Other Important Vermont Small Business Issues

Date: January 14, 2014

Property Taxes and Education Financing Reform

The Legislature will once again be debating the way Vermont pays for education.  For the second year in a row, Vermonters are facing a significant increase in their property taxes.  In November, the Vermont Tax Commissioner suggested that the statewide property tax may increase by 5-cents in 2015.  This is despite the fact that public school enrollment rates have been steadily declining over the last decade.  Lawmakers will have to tackle thorny issues such as local control and spending decisions, the benefits of school consolidation, the effectiveness of income sensitivity rules in calculating property taxes, as well as adjusting the threshold levels for penalizing school boards for over spending on their budgets.  However, despite building pressure, it is not clear if the Legislature is willing to take significant steps during this session to address these issues.

Tied into the debate over property taxes is the ongoing debate over Vermont’s ‘Current Use’ tax policy.

The Current Use program allows for landowners who preserve their property for forestry or agriculture to pay a lower tax rate than those whose land is open for development. The program originally started in 1978 but enrollment in current use spiked to more than 17,000 parcels, or 2.3 million acres, as of December 2012. This has cost the state about $54.6 million in tax revenue to the education fund.  The question being asked by many legislators is whether Vermont can afford to continue this level of tax exemption in light of the ever-increasing pressure of Vermont’s statewide property taxes.

During the last legislative session, labor advocates were able to gain passage of a bill that granted collective bargaining rights to home care workers, as well as a “fair share” bill, which required some education, state and municipal employees who opt not to join a union to pay fees to the union.  During the upcoming session, pro-labor groups are hoping to go one step further and pass legislation that would grant unionization rights to child care workers.  A group of child care workers, backed by the Vermont Early Educators United, an affiliate of the local American Federation of Teachers, will resume their longstanding fight for the legal right to join a union.  S.52, the child care unionization bill has already passed a key test vote in the Senate Education Committee and will likely be taken up by the full Senate in the next few weeks. Senator Dick McCormack, D-Windsor, who chairs the Education Committee, is one of the bill’s lead proponents, and has said that passage of S.52 is a “high priority” for him in 2014.  House Speaker Shap Smith has stated that he is unsure whether the child care unionization bill has enough support to pass the House.

GMO Labelling & Teacher Pension Reform

During the last legislative session the Vermont House of Representatives passed a bill that would require all foods that contained genetically modified organisms (GMOs) to be labeled.  The Senate is set to debate the bill this session. The bill defines GMOs as those created from organisms in which the genetic material has been changed via in vitro nucleic acid techniques or cellular fusion.  Under the proposed legislation, foods for sale in the retail marketplace would require labeling if they are produced “entirely or partially” using these techniques. Scientific research has not conclusively shown either the safety or danger of GMO foods.  Proponents of the GMO labeling legislation principally argue that consumers have the right to know what is in their food.  GMO labeling would help consumers make an informed decision about what products they are going to buy. 

Lawmakers have been put on notice by State Treasurer Beth Pearce that the chronic underfunding of the Vermont State Teachers’ Retirement System (VSTRS) must be addressed sooner rather than later.  Although, teacher pensions have been consistently funded by the Legislature in recent years, teacher health care benefits have not. Based on the current cost of healthcare and demand for services, Vermont is falling about $20 million short each year.  While state workers’ pensions are funded at 80 percent, the teachers’ retirement system is funded at 60 percent, well below actuarial recommendations.  Pierce has made some suggestions that could help indirectly, but there will be a need to commit “significant” money to VSTRS health care funding soon.  “The bottom line is, taxpayers are going to have to ante up for our promises and our obligations,” according to Pierce.

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