A key committee in the Vermont House has unveiled a plan to slash 2 cents from the statewide property tax rate. And the proposal includes some of the staunchest efforts yet by Democrats to curb spending on public education.
As things stand now, the statewide property tax rate is headed for a 7-cent increase next year – the highest single jump in the history of the modern education funding system. But lawmakers look poised to intervene. And on Wednesday, the House Committee on Ways and Means unveiled a bill that would cut 2 cents from the tax rate.
“I mean, Vermonters are concerned about their pocketbooks, and the increased tax rate really puts pressure on their pocketbooks and we’d like to see if we can reduce that pressure,” House Speaker Shap Smith said Wendesday.
As things stand now, the statewide property tax rate is headed for a 7-cent increase next year - the highest single jump in the history of the modern education funding system. But lawmakers look poised to intervene.
The defeat last week of nearly three dozen school budgets across Vermont has ramped up pressure on both lawmakers and the Shumlin administration to do something about tax rates. But the push is also on to clamp down on school spending.
And the legislation in the House is as much about depressing the rate of growth in future school budgets as it is about providing tax relief now.
"To the extent that we can address the increased spending by changing people’s behavior through adjustments to, say, the excess spending penalty," Smith says, "I think that that makes sense, so that people are even more sensitive to how much they’re spending at the budget level."
The annual bill setting the statewide property tax rate is generally a standalone piece of legislation. But lawmakers have added to it a slew of provisions this time around in what they say is an effort to ensure debate over measures that would compel local school districts to rein in spending.
Changes to the excess spending penalty represent perhaps the most dramatic provision in the House proposal. The legislation would establish financial penalties for school districts whose per-pupil spending increases faster than the rate of inflation. In districts where per-pupil spending is below the statewide average, schools would get an extra percentage point before they entered penalty territory.
Changes to the excess spending penalty represent perhaps the most dramatic provision in the House proposal. The legislation would establish financial penalties for school districts whose per-pupil spending increases faster than the rate of inflation.
“We spend plenty of money per pupil in our schools system for our K-through-12 education," says Rep. David Sharpe, ranking Democrat on the House Committee on Ways and Means. "And what we’re trying to do here in the Statehouse is put downward pressure on that by requiring schools who exceed spending over the inflation index to pay a little bit more in taxes.”
At schools with declining enrollments, the new provision means districts might have to actually decrease overall spending in order to avoid being penalized financially. But Sharpe says the state can’t continue to spend more money educating fewer students.
“We spend among the highest per pupil in the country,” Sharpe says. “We can, we should, we must deliver better education for no more money.”
The legislation contains a number of other controversial provisions, including the phasing out of the small schools grant, and the elimination of a clause that now insulates many schools against the negative financial impacts of dropping enrollment.
"We spend among the highest per pupil in the country. We can, we should, we must deliver better education for no more money." - Rep. David Sharpe, ranking Democrat on the House Committee on Ways and Means
The bill would also mean changes for income sensitivity, and would increase the tax burdens of households making between $47,000 and about $100,000 per year. Lawmakers would use the money to buy down the property tax bills of households making in excess of more than about $100,000.
Progressives and many Democrats have pushed back against this idea, saying it amounts to a tax increase on the middle-income Vermonters whose incomes have remained largely stagnant over the past decade.
But the tax obligations of non-income-sensitized residents have increased at a much higher rate in recent years than those of homeowners that qualify for the program. And Smith says he thinks the rates of people getting income sensitivity need to start better reflecting the overall increase in education spending.
“At this point in time, it looks like the income sensitivity rate should be adjusted upwards to reflect that there is also an adjustment upwards in residential and non-residential rates,” Smith says.
Lawmakers say they'll likely have to tap a reserve fund in order to reduce the statewide property tax rate by 2 cents. School boards, the teachers union and superintendents will weigh in on the plan in the coming days.
The bill would also reduce the size of the tax rebate for which renters are eligible.
Lawmakers say they’ll likely have to tap a reserve fund in order to reduce the statewide property tax rate by 2 cents. School boards, the teachers union and superintendents will weigh in on the plan in the coming days.
Steve Dale, executive director of the Vermont School Boards’ Association, said he’s glad to see the committee omit from its proposal a provision that would have imposed penalties on districts that exceed certain staff-to-student ratios. But he said the cumulative impact of the provisions in the bill could have a detrimental impact on some districts, especially some of the smaller ones.
