Last December, Washington passed a giant tax cut that mostly benefits corporations and those at the top—in Vermont they will see a $350 million federal tax reduction in 2018 alone.  This new federal law will increase Vermont’s income inequality, which slows economic growth, increases poverty, and reduces upward mobility.

The Legislature is contemplating two measures that would slow this worsening income inequality by giving working Vermonters a bigger slice of the pie: a minimum wage increase and paid family and medical leave.

Cost containment is the watchword around public education this legislative session, with a focus on “high spenders.” The assumption seems to be that reining in high-spending school districts will free up lots of money for low-spending districts and also lower property taxes for everyone.

No one has defined “high spender” or “low spender,” although for some legislators the terms appear relative to their own towns’ spending. But one way to analyze education spending is to see where the majority of pupils fall and then look at who lies above and below.

As the infographic shows, per-pupil spending for two-thirds of Vermont students this year falls between about $14,000 and $16,750. The average is $15,368, so two-thirds of students are within about $1,400—plus or minus—of the average.­

While state leaders work on neutralizing a $30 million state income tax increase that would result from federal tax reform, there has been not a word about the much bigger state impact of that reform: the $500 million tax cut mostly for those at the top and the likely cuts in federal support for state services.

House Education Committee
March 12, 2018
Testimony of Paul A. Cillo, President

Good afternoon, Mr. Chairman, members of the committee.

Thank you for inviting me to testify today on H.911, the Ways and Means Committee bill. I am addressing the portions of the bill that relate to education funding.

I appreciate that you have a difficult task. I’ve been deeply involved in education funding for 30 years. It’s complicated; not just in Vermont, but everywhere in the country. There are lots of interactive moving parts to the system. For that reason, I’ve found it’s helpful and important to identify the problem you’re trying to solve and understand the cause of the problem.

March 9, 2018

The Honorable David Sharpe, Chair
House Education Committee
Vermont State House
115 State Street
Montpelier, VT 05633

Dear Representative Sharpe,

As you know, Public Assets has been following the House’s work this session on education funding. I’m writing today about the Ways and Means Committee bill, H.911, which is now in the Education Committee. This letter addresses the “Education Financing Changes” portion of bill that begins with Sec. 7.

A fair school funding system doesn’t need to be more complex than the current system. The Legislature could make the funding system much simpler for voters by doing away completely with school property taxes on a primary residence and up to two acres of land. All we need to do is extend the current income-based homestead tax to all residents, regardless of income. It would be easy for everyone to understand, and all Vermonters would be contributing to the support of our schools based on their ability to pay.

What could be simpler or fairer?

Before Vermonters can assess the new education funding bill emerging in the Vermont House, they need to see a thorough analysis of winners and losers. The plan is being touted as a major shift from property taxes to income taxes to pay for education. But looking at the proposed education revenue numbers, there isn’t much of a shift. In fact, there will be slightly less in income taxes and slightly more in property taxes going into the Education Fund than under the current system.

But individual Vermonters will see a change. Upper income Vermonters who now pay only property taxes would pay both property taxes and a new education income tax. Depending on the value of their homes, they could see a reduction in their school taxes overall. But without more data from the Ways and Means Committee, we can’t know how many of these upper income taxpayers will be better off and how much they would save.

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...