Editor’s note: This op-ed is by Allen Gilbert, executive director of the Vermont-ACLU and a member of the Vermont Journalism Trust board, which is the umbrella organization for VTDigger.org. The Vermont-ACLU represented Anne Galloway, editor of VTD, in a public records lawsuit lodged against the Town of Hartford.
Our former governor tried last year to punish school districts that didn’t cut their budgets. The legislature rejected the idea. The plan wouldn’t work the way it was supposed to, House members said. And, they noted, it violated the equity principle established in the Vermont Supreme Court’s 1997 Brigham decision. Well, this year the proposal has been resurrected and turned on its head. Rather than punishing “bad” towns, the House Ways and Means Committee has decided to reward “good” towns.
This proposal –Section 4 of H. 436, the annual miscellaneous tax bill — will be taken up by the full House this week. The proposal wasn’t a good idea last year, and it’s not a good idea this year. Below are the reasons why.
But first, you should know that there are some interesting politics swirling around H. 436, despite its seemingly innocuous title of “miscellaneous tax bill.” The politics have to do with an effort to get as many representatives as possible to buy into other proposals.
Sometimes, if you have to give a little to get more, compromises are made. And the “more” in this bill is much bigger than a school tax break.
There’s a provision that levies an .8-percent tax on health insurance claims, payable to the state’s “health care resources fund.” Another provision raises the tax levied on hospitals from 5.5 percent to 6 percent. Assessments on home health agencies and nursing homes are increased, too. Tobacco taxes are raised. Burlington’s “tax increment financing” agreement is fine-tuned.
Discussion around H. 436, therefore, will pop off the debate over this year’s signature issue, health care reform, if it hasn’t started already.
The school tax provision has a bit part in the total scheme of things. Nonetheless, there are good reasons to oppose the provision. We see four, and they are all rooted in equity:
1. A town spending $15,000 per pupil meets its spending reduction target by cutting its Russian language and swim programs. Under Section 4 of the bill, its school tax rate is reduced a penny. A town spending a third less — $10,000 per pupil — feels it just wouldn’t be right to cut a calculus course and reduce phys ed time to meet its spending reduction target. Even though the second town is spending far less per pupil than the first town, it doesn’t get a tax break. In fact, its tax rate is set marginally higher to cover the costs of the tax break given to the higher-spending town. This is not equity.
2. A punishment-and-rewards budget-cutting system ignores expenses the state has told schools must be covered — at all costs. The addition of two special needs students with severe disabilities can mean $400,000 in new budget expenses for a district. A punishment-and-rewards budget-cutting system also ignores additions of any students anywhere. A school can, in fact, cut its per-pupil spending costs and be running more efficiently because new students have moved into town — yet it may not be meeting budget reduction targets. School tax rates are directly related to spending per pupil, not to the size of a school’s budget.
3. The tax rate reduction is given to ALL towns in a supervisory union, regardless of whether each town’s schools met their target. As long as the SU collectively meets the Challenges for Change target for that SU, all towns get a break.
4. The $1 million in “rewards” that the miscellaneous tax bill offers may be seen as “inconsequential” given the size of the state’s overall education spending. But creating another “carve-out” by allowing an unequal draw on school funds trims another corner from the equitable school funding principle the state has followed for 15 years.
Here’s the bottom line: Our current school funding formula already has a built-in, equitable mechanism for rewarding efficient management of tax dollars. Tax rates go up when per-pupil spending rises. Tax rates go down when per-pupil spending falls. An inequitable second system is not needed.
Admittedly, crafting the annual miscellaneous tax bill is a difficult job. But this is one tax provision that is not sound policy.
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As usual I appreciate Allen Gilbert’s thinking and hope the Legislature follows his recommendation as they must understand the wisdom of his reasoning. I beg someone to give us as lucid an analysis of why a tax on Home Health Agencies and Nursing Homes is in any way equitable. I rather favored the tax on dentists if tied to “encouraging” them to treat Medicaid patients, since there is a serious shortage of dentists who do take Medicaid patients. There is also a shortage of dentists who contribute time to free clinics such as the Red Lion Dental Clinic in White River Jct., so apparently we need some incentives for dentists to care for the unisured and under-insured. So the debate on how to trim the sails on that “miscellaneous tax bill” should be attended by all of us.
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This whole concept of rewarding school districts that allegedly reached their ‘challenges for change’ goals doesn’t pass the straight face test. I know of at least one district that reached the goal simply because that district received an unanticipated bunch of money in the form of previous tuition over-payments. I’ve read of at least two others who reached the goal by virtue of reduced special ed expenses due to students leaving their systems. Others were reducing anyway with or without the “challenge”.
What happens when some or all of these districts have to increase their costs because of tuition underpayments, increased special ed enrollments or just plain increased enrollments? Are we going to un-reward them?
Yet one more foolish idea out of a state government determined to enact foolish educational ideas into law.
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I think Mr. Gilbert is right about the inequity of the school tax proposal. But I’d take the critique a step further and call the idea ineffective as well.
As I understand it, this would be a “tax expenditure” charged to the Education Fund. The cost to the Fund in revenue foregone would be justified only if it motivated school boards to cut their budgets by an even larger amount overall.
How many school boards would feel so motivated? One has to wonder.
Tax rates can swing wildly on the basis of events and calculations that are mostly if not entirely outside a school board’s control. In our town (Calais), for example, this year’s Common Level of Appraisal is pushing our tax rate up by 9.1 cents. A transitory fall in enrollment is pushing it up a further 5.9 cents.
We would welcome a one-cent break on our property taxes, of course, but against the backdrop of random market and demographic blips and dips that exert a much stronger influence on our tax rate, it’s a drop in the bucket. We’d get better results by urging our neighbors to sell their houses more cheaply or schedule their babies in a more orderly fashion.
I’m a big fan of the concept behind Acts 60/68, but I have to admit that the implementation is a Rube Goldberg monstrosity. Its saving grace is the income sensitivity program, which cancels out a lot (though not all) of the craziness.
My bottom line is more skeptical than Mr. Gilbert’s: our current school funding formula allows for huge disconnects between local school budgets and education taxes. Using tax rate reductions as incentives for budget cutting is a pointless and costly exercise.
The best thing we can do is elect good school board members who know what they’re doing and who build responsible, sustainable and realistic budgets to educate their towns’ children. With a healthy local democracy of this sort, we’ll get things mostly right.
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‘The best thing we can do is …’
That last paragraph above is so well said.
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The whole “changes for the challenged” was little more than a cute sound bite with no connection to reality. The problem was, and still is, that the Democratic leadership bought into the fraud. As usual Allen Gilbert hits the nail on the head. Let’s hope the legislature listens to his arguments.