Rebates again?

As the Legislature pushes to pass bills before adjournment, it’s easy to enact a “quick little fix” that will turn into a major headache later on. The Vermont Senate still has a chance to avoid such a misstep and drop the idea of sending out budget-surplus, property-tax rebate checks at the end of each fiscal year.

The proposal being considered in the Senate Appropriations committee would return half of any General Fund budget surplus at the end of each fiscal year to Vermont homeowners as a rebate check. One version of the plan would have the checks be the same amount for every homeowner, regardless of how much tax the homeowner had paid.

Ostensibly, the rebate checks are meant to compensate for General Fund cuts to the Education Fund the Legislature has made in recent years, which have driven up property taxes. The House proposed dedicating half of any General Fund budget surpluses to the Education Fund until the cuts were restored. The Senate, however, is talking about sending the money directly to Vermont resident homeowners in the form of budget-surplus, property-tax rebate checks, which might be a little as $30.

If the Legislature’s goal is to reduce property taxes, the way to do that is to restore the General Fund transfer. Every dollar from the General Fund that is paid into the Education Fund is a dollar that does not have to be raised through property taxes. The solution to high property taxes is to lower them, not to raise property taxes and then give Vermonters a rebate, which is exactly what the Senate plan would do.

And if the goal is to reduce property taxes just for Vermont resident homeowners, the Legislature can reduce the homestead tax rates—the homestead property tax rate and the income-based rate that is available only to Vermont residents.

A rebate check adds a needless complication to Vermont’s education finance system, not to mention the cost to write and mail the checks. Vermont used to send rebate checks to eligible homeowners, and the Legislature discontinued them after people said the system was too confusing. People didn’t see the connection between their property tax bills and the rebate checks and continued to complain that property taxes were too high. Now, they just get a lower tax bill instead of a higher bill and rebate check. Why create that problem all over again?

Finally, the rebate idea lacks the kind of analysis that is missing with much of Vermont’s budget process: Is this really the best use of the $5 million or $10 million or $15 million that might be paid out in any given year? Does it make sense to send money to rich and poor alike if we’re trying to expand the middle class? Should we be cutting support for education when we’re trying to do something about declining math scores?

Time is short if lawmakers want to get out before the end of April. One way they could lighten their load is to shelve the rebate proposal and move on to more urgent business. Come summer, they and we will be glad they did.