Vt. lawmakers grapple with anticipated property tax hike

MONTPELIER, Vt. (WCAX) – Vermont lawmakers are searching for answers on how to bring down a massive expected property tax increase driven by school spending. School districts are preparing to warn their Town Meeting Day budgets and the 17% forecasted tax hike is raising alarms.

Elisa Maurice of Barre went grocery shopping Thursday and says persistent high prices are a problem.

“Expensive. It’s gone up about $100 in the year or so,” she said. Maurice, who rents out several properties, says she’s also worried about the soaring cost of education and property taxes. “I would hope to keep raising the rent over the next few years but I just don’t know.”

Town Meeting Day is right around the corner, where voters will vote on school budgets. Education officials were among those testifying in front of four key legislative committees Thursday who are trying to grapple with the scope of the problem of rising costs and disappearing pandemic-era dollars.

“What that does is create a tax rate trough, which you need to climb out of,” said Jake Feldman with the Vermont Department of Taxes.

State officials say this year’s ballooning education costs are driven by a myriad of issues including soaring health care costs, pandemic relief funds going away, declining enrollment, as well as recently approved education finance reform rules aimed at equity. Last year’s tweak to the state’s education funding formula means that wealthier districts have to pay more into the state-wide Education Fund to maintain current school services. The law included a 5% cap on property increases to blunt the increased costs, but some say districts are using the law to spend more.

“This law decreases transparency and raises property taxes to levels that will require many to make difficult decisions,” said Lamoille South Supervisory Union Superintendent Ryan Heraty.

Others say a statewide tool adjusting property values is to blame. “Act 127 addresses historical inequities and we should not retreat from that while we address other challenges,” said Burlington School District Superintendent Tom Flanagan.

Business groups say the massive expected tax hike will also many people’s bottom lines. “We need to have a conversation in our state about how do we right-size our system and how do we prevent cost overflows that are avoidable,” said Austin Davis with the Lake Champlain Chamber of Commerce.

The tax conundrum comes at a pivotal time for Vermont’s education system, with increasing costs shouldered by a shrinking tax base.

Lawmakers are now faced with the hard choice of either cutting costs, which many districts say would gut programs and staff, or raising revenues, which in many communities will mean double-digit property tax rate hikes.

We are months away from knowing what the final statewide property tax rate will be. After voters weigh in on Town Meeting Day, lawmakers will then have to set the statewide property tax rate.