Democratic lawmakers in Vermont
Because the effort is still a work in progress, it is hard to assess how well it achieves the intended goals. One thing that seems clear from news accounts, though, is that while it may be simpler than the current system, with its bewildering array of provisions such as income sensitivity, circuit breakers and Common Level of Appraisal, the contemplated replacement is not simple.
To wit: The homestead property tax rate would be cut almost in half, to an average of 82 cents per $100 of assessed value, and income sensitivity, which addresses ability to pay, would disappear. The property tax revenue would be replaced by a progressive school income tax, with fixed rates applying to income tiers above $47,000. The system would set a statewide threshold for per pupil spending — $12,253 for next year, an amount currently exceeded by virtually all school districts. According to VtDigger, every $56 spent above that base per-pupil amount would add an additional penny in local property tax rates. Thus, spending above the threshold would be more directly and more clearly reflected in local property tax rates than currently, which would serve as a needed cost containment measure, proponents say.
This might not be much easier to explain at annual school meeting than the current system, which was created by Act 60 and its successor, Act 68, in response to the Vermont Supreme Court’s ruling in the 1997 Brigham case that every child in Vermont has a right to substantially equal educational opportunity. Although justly criticized as opaque, the system was designed to ensure that a child from a poor town was afforded the same access to educational resources as one living in a wealthy community, and it has largely accomplished that goal.
The successor under consideration appears to have the potential to undermine equal educational opportunity. While the school income tax rates will be fixed, the local property tax rates will vary according to spending decisions. Would that not recreate a situation where it would be far less of a burden to raise per pupil spending in wealthy communities than in poorer ones?
As to stability, the proposal appears to have merit. Besides adding an income tax while reducing the property tax rate, the plan would dedicate all sales and use tax revenues to the education fund as well as 25 percent of rooms and meals tax revenues, diversifying the funding stream and making it less vulnerable to changes in any single source. It’s important to note that, while it shifts funding sources, the proposal is intended to be revenue neutral, which almost certainly will not meet with the approval of Gov. Phil Scott, who is pushing to reduce overall spending on schools in the face of enrollments that have been declining steeply for many years.
A major concern with trying to enact any complex reform on a tight schedule is that there might not be sufficient time to understand and address all its implications, in this case especially to adequately assess which taxpayers and households would be winners and which losers under the plan. Moreover, the Legislature must recognize the need to build support among local school officials as well as the general public if it hopes for the reform to be welcomed as an improvement. That can’t be done overnight.