This opinion piece is by Neale F. Lunderville, the Secretary of Administration for the State of Vermont.
On Town Meeting Day, many voters will be confounded by a riddle on their school budget ballot: how is it that we cut school spending, but our property tax bill went up anyway?
The answer is buried deep within the labyrinth of Act 60 and Act 68, the complex and impenetrable school funding laws that still confuse taxpayers many years after their enactment. This system – which Governor Douglas has called “fundamentally broken and beyond repair” – threatens another year with higher property taxes at a time when families and small businesses can least afford them. And it only gets worse as the problem compounds in years to come.
Since the passage of Act 60, school spending has grown dramatically with the true cost to taxpayers masked by a surging housing market and expanding subsidies. As home values climbed, lawmakers and school boards could lower the property tax rate and still collect more than enough for schools.
Budgets ballooned as schools hired more teachers and staff – even as the number of students declined. Since 1997, the number of students in Vermont’s schools has dropped by 11.5%, yet the number of school staff increased by 23%. Looking at it another way, for every 3.4 students we lost from the classroom, schools hired an additional teacher or staff person. At this rate, how long will it be until we have more staff than students?
Vermonters will pay $504.5 million more in property taxes next year than they did in 1999, an annual tax increase of 6.7%, easily double the rate of inflation.
As budgets went up, property taxes followed. Vermonters will pay $504.5 million more in property taxes next year than they did in 1999, an annual tax increase of 6.7%, easily double the rate of inflation. This was never sustainable.
Today, for all these reasons and others, property tax payers are facing something unseen since before Act 60: the statewide tax rate will go up by two cents. This means that taxpayers will be paying as much as $59 million more in property taxes next year than this year – a number that will continue to grow without meaningful reform and cost cutting starting right now.
This problem has been building on the horizon for years – with Governor Douglas repeatedly sounding the warning call. Since 2005, Douglas has offered annual proposals to the Legislature to lower property taxes by controlling spending. He proposed that school budget increases greater than inflation require 60% voter approval. He twice proposed to cap school spending growth at 3.5% per pupil and last year he proposed to level fund per pupil spending. Each of these proposals was either rejected or passed over.
Further, the Governor aggressively opposed education spending increases, including legislative initiatives to expand property tax subsidies to upper income households and elimination of caps on special education spending. Unfortunately, the Governor’s calls for restraint were ignored.
In January, Governor Douglas offered another series of ambitious education reforms to reduce school spending, realign education expenses and reform Act 60. He proposed normalizing school staffing ratios to more responsible levels, increasing cost sharing for teacher health insurance to 20%, and encouraging school district consolidation. He also proposed making teachers’ retirement an education expense (instead of competing with human services funding) and progressively graduating tax subsidies for taxpayers with higher incomes to protect the entire subsidy for lower income Vermonters.
Without these reforms, property tax payers will see rates rise two cents. With the Governor’s proposal, everyone’s statewide rate will drop one cent – saving taxpayers $33 million.
Vermont’s school system is among the best funded in the nation. The Governor’s proposals will not change our good standing. We can give property tax payers a break and put education funding on solid financial footing without compromising our children’s educational opportunities.
In the halls of the State House, members of both parties are having conversations about possible reforms, and there is a growing understanding of the problem. But we cannot confuse understanding for action. Without action on meaningful reform, the sting of increasing property taxes will burn for years to come.
Our current crisis was avoidable. But if we act now – both locally and in Montpelier – we can fight back against its worst effects. Another year of inaction is not an acceptable option.
Our scores suck considering the pupil/teacher ratio. Hyde Park taxes, going way up but I bet everyting will pass, by the few. Hope I’m wrong.
Any number of self-ordained education and education finance experts, have commented recently about the ills of Act 60. Some of them are competent researchers and excellent writers. Some are also great at picking and chosing data to present their biased case. Blogs, newspapers and legislative halls have been filled with opinions, complaints, suggestions and even bills recommending varied changes to education funding in Vermont. However, few, if any in recent months and years, have taken a look back at what existed before Act 60. Their failure to that is troubling, at best.
Perhaps the best way to outline the conditions prior to Act 60 is to quote from Brigham. These two quotes describe the inequities that existed in that era:
“At the extremes, in fiscal year 1995 the Town of Eden spent $2979 per student, compared with the Town of Winhall, which spent $7726, or 160% more than Eden. [FN5] In December 1994, the top 5% of school districts spent from $5812 to $7803 per student, while the bottom 5% spent from $2720 to $3608. Thus, some school districts in Vermont commonly spend twice as much or more per student as other districts.”
“ In fiscal year 1995, for example, the Town of Richford’s property tax base was approximately $140,000 per student, second lowest in the state, and its average student expenditure was also among the lowest at $3743. By contrast, the Town of Peru enjoyed a tax base of approximately $2.2 million per student, and its per pupil expenditure was $6476. Of course, property wealth does not invariably correlate with student expenditures. Stannard’s property tax base in fiscal year 1995 was somewhat over $118,000 per student, compared with Sherburne’s of $2.5 million. Notwithstanding the vast disparity in property wealth, Stannard’s average expenditure per pupil, $5684, was nearly equal to Sherburne’s of $5731. Not surprisingly, however, there was a huge disparity in their effective tax rates: on an $85,000 home, the tax in Sherburne was $247; in Stannard, it was $2040. It is thus readily apparent, as the Department of Education has noted, “that spending per pupil … tends to be highest in resource rich districts who benefit further with low school tax rates … [while] [c]onversely, towns with limited resources spend less per student [and] pay higher tax rates.””
We can not have an intellegent discussion about the current school finance situation without acknowledging the grave inequities that existed in 1995. Anyone who wants to present a creditable change to education funding must also carefully explain how any changes to the current system or proposed new system will continue to constructively address the inequities of the past.
Mr. Launderville needs to carefully explain how the Douglas plan is going to prevent a return to a time when the haves can spend and the have nots can not. Without such clarity, any proposal is little more than verbal dribble.
Of course we need all Vermont children to have an excellent education. We also need an equitable way to pay for it. My property taxes are 16% of my income! I’m paying for bureaucracy not education-judging by the poor test results. I hope Heidi Scheuermann’s Education Proposal is seriously considered.
With respect, I don’t believe your assertion that you’re paying 16% of your income for property taxes.
If you make less than about $90,000, you don’t pay more than 2% – 3% for statewide education property taxes. It’s called income sensitivity and has been in effect for well over a decade.
Even if you add municipal (non-education) property taxes (which have nothing to do with Heidi Scheuerman’s bill), it could not possibly equal 16% of your income unless you own a home worth about $2 million or more.
You made a factual assertion and expect us to take it seriously. Personally, I can’t do that without more information.
“Mr. Launderville needs to carefully explain how the Douglas plan is going to prevent a return to a time when the haves can spend and the have nots can not”
Good points, George. I originally emigrated to Vermont from New Hampshire, where the property tax was the sole basis for educational spending. Rich towns had the gravy; poor towns had the dry biscuts. When I came to Vermont poor towns such as Claremont were suing the state over this. Act 60 was and is a milestone in an attempt to equalize each town’s access to education, despite its imperfections. Mr. Lunderville does not explain what will happen if we rescind the act. Perhaps that is what his boss wants — rich towns getting the gravy.
Mr. Lunderville also omitted how so much of these tax increases are going to ever-ballooning health care spending for the schools. Until we actually do something about health care we’re going to get nowhere on school spending.
After years of increasing propery tax giveaways, many Vermonters do not pay the full tax bill anymore. Between state payments, exemptions and current use, so many folks are “de-sensitized” from the real cost of goverment (including education) that it’s quite easy to vote for everything. The maximum state payment is $8,000. The only way to get that kind of subsidy is if you have a $50,000 income and live in an $800,000 house, as exposed in Jim Kenyon’s recent column in the Valley News…tax breaks for millionaires, paid for by a shrinking and struggling middle class and businesses.
“tax breaks for millionaires, paid for by a shrinking and struggling middle class and businesses.”
That’s been the republican goal ever since the dawn of their age when Ronald Reagan began the so-called Reagan Revolution. They’ve been remarkably successful at it too.