Scott Beck: What a mess

This commentary is by Rep. Scott Beck, R-St. Johnsbury, a member of the Vermont House Ways & Means Committee. 

The annual discussion over Vermont’s Education Fund and wringing of hands over education property tax rates is an unprecedented mess this year, and that’s being kind. The Dec. 1 tax letter projects that unless school districts back down from increasing their education spending by $207 million (around $60 million is normal), the average property tax bill will go up by 18.5%. 

Voters will make the final determination of how much school districts spend. They always do.

Here is a laundry list of why such a large increase is expected this year: Universal school meals added $28 million, healthcare premiums went up by 16%, very high staffing ratios, inflation on everything else, student weighting changes, failure to fully implement special education reform from 2018, increase in pension costs of $10 million, collective bargaining agreements, the retention of school positions being funded by one-time Covid dollars, high capital construction costs, a cap on district rates that has encouraged spending, and consumption tax growth has returned to 2%.

And then there is the confusion of the common level of appraisal. Half of the districts benefit from CLA and half don’t. I’ve never spoken to anyone who knows which bucket they are in or why or how it impacts their tax rate. 

Recent public comments indicate that the Legislature will address property tax rates. It is important to understand that the Legislature has only four blunt tools at its disposal:

1. In the middle of school budgeting the rules could be changed.
2. A reserve fund could be tapped to provide one-time relief.
3. Spending could be cut from a non-education program and diverted to the Education Fund. 
4. Non-property taxes could be increased to reduce property taxes.

These are extraordinarily unpopular and dramatic ideas to consider. Of course, so is an 18.5% increase in property tax rates.

Some of what is occurring is not particular to the Education Fund, but much of it is. The following changes would finally fix Act 60/68 and cause the fund to perform as it was supposed to, and in a way that Vermonters could understand while strengthening local control and accountability:

1. More closely connect a district’s tax rate to its spending, as proposed by the House in 2018.
2. Normal pension costs should be paid by employers, not as a line-item in the Education Fund, also proposed by the House in 2018.
3. Eliminate CLA and instead move to the Massachusetts schedule of determining property value.
4. Reform the property tax bill to a property tax payment with an income-based credit received at tax filing. This is how every New England state administers an income-based property tax credit. An estimated income-based credit could be applied for in advance.
5. Modify or eliminate the Act 127 rate cap in Fiscal Year 2026. 
6. Eliminate the excess spending threshold and penalty.

This year’s mess is unprecedented, but Vermont would be foolish if it did not acknowledge that much of our problem is systemic. The Legislature should act decisively and provide Vermonters with an education funding system that is understandable, more closely connects a district’s spending decision with its tax rate without the use of penalties, and divorces the local tax rate from unpredictable local property valuations changes.