Gov. Phil Scott during his budget address on Tuesday threw support behind legislation sponsored by Senate Pro Tempore Phil Baruth, D/P-Chittenden Central, that would cap school district spending in future years.
Scott’s endorsement of the bill, proposed by the Senate’s top Democrat, came as he urged lawmakers and the state’s 119 school districts to pull “in the same direction to lower the tax burden on Vermonters this year.”
The legislation, S.220, would limit growth in school districts’ per-student spending in fiscal years 2028 and 2029. The cap would be tied to a district’s per-student spending in the 2027 fiscal year, which is the 2026-27 school year.
Following Scott’s budget address, Baruth told reporters that he “greatly enjoyed the fact that he supported my bill” but noted the legislation is still “subject to change” in the Senate Finance Committee.
“The committee will work its will, but it’s always good to know the governor is receptive, should we get it to his desk,” Baruth said.
The push to cap spending comes amid heightened anxiety over the rising cost of public education in Vermont and its effect on property taxes. To address that, lawmakers this session hope to move forward with the groundwork laid in Act 73, the state’s education reform law passed last session that would consolidate school districts and shift to a new education finance model by 2028.
Scott in his address Tuesday said he wants to use $105 million to dampen an expected 12% average property tax increase. That spike is driven in part by a projected $115 million increase in education spending next year, although districts are still formulating their budgets.
The other half of the spike is the result of a fiscal hole left by Scott and legislators’ decision to use about $100 million to blunt property taxes in 2025.
Scott in December originally queued up $75 million in excess state revenue to buy down the education tax rate but said during his budget address that he planned on using an additional $30 million legislators had set aside last year.
The buydown, he said, would cut the state’s projected tax increase by about half, from about 12% to about 5.5%.
Scott chided school districts during his address, and said that districts “upped their spending” after the state last year used general fund dollars to buy down the increase in education spending.
“We need administrators and school boards to dig deep and get creative to reduce this year’s growth in spending. And, I’ll be honest, I’m worried about what I’m seeing in the news, and what we saw last year when we made a similar investment,” Scott said Tuesday. “This money is to ease the burden on taxpayers, not to create space for school budgets to continue to grow.”
Baruth’s legislation would likely save taxpayers money if enacted. Julia Richter, a principal fiscal analyst with the Legislative Joint Fiscal Office, told lawmakers that if the bill was implemented in fiscal year 2027 — the budget year starting July 1 — the state would save an estimated $67 million, based on preliminary local school budget data.
Whether the bill would hold up to a legal challenge is another question. John Gray, a legislative attorney, told the Senate Finance Committee that the bill raised “potential constitutional concerns.” He said it could potentially be challenged under the state constitution’s educational clause, or the Brigham decision, a landmark Vermont Supreme Court decision that required the state to ensure an equal educational opportunity for all students.
Baruth’s bill is currently in the Senate Finance Committee. The committee’s chair, Sen. Ann Cummings, D-Washington, told reporters on Tuesday she would “work to get that bill out” but was cautious about the legislation’s prospects.
“I think given the fact that things like health care and employee contracts frequently cover a number of years, and nobody controls health care at this point, there is concern about the impact,” she said.
House Speaker Jill Krowinski, D-Burlington, said in a statement Wednesday that she continues to be concerned about introducing a spending cap when current law already has school spending penalties in place.
“It’s important to note that the excess spending threshold we have in place was developed after a tremendous amount of testimony when we were first weighing a cap versus a spending threshold,” she said, referencing existing law that double-taxes districts that spend above a certain amount per student.
Since its introduction earlier this month, a number of organizational leaders in testimony have thrown cold water on the legislation’s viability. Many pointed to previous spending cap proposals that have been proposed and either scrapped or eventually repealed.
Senate Republicans proposed a similar concept as an amendment to the bill that became Act 73 last session, but that was voted down, according to Senate Minority Leader Scott Beck, R-Caledonia.
Jeff Fannon, the Vermont National Education Association’s executive director, said during testimony last week that the spending cap “should be rejected.”
Others, like Jay Nichols, the executive director of the Vermont Principals’ Association, and Elizabeth Jennings, the president of the Vermont Association of School Business Officials, said that a spending cap would do little to address cost drivers that are out of districts’ control.
Instead, the cap would force district officials to cut educational programming or reduce staffing.
“How do hard caps on education spending help with increased health care and other costs that local school boards have no control over?” Nichols said during testimony last week.
This story was republished with permission from VtDigger, which offers its reporting at no cost to local news organizations through its Community News Sharing Project. To learn more, visit vtdigger.org/community-news-sharing-project.