Dear Representative Ancel,

I’m writing about the Ways and Means Committee’s work this session on education funding. I understand the challenges the committee faces in making changes to the system, and it appears that there is a lot about the plan that has not yet been worked out. Nevertheless, I want to share some thoughts about the plan so far based on Public Assets Institute’s analysis of the information the committee has posted on the Legislature’s website.

Income taxes: The plan proposes to replace Vermonters’ current option of paying school taxes on their primary residence based on household income with a statewide progressive income tax. The latest Tax Department data show that Vermonters paying school taxes based on income had household income of just under $7 billion in 2017...

In his annual letter to the Legislature the tax commissioner announced that a projected 3.9 percent increase in per-pupil spending next year was going to result in a 6.2 percent increase in the average homestead property tax rate. This is the kind of disconnect that really irks local voters and school officials alike.

There are reasons for next year’s big tax rate jump—more on that later. But here’s the thing: The education funding proposal being developed in the Vermont House would not end the frustration from modest spending increases that result in disproportionately larger property tax increases. In fact, these would become a permanent feature.

A new education funding plan taking shape in the House Ways and Means Committee is being billed as a move toward simplicity and greater reliance on the income tax to support education. In fact, the plan appears to make the connection between school spending and taxes less transparent, and it will take Vermont back to the days when only wealthy communities could afford to pay the property taxes necessary to support a good education.

Currently, about two-thirds of Vermont resident homeowners pay income-based school taxes. Tax rates vary from town to town, depending on the education spending per pupil. But there is a direct relationship between the income-based tax rates and local spending.



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The latest:
Per-Pupil Education Spending and Tax Rates, Fiscal 2016