The state’s teachers union and two nonprofit groups are planning a push to eliminate Vermont’s most hated levy — the residential education property tax — in favor of shifting the school funding burden onto the income tax.
“We firmly believe that a family’s ability to pay needs to be of paramount concern when it comes to funding our schools,” said VT-NEA spokesperson Darren Allen.
The union, alongside the Montpelier-based think-tank Public Assets Institute and the nonprofit Voices for Vermont’s Children, are billing the proposal as something of a continuation to Act 60, the law that overhauled education funding twenty years ago.
“We’re a long way there already. Two-thirds of homeowners already pay some or all of their school taxes based on household income,” said Jack Hoffman, a senior analyst at Public Assets.
The three groups are calling the plan the “Fair Taxes for VT Kids” initiative. A website is already live, and Public Assets plans to put out a more detailed proposal in the fall on what the tax scheme would look like.
About a quarter of the state’s spending on education is paid through the residential property tax. In 2018, the levy raised $414.5 million for schools.
But it’s not the biggest contributor to the state’s education fund. That distinction goes to the non-residential property tax, which is levied on second homes and businesses; it kicked in $644.5 million this year. The non-residential tax would stay in place under the new initiative.
Whether Republican Gov. Phil Scott, who has made tamping down school spending his top education priority — with a particular focus on controlling property taxes — could be convinced to support the proposal is unclear.
Rebecca Kelley, his spokesperson, said Tuesday that any change in the education funding formula “must be done in conjunction with policy changes that will increase efficiency of the system to ensure we’re directing more of the dollars we spend toward our kids and educational opportunities, as well as helping make the system more sustainable and affordable for taxpayers.”
House Democrats proposed a similar – though more moderate – plan to shift some of the property tax’s burden for schools onto the income tax last session. The proposal met public resistance and petered out in committee.
House Ways and Means Chair Rep. Janet Ancel, D-Calais, said it’s highly likely the Legislature will pick up the topic of education funding again when it comes back in session this winter. But a complete elimination of the property tax would be “a pretty heavy lift,” she said.
“I would need to convinced that the value of your home shouldn’t be considered. I tend to think it’s relevant,” she said.
Senate Education Chair Phil Baruth, D-Chittenden, said he couldn’t comment directly on the Fair Taxes initiative, which he hadn’t seen, but that “in general I support using the property tax dramatically less or not at all to support schools.”
The current system, he said, “leads to a kind of demonization of education and teachers and school budgets in a way that you don’t see for other parts of the budget in Vermont.”
As for the proposal’s chances of picking up steam in the Senate, he said that would likely depend on outcomes in the November elections.
The property tax is generally considered to be a much more stable source of revenue than the income tax, said Senate Finance Chair Ann Cummings, D-Washington, adding that she’d be worried about hits to revenue for schools in times of economic turmoil.
“I think, provided we can find a way to cushion that volatility, it’s worth discussing,” she said of the Fair Taxes proposal.
“There’s interest in doing something different,” she said. “But unfortunately, as Rep. Ancel has said, the minute you try and make something fair, it becomes complicated.”
