Public Assets Institute > Policy Areas > Education > As General Fund support drops, school taxes rise

As General Fund support drops, school taxes rise

Unlike his predecessor, who used to rail at local school officials, Gov. Peter Shumlin sent out a letter to all school board members last week thanking them for their service and for working to hold down education costs. “The fact that overall school spending increases have been basically zero over the past two years proves that school boards, administrators, and voters have been diligent in keeping costs in line,” the governor wrote.

Then the governor made his pitch to the school board officials to hold the line for another year. “If overall school spending can be held level for another year,” he said, “that could help keep tax rates and taxes paid level as well.”

Not exactly—unless the governor is prepared to reverse course and start fully funding General Fund support for education again.

Education spending, which has particular meaning under Act 68 and includes the expenditures used to calculate a district’s per pupil spending and determine the tax rates, actually declined in fiscal 2011 and again in fiscal 2012. But many of the school officials who received the governor’s letter know that, despite their best efforts, tax rates and tax bills went up in those two years.

That’s because the Legislature—at the urging of the current and previous administrations—has cut the annual General Fund appropriation to support education for the past few years. Montpelier has avoided raising General Fund taxes to balance the state budget, but forced local school officials to increase property taxes to cover what had been the state’s responsibility.

In fiscal 2005, 61 percent of education funding came from school taxes—both property-based and income-based—and 39 percent came from the General Fund and dedicated revenues, like lottery proceeds. In fiscal 2012, the General Fund and dedicated revenue are contributing only 33 percent, and school taxes cover 67 percent. The shift means that property taxes, which still fall harder on middle-income Vermonters than on the wealthy, are $77 million higher than they would otherwise be. Meanwhile, our progressive income tax has been cut for those at the top.

Posted by Jack Hoffman on November 30, 2011 at 4:54 pm

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