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Vermont Legislature
Follow VPR's statehouse coverage, featuring Pete Hirschfeld and Bob Kinzel in our Statehouse Bureau in Montpelier.

New Penalty Cap Could Reduce Property Tax Burdens

Although lawmakers didn’t pass a sweeping education governance bill this year, they did take some steps to try to control school spending in the future and some school officials think the proposal will help moderate the burden on property taxes in the next few years.

Tucked away in a massive tax bill is a provision that makes some important changes for towns that spend considerably more than the statewide per student average.

Here’s how the current system works.  If a school district spends more than 23 percent above the average, a major penalty kicks in. For every dollar the district spends above this cap, it has to send a dollar to the state.

But critics of this formula have noted that the cap is a moving target because if the statewide average increases 10 percent, then the penalty cap rises by the same amount.

"There are many school districts that at the start of the budget process calculate what that number is." Steve Dale, executive director of the Vermont School Boards Association, on why a lower penalty cap could influence school spending

Under the new plan, this year’s statewide average will be considered as the base amount and future increases will be tied to inflation not school spending, and in several years, the 23 percent excessive penalty threshold will drop down to 21 percent.

Bristol Rep. David Sharpe thinks this change will have a significant impact on school spending over the next few years.

“The hope is that this will suppress high spending in the state and slow down the average,” said Sharpe. “And bring spending under a little bit of control.”

And Sharpe thinks lowering the penalty spending cap will have other benefits as well.

“So that we bring closer together the amount of money spent by the low spending communities and the high spending communities on Vermont students,” said Sharpe.

Steve Dale is the executive director of the Vermont School Boards Association. He says the spending cap plays an important role in the budgeting process at the local level.

“There are many school districts that at the start of the budget process calculate what that number is,” said Dale. “And that becomes a very important target for them to stay below and I think for that reason very few districts have gone above it.”

But Dale is concerned that a lower penalty cap could force some schools to make very difficult budget decisions.

“The fear is that many school districts can respond to a hard threshold,” said Dale. “But they may do so at a cost that we would wish they wouldn’t incur in terms of the quality of education.”

Although the House and Senate could not agree on a school district consolidation bill this session, Dale says the debate has launched an important statewide discussion about this issue.

Bob Kinzel has been covering the Vermont Statehouse since 1981 — longer than any continuously serving member of the Legislature. With his wealth of institutional knowledge, he answers your questions on our series, "Ask Bob."
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