The Shumlin administration has recommended a 2 cent increase in the statewide property tax rates for residential and commercial property for fiscal year 2016.
The increase would bring the base homestead rate to $1 and the commercial rate to $1.535 per $100 of assessed value. Both rates are adjusted by local school spending levels.
Last year, property tax rates increased by 4.5 cents for homestead and 7 cents for nonresidential real estate. The previous year rates went up by 5 cents for both residential and commercial property. A penny on the statewide tax rate raises about $11 million.
The Vermont Agency of Education projects that school spending will increase by 3.09 percent in the coming year. The grand list, or the total value of the state’s real estate, is expected to increase by 0.3 percent, according the the Vermont Department of Taxes.
School spending has continued to increase despite a dramatic 20 percent drop in student enrollments over the past 15 years. This year the total number of public school students enrollments for K-12 public school employees will dip below 80,000, according to the agency. School spending rose by 3 percent in fiscal year 2013 and 5 percent in 2014. The base amount of spending per pupil supported by the tax rate this year would be $9,459.
In a letter to legislative leaders, Gov. Peter Shumlin wrote that the current growth of education spending is unsustainable.
“Shifting more education spending to other sources will not address the burden Vermonters feel,” Shumlin said in a statement. “We need to tackle this first as a spending challenge because education costs have continued to rise faster than Vermonters’ ability to pay for it, even though our student count has declined.”
Vermont spent $19,752 per student in the 2013-2014 school year and had the highest per pupil spending rate in the nation, according to the National Education Association. The state’s average student to teacher ratio is now 7.5 to 1, the Agency of Education estimates. A few years ago, the average ratio was 11 to 1. Staffing ratios are 4.75 to 1. If the ratio increased to 5.5 to 1 the state could save $75 million a year, officials have said.
Pundits speculate that Shumlin, who has been the sitting Democratic governor for two terms, nearly lost the last election last month in part because of the sticker shock voters experienced Nov. 1, when many property tax bills came due.
Education finance reform is a political lightning rod, and the governor remains careful about how he talks about education finance reform. In brief remarks on Monday, he continued to employ the same rhetoric he used before the election.
“There is no silver bullet that’s going to solve our property tax challenge but what it will take is lots of good ideas that we bring together to help reduce spending while we improve quality outcomes for our children,” Shumlin said.
Instead of tackling the issue head on with a plan “from Montpelier,” the governor has asked Rebecca Holcombe, the secretary of the Agency of Education, to go on a road tour of school districts across the state. The agency has identified schools that are facing financial difficulties, and Holcombe has been providing school districts with data sets to help school board members and superintendents understand the impact declining enrollments have had and will continue to have on tax rates in rural areas.
Holcombe told reporters at the press conference that in some cases she is recommending school mergers in places that have depopulated. She is also helping schools manage staff to student ratios.
“The fiscal stresses schools are experiencing is beginning to affect the quality of the care of our children,” Holcombe told reporters.
“What we all need to understand … is the status quo isn’t an option right now,” she continued. “What we need to do is work with Vermonters and figure out better ways to do education.”
The press conference sidestepped a subject officials were anxious not talk about: reducing the number of staff in schools statewide. Staff expenses represent about 80 percent of school costs. When reporter lobbed questions about minimum staff or teacher ratios, the governor said he wouldn’t dictate thresholds from Montpelier.
The Vermont-NEA issued a statement after the press conference emphasizing that Vermont’s unique statewide property tax system is “the fairest in the country.” The union represents about 10,000 teachers out of a total of 18,400 school staff in the state.
Martha Allen, the president of the union, said teachers remain ready to help local communities and elected officials make the system “even fairer.”
“As we embark on our annual discussion of how to keep Vermont’s schools among the top five in the nation, we cannot lose sight of the fact that what’s most important is doing what is right for our children,” she said in a statement. “And we must take care not to destroy what we’ve, together with local communities, built over the decades.”
Last Wednesday, the agency delayed implementation of Act 166, which will make pre-K programs mandatory in school districts across the state. The program will now go into effect in the 2016-2017 school year. Shumlin said the delay would result in marginal savings for taxpayers, but he wouldn’t cite an amount. Eighty percent of Vermont schools already offer 10-hour per week pre-school programs for roughly 6,000 children. Previous estimates show that by 2021, the program will cost $10 million per year.
The Education Fund is supported by the statewide property tax, a transfer from the General Fund, lottery proceeds, 35 percent of the sales and use tax and 30 percent of the purchase and use taxes on vehicles. In fiscal year 2014, 30 percent of General Fund revenues were transferred to the Education Fund.
The state faces a $100 million General Fund budget gap in fiscal year 2016.
Editor’s note: This story was updated at 6 a.m., 6:24 a.m., 7:19 a.m. and 7:58 a.m. on Dec. 2.
