[T]he education fund gap is much higher than originally projected, legislative analysts say.
The gap, which had been reported by the Scott administration to be $40 million, is actually $58.2 million. That’s because special education spending is higher than anticipated, and the governor, in his public statements, hasn’t take into account funding needed to fill statutorily required reserves.
The state treasurer’s office has said that if the state does not fill its education fund reserves at the 5 percent level, the state’s credit rating could be downgraded.
In order to cover the $58 million gap, the statewide property tax would need to go up by 7 cents, but Gov. Phil Scott has insisted on keeping the tax rate level.
Originally, Scott said the difference should be borne by local schools, which had already kept school spending increases per pupil to a mere 0.8 percent in voter passed budgets on Town Meeting Day.
Then the governor switched tack last week and said he would use a one-time source of money to fill the gap — effectively punting an ongoing structural deficit to next year.
Level funding for several years would significantly increase the deficit, according to an analysis by the Joint Fiscal Office, the Legislature’s research arm. In 2020, the deficit would grow to $120 million. By year five, the gap would be $230 million.
The new analysis by the Joint Fiscal Office was requested by Senate President Pro Tem Tim Ashe, who has been skeptical of the Scott administration’s strategy for use of one-time money to level fund the gap.
“Is there a magical source for this one-time money? No one has said there is one,” Ashe said in an interview.
Ashe says use of a little one-time money to get through to next year “could certainly be part of a compromise,” but using $58 million in funds would be unprecedented and would “fundamentally change the way we fund our schools.”
Districts kept spending down this year, cost containment measures in law are paying dividends, more structural changes are being proposed and the state has a growing grand list, Ashe said.
“We have all sorts of trends moving in the right direction, so now the question is: To fulfill a one year campaign pledge, do you make destructive decisions?” Ashe said.
The governor’s office, meanwhile has not identified the source of the one-time funds and has been playing a game of cat and mouse with lawmakers on the subject.
Instead, Rebecca Kelley, spokesperson for the governor, blamed lawmakers for the gap and said if the Legislature had “supported the governor’s proposal for a statewide health benefit last year, this gap would be cut in half.”
“With the Legislature abdicating any responsibility to offer a plan to prevent a statewide education tax increase on Vermonters or pursue any of the ideas we presented in January, we’ll be presenting a package to them that will close the gap and identifies the needed funding sources,” Kelley said.
Kelley declined to say just when that might be.
On Wednesday, Adam Greshin, commissioner of the Department of Finance and Management, was supposed to tell the House Ways and Means Committee where the money was coming from, but he was a no-show. As was his fill-in, Kaj Samsom, the tax commissioner.
Janet Ancel, chair of the House Ways and Means Committee, told colleagues on the panel that she is frustrated with the governor’s office. “If we’re going to make big changes in how we finance education and it affects tax rates, this committee ought to know sooner rather than later, so that’s a little bit of a frustration out there,” Ancel said.
Meanwhile, Scott has threatened to veto budget and tax bills unless the Legislature reduces education spending. Legislative leaders in the House and Senate say the governor’s office has refused to work with lawmakers to develop concrete plans over the course of the session for lowering school costs. Instead, the Scott administration has floated a series of unvetted proposals, including a plan pitched Tuesday that would increase staff-to-student ratios from the statewide average of 1 to 4 to an average of 1 to 5.
House Speaker Mitzi Johnson has criticized the governor’s one-time funding plan. Johnson says now’s the time for Scott to find a solution with lawmakers — before the session ends.
“Before the administration starts throwing its hands up in the air and says I guess we’ll have a veto session — we still have a few weeks, this is the time,” Johnson said. “It’s the administration’s job to come to the table and be problem solvers with us. I think it’s a waste of taxpayer resources to sit back and wait and veto and then say, now I’ll engage.
“It’s what every governor has done before him is to come to the table and come to a solution before we get to a veto,” Johnson said.
Johnson said the House has worked “extensively to reduce costs,” citing their commitment to school district consolidation under Act 46, a legislative plan to restructure special education and an overhaul of the education tax formula that taps income taxes, lowers property taxes by 10 percent and penalizes districts that spend over a per pupil threshold.
Editor’s note: Reporter Mike Polhamus contributed to this report.
