Vt. property tax fix headed to governor following Senate approval

MONTPELIER, Vt. (WCAX) – The Vermont Senate Wednesday approved a bill that seeks to bring skyrocketing property tax bills back to earth. Many lawmakers called the measure just a start to bigger discussions about how the state funds education.

The future of school spending and its impact on taxpayers was up for debate Wednesday at the Statehouse.

School spending is up across the board this year due to a combination of factors including rising health care costs for teachers and the end of federal pandemic cash. It was also driven by Act 127 passed in 2022, which aimed at equity for students who are learning English as a second language or are otherwise more expensive to teach. Districts benefiting from more cash are spending it but state lawmakers also believe a temporary tax cap meant to ease the impact of those reforms in wealthier districts led to increased spending by those communities before the law fully kicked in.

The bill fast-tracked through the Senate this week eliminates that cap. It also lets districts push back school budget votes.

The property tax SNAFU has prompted discussions in the upper chamber about local control on school budgets, and whether most Vermonters understand that their school budget votes draw from the statewide Education Fund. “We have a system that Moe, Curly, and Larry can’t figure out,” said Sen. Randy Brock, R-Franklin County.

Other lawmakers pondered what can be done to make the process more transparent. “We have centralized the education funding in this state with decentralized decision-making,” said Sen. Tom Chittenden, D-Chittenden County.

Others say despite the good intentions for educational equity, Vermonters will bear the brunt of increased costs. “It’s just hard to comprehend how something that had so much time put into it failed so miserably,” said Sen. Russ Ingalls, R-Essex-Orleans Counties.

Education spending is increasing 5% this year, and for the first time ever the Ed Fund surpassed $2 billion.

Lt. Gov. David Zuckerman, P/D-Vt., says the Legislature shouldn’t lose sight of the intent of the education reforms in Act 127 — equity for all students. “As complex as it is, it’s been critically important to make sure kids who are up in towns without property wealth have as good of an opportunity to get as good of an opportunity as any other kid in the state,” he said.

The bill now heads to Governor Phil Scott, who is likely to sign it. It leaves school districts just a few weeks until Town Meeting Day on March 5th.

HOUSE CONSIDERS WEALTH TAX

Lawmakers are now forging ahead and looking into raising new revenues, including proposed taxes on the state’s top earners.

One House bill calls for a 3% tax on people making over $500,000. Another proposal would add a tax on capital gain assets above $10 million. The measures are expected to bring in more than $100 million into the General Fund.

House Committee on Ways and Means Chair Rep. Emilie Kornheiser, D-Brattleboro, says the revenue could be put toward programs including housing, flood resiliency, and schools. “When we see those needs — and we just saw what happens when we invest in those needs — it seems like we might as well learn those lessons and get those things done for Vermonters,” she said.

But top Democrats say cutting costs needs to be on the table, too. “We’re going to need a discussion about how to reduce those budgets and reduce those long-term costs in a way that is new and groundbreaking,” said Senate President Phil Baruth, D- Chittenden County.

Governor Phil Scott, who is opposed to any new taxes, has said the House tax proposals might prompt wealthy Vermonters to leave the state.