EDUCATION FUNDING -- Upward Pressure on Property Taxes

Date: February 19, 2014

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 state-wide property
tax may increase by 5-cents again in 2015. 
This comes after a 5-cents increase in 2014. Vermont’s current education
funding formula was created in 1997 with the passage of Act 60, and amended in
2003 with Act 68.  While Vermont property
taxes have been steadily increasing, student enrollment in Vermont public
schools has declined 20 percent over a 15-year period.  As a result of the drop in the student
population, Vermont now has one the lowest student to teacher ratios in the


The contrast in declining school enrollment versus almost yearly
increases in property taxes has led to many discussions about whether and how
Vermont’s education funding system should be reformed.  Those discussions certainly made their way to
the State House early in the current legislative session. During his Budget
Address in January, Governor Shumlin disgruntled many lawmakers and local
school members when he stated: “I am not at all happy that Vermonters will once
again bear an increase of 5 to 7 cents in the statewide property tax rate next
year based upon projections for local school spending. I urge Vermonters at
town meetings across our state this year to carefully scrutinize school budgets
that increase per pupil spending and grow faster than our incomes.”

Many school board members and legislators involved in the debate felt
that the Governor’s statement largely deflected the role of Vermont’s statewide
education financing system in rising property taxes.  Representative Adam Greshin, I-Warren, spoke
for them when he stated that the Governor “refuses to acknowledge the state’s
role in fueling statewide spending. Our funding mechanism substantially
separates local decision-making from the tax consequences of those decisions. It’s
no surprise school boards are frustrated and voters are angry. ”


Early in the legislative session it appeared that there would be
discussions and analysis of the education funding system, but not much concrete
action on the issue this year.  Possible
reform options that always seemed to be at the forefront of discussion included
school consolidation, income sensitivity provisions which reduce property tax
burdens for lower income households, and the “high-spending threshold” that
kicks in as a method of moderating school budget increases.


Although it appeared the discussions of education financing would only
be conceptual during the current legislative session, this week the House
Education committee is expected to consider a draft bill that would reform
Vermont’s education governance structure.

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