Public Assets Institute > Policy Areas > Education > Property Tax Rise: Don’t blame the schools

Property Tax Rise: Don’t blame the schools

Dec. 6, 2009, Times Argus/Rutland Herald

Vermont’s school boards and teachers with the support of local voters have been effectively managing school costs while keeping the state’s public schools among the best in the nation.

Nationally released student test scores place Vermont in the top five states. Meanwhile, public education expenditures as a percentage of Vermont’s economy have remained flat for 15 years—at less than 6 percent of gross state product. That’s in spite of Vermont schools’ health care costs rising by an average of over 9 percent each year—against a relatively modest drop in public-school enrollments of  a little more than 1 percent yearly.

Vermont has a financially sustainable public education system that achieves excellent results. It keeps its education spending flat as a percentage of the economy under hugely trying circumstances. This should be cause for congratulations.

Yet, since his inauguration last January—when he called the system “fundamentally broken”— Governor Douglas has been leading the charge against our schools, and handing out rebukes to the people who run them and the voters who support them.

This week, the administration renewed the assault with the release of the news that the school tax rate would need to go up 2.2 cents next year.  Nothing in the tax commissioner’s letter to legislative leaders mentioned health care costs or the state’s shortchanging of the Education Fund.

To help balance the General Fund during this fiscal year lawmakers cut $25 million that would have otherwise been transferred to the Education Fund—which up until now has been the one stable fund in the state. The administration is recommending an increase in the statewide school tax rate to cover this shortfall.

It could have been worse. In addition to the cut, the governor had proposed burdening the Education Fund with $40 million in teachers’ retirement costs that had always been paid by the General Fund. Since each $10 million in the Education Fund requires a 1-cent increase in property taxes, this would have resulted in an added 4-cent increase in property taxes next year. The legislature rejected this proposal and passed its budget over the governor’s veto.

Now it appears that the administration is planning to use property taxes to cover even more of the General Fund problem after fiscal 2011. Some of the federal dollars helped fulfill the General Fund’s commitment to the Education Fund this year.  But federal stimulus funds are expected to dry up after 2011 leaving the Education Fund short tens of millions of dollars. But the administration apparently does not intend to fill the hole with General Fund monies, which are raised from a more equitably distributed variety of sources, including the income tax. Instead, it envisions use of—you guessed it—property taxes, which fall more heavily on low and moderate income Vermonters.

There is no question that the global economic downturn is taking a big bite out of General Fund revenues. But the legislature and the administration should not be looking to raise property taxes to solve this problem. Property taxes are already too high.

Our state should explore ways to work with school districts to deliver high quality education for less money by lowering health care costs, collaborating where possible, and using technology. But we will get nowhere fast by shifting costs onto the Education Fund and then chastising school boards and teachers for the rising costs of education. These people do the most important job in our state: preparing our children to thrive in an ever more complex world. They deserve the support of our governor and elected officials, not their blame.

Paul Cillo is President of the Public Assets Institute in Montpelier.