VERMONT – (This commentary is by a group of former Vermont lawmakers. Their names are listed below the text.)
More than 50 years ago, Vermont recognized the hardship faced by homeowners whose property taxes were rising faster than their ability to pay them. Since then, state fiscal policy has moved, in fits and starts, toward a system where school taxes are based on Vermonters’ income, the best measure of their ability to pay.
We, former Vermont legislators, urge you not to abandon a half-century of progress. Instead, we hope you will fulfill the promise of Act 60, which we helped pass in 1997, and ask Vermont homeowners with the most income to contribute their fair share to the cost of education by paying based on income.
Vermont’s education funding system is committed both to fair taxation and local decision making, and we can strengthen both of those. Instead, H.454, the education reform bill that recently passed the Vermont House of Representatives, weakens them.
Income-based school taxes ease pressure on homeowners with modest earnings that don’t keep pace with rising real estate prices and property taxes. For high-earning homeowners, income is a more accurate reflection of their means than a single piece of property, so taxes based on income are critical to fair school funding for all.
H.454 as passed by the Vermont House takes the state in the opposite direction. The bill would repeal the law’s current provision allowing residents to pay some or all of their school taxes based on their income, which 70% of Vermont homeowners do. Instead, H.454 recommits the state to regressive property taxes that hit low- and middle income residents the hardest.
To temper the negative impacts of the property tax for those with incomes of $115,000 or less, the plan puts in place homestead exemptions, which provide relief for some but still rely on property taxes. Lawmakers have considered homestead exemptions over the last
50 years and repeatedly rejected them as too complicated and failing to achieve the fairness of income-based taxes.
H.454 does nothing to address the unfair tax break in the current funding system. Many of Vermont’s wealthiest homeowners pay school taxes on their property that are less than their income-based taxes would be. H.454 allows these homeowners to continue to pay property taxes instead of asking them to pay the same share of their income to support education as average Vermonters pay.
H.454 also brings back a foundation formula: state-determined and state-funded grants that can be supplemented by local school districts which Vermont tried before the state supreme court declared it unconstitutional in 1997. The constitutional problems can be overcome, and H.454 attempts to do so. But this, too, is something the Legislature tried decades ago and found unworkable because it was overly complicated and made tax rates unpredictable from year to year.
None of the sweeping changes in H.454, the associated risks, nor the hassles to school districts are necessary. The sharp increase in taxes last year was due in large part to costs outside of school districts’ control and also to legislative missteps in the previous two years.
And while the governor likes to say the message from the election was that schools are spending too much, that’s not the case. School spending in Vermont as a percentage of the state’s economy has been a stable 5.5% to 6% fordecades.
Unfair taxes anger taxpayers and alienate them from participation in decision-making about their schools, and that hurts students, teachers and communities. H.454 does not solve these problems. Rather, in reaching for elusive “efficiencies,” with promises of better education, the bill doubles down on school consolidation, which many Vermonters have rejected; that will alienate more citizens by taking budgetary decision-making out of communities’ hands.
There are immediate, affordable changes to the existing law that would make the system fairer for the Vermonters hurt last year. Instead of rushing to new and unproven or old, proven-unworkable financing mechanisms and an unprecedented move away from local control, the Legislature should adopt those changes.
We are proud that for 30 years Vermont has had the most equitable school financing system in the country, supporting schools that produce some of the highest test scores in the country. Not incidentally, our schools hold together many of the small rural communities that make Vermont an enviable place to live.
H.454 risks destroying much of this. Vermont deserves better.
Former Rep. Elaine Alfano, Former Sen. Susan Bartlett
Former Rep. Paul Cillo, Former Rep. David Deen
Former Sen. Matt Dunne, Former Rep. John Freidin
Former Rep. Martha Heath, Former Sen. Cheryl Hooker
Former Rep. Carolyn Kehler, Former Rep. Karen Lafayette
Former Rep. Gini Milkey, Former Rep. Donny Osman
Former Rep. Ed Paquin, Former Rep. Ann Seibert
Former Rep. Mary Sullivan, Former Rep. John Tracy
Former Rep. Michael Vinton, Former Rep. Mark Woodward
Former Lt. Governor David Zuckerman
Paul Cillo is a former state representative who served the Hardwick Area and was the executive director of the Public Assets Institute until he stepped down at the end of 2022.
This commentary first appeared in VTDigger, May 12.
