a direct negative impact on students,” said Dale. “That it would be far better to engage legislators and others in the discussion about what needs to change at the state level rather than conveying that message through the vote next Tuesday.”
It’s unclear if lawmakers will try to make significant changes to the current funding system during the second half of the session. However, if a large number of school budgets are defeated, it’s likely that the issue will debated in the coming weeks.
