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.

Gov. Phil Scott laid out an ambitious agenda for state government in his second budget address. He outlined many problems facing Vermonters today, and for the most part his assessment was accurate. The state does need to address drug addiction, retirement security, environmental protection, mental illness, affordable housing, energy efficiency, job creation, equal educational opportunities, and the many other issues he cited.

It is hard to see how he can achieve all this with a spending formula that ties the growth in the state budget to Vermonters’ wages. And while we applaud his proposal to try to recruit young families to settle in here, we have to wonder how many young parents are eager to move to a state where the governor says we’re spending too much on education and wants to reduce staffing in schools.

Along with the problems Governor Scott cited, Vermont—like the rest of the nation—also has a problem with income inequality. Wage growth has been stubbornly slow, while incomes for the wealthy have grown much faster. Linking state spending to wage growth can only exacerbate the problem. When wages aren’t keeping pace with basic living expenses, Vermonters need more support from their government, not less.

Good afternoon Mister Chairman, members of the committee. My name is Paul Cillo. I’m the president of Public Assets Institute, a non-profit, non-partisan organization based in Montpelier that focuses on state fiscal and economic policy including education finance. Thank you for giving me the opportunity to talk with you today. Read more

Good morning, Mr. Chairman, members of the committee. Thank you for having me here today.

My name is Stephanie Yu.  I’m a policy analyst with Public Assets Institute here in Montpelier.  We’re a nonprofit, nonpartisan, public policy think tank that was established in 2003. Read more

“The vast majority of the most rigorous modern research on the impact of higher minimum wages—including robust increases to $13 or more—shows that these policies boost worker earnings with little to no adverse impact on employment.” Testimony to the Minimum Wage Study Committee from Yannet Lathrop of the National Employment Law Project on November 21, 2017. In other words, there is no credible evidence that minimum wage increases cause significant job loss.

The Congressional tax plans aren’t the only policies in Washington that could make life harder for working families and the middle class.

Possible changes to the federal overtime rules may also take money away from thousands of Vermonters.  A new analysis by the Economic Policy Institute shows that 19,000 Vermont workers could lose a combined $3 million in overtime pay if the Trump administration rolls back a 2016 rule change updating who’s eligible. Read more

This is the 11th year in a row that Montpelier has projected spending obligations will exceed state revenue projections going into the start of the legislative session. Maybe it’s time to acknowledge that the state’s revenue system isn’t keeping up with even modest budget growth. Read more

Income inequality is already growing in Vermont. And if Congress has its way on tax reform, that problem will get worse.

Analysis released yesterday by the Institute on Taxation and Economic Policy shows that, like the House plan from earlier this month, the newly released U.S. Senate’s tax plan helps Vermonters at the top the most.

Nationally, the plan is heavily tilted in favor of upper-income households and profitable corporations.  The top 1 percent gets around one-fourth of the total tax cuts and the top 5 percent receive half of the tax cuts. In Vermont, 60 percent of the benefits go to the top 20 percent of taxpayers.

Under the Senate plan, the top 1 percent of Vermont taxpayers would on average get a tax cut of $21,910, growing to $29,820 by 2027. Meanwhile, the bottom 20 percent of taxpayers would save an average of $100 in 2019 and $200 in 2027.

Gov. Phil Scott sets out some priorities in the fiscal 2019 State Budget Overview released Thursday. He doesn’t spell out goals per se; they’re more like areas of concern. Still, the budget process just seems backwards, especially when the stated goal of the budget, at least according to statute, is to address the needs of Vermonters.

The Budget Overview says the administration will measure progress by: “Growing the Economy,” “Making Vermont More Affordable,” and “Protecting the Vulnerable.” These are laudable goals, but there are no defined targets. For example, one metric is “[p]ercent of population living below 200% of the Federal Poverty Level (FPL).” But there’s no indication of what the percentage ought to be or what might be done to reduce poverty. “Wage growth—by region” is another metric, but again, no goal, no 5-year target.

It’s understandable. The Fight for 15 has a certain alliterative ring to it. But ultimately, the number itself matters less than the timing.

The debate about raising the minimum wage in Vermont has clearly been influenced by the national push for a $15 an hour minimum wage and actions taken in other states. But when will Vermont get to $15? That is the critical question in this discussion.

The current $10 minimum wage is slated to go to $10.50 next year and grow with inflation after that. It would reach $15 by about 2034.