The Senate on Wednesday expedited its passage of a bill that would allow school boards to postpone their budget votes, while also repealing and replacing a controversial property tax rate increase cap.
Property taxes are projected to rise an average of 20% this year, driven by a nearly 15% expected increase in education spending.
Lawmakers called the “time-sensitive” bill, H.850, a “Band-Aid” in addressing property taxes. But in a spirited floor session Wednesday, many acknowledged the changes wouldn’t be enough.
Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, said the legislature would need to come up with “groundbreaking” new ways to contain public education costs this year.
H.850 would repeal the 5% homestead tax rate increase cap created by Act 127 — Vermont’s most recent education funding law — and replace it with a tax discount system limited to districts that lost taxing capacity under the new pupil weighting system created by the law. The bill also would allow school districts to alter their budgets as lawmakers hope removing the property tax cap would spur school boards to remove spending, thus lowering property taxes.
School district leaders say the spending increases are needed to maintain the status quo due to inflation, rising staff health care costs and teacher salaries, and the increased needs of Vermont’s children, an increasing number of whom are struggling with mental health challenges.
Compared to other U.S. states, Vermont ranks at or near the top in terms of public education spending per student and student-to-staff ratios.
Jason Maulucci, a spokesperson for Gov. Phil Scott, said in an email that Scott would review H.850 “as expeditiously as possible.” He called the bill “a very small step towards addressing the property tax crisis,” but said lawmakers had “ignored” the governor’s warnings and “rejected” his cost containment ideas.
Earlier this year, legislators grew concerned that Act 127’s tax increase cap was encouraging districts to add extra money to their budgets, calling it an “unintended consequence.”
It remains to be seen how much money districts might take out of their proposed budgets with H.850’s prompting. Lawmakers in both chambers have also signaled they will consider increasing revenue sources to the education fund, which would also reduce property taxes.
Future cost containment measures were actively discussed on Tuesday in the Senate Finance Committee, as Sen. Ann Cummings, D-Washington, and Sen. Thomas Chittenden, D-Chittenden Southeast, mulled ideas like capping spending or increasing the staff-to-student ratio in schools.
Senators on Wednesday homed in on the complexity of Vermont’s education finance system, which some suggested required systemic reform in order to simplify.
Sen. Randy Brock, R-Franklin, advocated for bringing back a tax commission that could study Vermont’s taxes as a whole, thinking about potential changes holistically rather than piecemeal.
He called Vermont’s current tax system “convoluted” and “difficult to understand,” noting that even senators struggle to explain the workings of education finance.
Like Brock, Sen. Russ Ingalls, R-Essex, the only vocal opponent to H.850, called for simplicity.
Act 127 “was really well thought out,” Ingalls said, yet the Legislature “failed so miserably” and “caused so much confusion” that it hadn’t anticipated.
“I can’t go home and tell everybody what we did, what we didn’t do,” Ingalls said, citing the opaqueness of the funding system. “I just think that we need to be better.”
