Public Assets Institute > Press > Press Releases > Let’s Put All Taxes on the Table, Not Just the Property Tax

Let’s Put All Taxes on the Table, Not Just the Property Tax


December 3, 2008

Sarah Lyons
Public Assets Institute 
Montpelier, Vermont 

MONTPELIER – Taking money from the state Education Fund to help balance the rest of the state budget will drive up property tax rates for Vermonters, Paul Cillo, executive director of Public Assets Institute, warned Wednesday. 

Cillo was responding to a news report Tuesday in which Tax Commissioner Tom Pelham suggested that the Legislature might want to use an estimated $20 million surplus in the Education Fund to cover shortfalls in other programs. If the administration diverts the surplus, Cillo said, the money can’t be used to lower the property tax rate, which is the way the education funding system is supposed to work. 

According to Cillo, Vermonters would see a 2-cent drop in the state property tax rate if the Legislature doesn’t raid the Education Fund.  Governor Douglas has made high property taxes a key part of his affordability agenda.  Cillo said he was surprised that the administration would do anything to push property taxes higher than they need to be. 

“If the administration is going to increase tax rates to deal with the current fiscal crisis, all revenue options should be on the table. But, there are better alternatives than the property tax,” Cillo said. 

According to Cillo, the administration and the Legislature need to be looking at revenues, as well as budget cuts, to deal with the current problem. 

“The state budget is out of balance because revenues have fallen off sharply, not because Governor Douglas has been over-spending for the last six years,” Cillo said. “Vermont can’t rely solely on revenues any more than it can cut its way out of this problem. Both options – all options – need to be on the table.” 

Cillo noted that Vermont took this kind of balanced approach during the recessions of the early 1980s and the early 1990s. 

In both cases, the fiscal rescue package included budget cuts, higher tax rates and deficit spending, he said. 

Vermont maintains an Education Fund reserve. Under state law, if there is a surplus above the 5 percent reserve, the tax commissioner is required to recommend a lower tax rate that would eliminate the surplus. In effect, the commissioner is obligated to recommend a tax rate that returns the surplus to property taxpayers. 

On Dec. 1, the deadline for making his recommendation, the commissioner announced that current tax rates would generate a $20 million surplus, but declined to recommend a lower tax rate. On Tuesday, the commissioner told Vermont Public Radio that the Legislature might want to use the surplus “to help resolve our budget woes.” 

Before the Legislature grabs the Education Fund surplus and forces Vermonters to pay higher property taxes, Cillo said, it should look at the alternatives for generating additional revenue. 


Public Assets Institute is a non-profit, non-partisan organization that promotes sounds budget and tax policies to benefit all Vermonters. Additional information is available at 

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