[T]he Senate Finance Committee on Tuesday approved an education governance reform bill after tweaking statewide property tax rates from the House-passed version.
The bill was approved 6-0-1, with one lawmaker, Sen. Richard Westman, R-Lamoille, absent. The measure, H.361, now goes to Senate Appropriations, then to the Senate floor.
The Senate version adds 2 cents to the homestead property tax rate that passed the House — from 98 cents per $100 of assessed property value to $1.
Income-based taxpayers would see a smaller increase than that contained in the House bill. The Senate lowered the amount from 1.94 percent (in the House version) to 1.82 percent for those who pay based on household income. The current rate is 1.8 percent.
The tax rates passed out of Senate Finance on Tuesday also bump up the non-residential property tax rate from the House-passed $1.51.5 to $1.53.5 per $100 of assessed value.
The changes to the House-passed tax rates were proposed by Sen. Mark MacDonald, D-Orange. He said the rate would level out the impact across taxpayer groups.
MacDonald argued that the House-passed rates of 98 cents for the base homestead rate and $1.51.5 for non-residential properties were based on sales tax revenue from legislation that has not yet passed the Senate. He said the Senate rates could go down one penny each, if projections for sales tax revenue play out.
On a whiteboard in the Senate Finance Committee room, MacDonald showed that the House-passed version of the bill would have seen the tax rate for income-based payers increase by 7.8 percent this year, while the tax rate for those who pay based on property value called for no increase.
Sen. Tim Ashe, D/P-Chittenden, chair of the Senate Finance Committee, said he would support the tax rate plan only if the committee considers setting an asset limit for people who receive income sensitivity on their property taxes.
Ashe believes people who are asset-rich should not be receiving the tax break. He agreed to the tax rates laid out in Tuesday’s amendment if that issue could be taken up separately on Wednesday.
In a motion on the tax rates taken before the full bill was voted out, Sen. Kevin Mullin, R-Rutland, voted against the tax rates, but he later voted in favor of H.361 as amended. He suggested that the tax rate be lowered a penny and said if the committee went to the full Senate with a base homestead property tax rate of 99 cents, it would find more support.
The House and Senate bills both look to address declining student enrollment amid rising education spending and lay out a series of carrots and sticks, including grants and tax breaks, and the phase-outs of the hold harmless provision and small schools grants to spur school districts to come together into larger school systems.
Several other amendments were also considered Tuesday.
The committee added an extension of one year for the phase-out of the hold-harmless provision for districts that are engaged in merger studies. This provision has protected districts that are losing pupils, insulating their tax rates, but is set to phase out.
That change came from testimony last week from residents in the town of Westford who sought more time for schools like theirs that will be affected by the change.
MacDonald made a motion to restore small schools grants, which are set to phase out except for geographically isolated schools, striking that section from the Senate Education Committee bill. The motion failed.
Another amendment passed by Senate Finance calls for training and work to help build leadership in school districts where there have been concerns about “chronic leadership challenges.”
The bill contains up to $50,000 to identify specific problems that limit the successful outcomes for leadership and lead to recommendations for leadership improvement.
Another amendment would require that the Agency of Education ensure districts that are economically disadvantaged are not clustered into larger, segregated systems.
Sen. Claire Ayer, D-Addison, proposed an amendment to ensure that the school governance bill does not end up causing mergers that “become a hub of poverty.” She suggested that guiding the changes more thoughtfully will help avoid socioeconomic segregation.
“This bill is about trying to provide incentives or, in some cases, some coercive action to get districts to behave differently than they do today,” Ashe said during the two days of testimony on the bill.
“The bill is voluntary, there’s nothing here that coerces, necessarily; there is nothing that requires mergers — there are incentives to encourage mergers,” Lyons said.
In the Senate version, the secretary of education will propose a plan to the State Board of Education by 2018 for the possible restructuring of districts that have not moved and do not meet state standards.
The state board would then seek that action be considered by the Legislature.
