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.
