House Democrats will make property tax reform a top priority this legislative session.
Members of the Democratic caucus vowed at a press conference on Wednesday to address the property tax burden on Vermonters. A group of 15 lawmakers made the declaration at the Statehouse in the wake of constituent blowback. Democrats on the campaign trail have heard from a number of Vermonters who are distraught about large increases in property taxes in their districts. The statewide tax rate for homestead property taxpayers has gone up 9 cents over fiscal years 2014 and 2015; the rate has increased 13.5 cents per $100 of assessed property value for non-residential property taxpayers over the same two year period. In some towns, taxes are due on Nov. 1, and consequently, for many voters, the spike in spending is top of mind.
Rep. Sarah Copeland-Hanzas, D-Bradford, led the half-hour meeting with reporters.
“We’re hearing loud and clear on the campaign trail our neighbors’ frustration with increasing property taxes,” Copeland-Hanzas said. “People feel helpless and powerless to keep up with the burden of property taxes. And we’re long past the age when the value of somebody’s property was an accurate measure of their ability to pay.”
Copeland-Hanzas said the caucus is committed to reforming the property tax system in 2015 and that reform will include an income tax component. “It’s time to craft an education finance reform bill that is less reliant on the property tax,” she said.
Rep. Dan Connor, D-Fairfield, said middle class constituents in his district who make a little more than $90,000 a year are paying 7 percent to 10 percent of their income on property taxes. “That’s a big chunk of money,” Connor said.
“The $90,000 income mark also is a point where families are no longer eligible for financial education assistance, and, in some cases, health care premium credits,” Connor said. “These Vermonters know the education system is broken. Taxpayers have reached their limit.”
The Dems repeatedly said they would have a “conversation” in January about a variety of proposals to address school spending and the financing formula. None of the plans, some of which have been floated in the past and have been shot down, were addressed in the press conference. Members of the House Ways and Means Committee, which has jurisdiction over tax changes, were not present at the press conference.
The reps also talked about addressing state spending on education, which has continued to increase while student enrollments have declined by 20 percent over the last 15 years. The average staff to student ratio is 1 to 4.75, the lowest ratio in the nation.
Vermont has a unique statewide property tax system, which was created in response to the Vermont Supreme Court’s Brigham decision 18 years ago. The ruling required the state to implement a formula that gives children, through their towns’ school districts, equal access to school funds.
Rep. Maxine Grad, D-Moretown, says lawmakers cannot hide behind the Brigham decision. She believes the Legislature needs to listen to constituents and see if “we can do things differently.” There may be other ways to interpret the court’s mandate, Grad says.
Bending the cost curve has been a sticky wicket in past legislative sessions. Previous attempts to set thresholds for staff to student ratios have failed. The House passed a bill in the waning days of the last session that would have pushed school districts toward consolidating supervisory union districts last year. The measure failed in the Senate.
House Republicans, who have long opposed Act 60, have been calling for property tax reform for years. Their proposals have centered on the repeal of the state’s equalized funding system.
Rep. Don Turner, House minority leader, said in a statement that Democrats “have repeatedly blocked common sense Republican led proposals that would have started the conversation on education funding reform and property tax reduction.
“Now — with less than three weeks until the election — the status quo Democrat supermajority today held a press conference in a desperate attempt to convince Vermonters that this time will be different than all the other times they have promised Vermonters action and failed again,” he wrote.
Copeland-Hanzas rejects the idea that the GOP has offered viable proposals.
“If someone is saying here, I have the solution, here you go, they’re probably selling snake oil,” she said. “We have a very complicated education funding system where decisions on what to spend are made in one place and decisions on how to raise the money and what a base level quality education looks like are made in another place.”
The complexity of the system hinges on a disconnect between school spending decisions made on the local level and the distribution of statewide property tax revenues under the Act 60 formula for K-12 public education in Vermont. In addition, the Legislature has allowed other education constituency groups to siphon money from the Education Fund. Pre-kindergarten programs, adult basic education, dual enrollment programs for college-bound high school seniors, corrections education and contributions for retiree health care are all now coming out of the Ed Fund.
Steve Jeffrey, executive director of the Vermont League of Cities and Towns, says that when it comes down to it “the voters don’t have much of an opportunity to control the costs if all of the expenditures in the Ed Fund are mandated by legislative action.” The complexity of the Act 60 system comes at the expense of the simplicity and transparency voters need to understand the impact of their decisions, he said in an interview.
“It’s not just the voters who decide what the property tax bill is anymore, it is the Legislature and the governor and all the state actors as well,” Jeffrey said. “Act 60 is so complicated that few taxpayers make the linkage between their spending decisions and frankly the spending of the Legislature and their property tax bill.
“One of the goals of reforming the funding system should be to improve the transparency so that taxpayers when they go to vote on March town meeting can understand that if they vote to spend more their property taxes are going to go up. That’s an important thing in a democracy.”
Jeffrey says the press conference was an indication that a critical mass of Democrats realize something must be done. “Without that rising tide of sentiment nothing can happen because it is so complex,” Jeffrey said.
In an interview, House Speaker Shap Smith, D-Morristown, said he is also seeing a shift in public sentiment. More members of the caucus and his own constituents, he says, are interested in considering “issues that were formerly off the table before,” such as school consolidation and supervisory union district consolidation.
Smith wants to take another look at long term cost trends now that there appears to be more public support for taking on the school spending conundrum. He also supports bringing down the residential property tax rate and including the income tax as a source of revenue for the Education Fund.
The Vermont Legislature is also expected to take up health care reform this legislative session. Can lawmakers take on two large tax policy changes simultaneously? Copeland-Hanzas seems to think so.
“We all hear equally when we knock on doors that folks are stressed about how they are going to pay their health care bills and also stressed about how they’re going to pay prop tax bills,” she said. “I don’t think you could say either one of these is more important than the other. It just so happened that the move toward single payer is a proposal that will be coming to us from a lot of bright people who are working in the governor’s office so to the extent that we don’t have to work on that until we are presented with a plan, we can be working on that right now to be doing some of the hard work that needs to be done to find a solution to our education funding system that is overreliant on property taxes.”
Editor’s note: This story was updated at 6:22 a.m. Oct. 16.
CORRECTION: The Brigham decision was mischaracterized in the original version of this story. The Brigham ruling required the state to put in place a formula that gives children, through their towns’ school districts, equal access to school funds. It did not require the state to provide children with equal access to an adequate education.
