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Vermont House votes to raise property taxes, give relief to schools

By   /   January 28, 2016  /   News  /   No Comments

Photo by Bruce Parker

CAP-KEEPER: State Rep. David Sharpe, D-Bristol, chair of the House Committee on Education, led the charge to modify Vermont’s new education spending cap and provide relief to school districts.

By Bruce Parker and Michael Bielawski

MONTPELIER, Vt. — Given a choice between forcing cuts to education spending or raising property taxes, the Vermont House on Wednesday chose to raise property taxes.

By a 94-52 vote, lawmakers voted to change a school spending cap provision passed eight months ago as part of Act 46, but in doing so raised taxes for Vermont property taxpayers.

After a day-long debate, representatives raised the 2 percent allowable growth percentage by 0.9 percent, reduced the penalty for exceeding the threshold from a dollar-per-dollar to 25 cents per dollar, and corrected a spending threshold error by allowing districts to use whichever calculation results in a lower homestead tax rate — the so-called “hold harmless” provision.

According to a Joint Fiscal Office estimate released Wednesday, the vote will increase Vermont’s homestead property tax rate 2 cents, from $1.52 to $1.54 per $100 of assessed property value. The tax change is owed to a difference in property yields under the current law versus yields under the House’s modifications.

The JFO estimate shows the House modification of the caps is nearly identical to repealing the caps altogether — the solution proposed by the Senate. The homestead tax rate under the House-modified threshold is $1.5397, compared to $1.5411 under a full repeal.

While critics opposed the bill largely due to its implications for taxpayers, supporters said keeping the original 2 percent allowable growth percentage would have forced school districts to decide between cutting programs and staff and incurring a double tax penalty for spending above their threshold.

“It was disappointing. We said all along when you do this you raise taxes, and that’s what’s happened,” Minority Leader Don Turner, a Republican from Milton, told Vermont Watchdog following the vote. “We should have stayed with the original bill. Cost containment is what people want. When you minimize the penalty and raise the threshold, you raise taxes.”

Photo by Bruce Parker

COMPROMISE: State Rep. Oliver Olsen, I-Londonderry, says the House’s modification to Act 46 spending caps is a ‘good compromise’ between doing nothing and full repeal.

State Rep. Oliver Olsen, an Independent from Londonderry, said the bill was “a good compromise between a full repeal and doing nothing.”

“The penalties were designed to ensure that school districts thought very carefully about spending above the threshold. It was not designed to generate revenue,” Olsen said. “We weren’t looking to ask the taxpayers to pay more; we were asking school districts to reduce the growth rate of spending, which is ultimately going to provide long-term relief.”

Throughout the marathon debate, lawmakers expressed frustration and confusion about Vermont’s complex education system. Representatives put forth a handful of additional amendments, which took the debate all the way to sundown. Those amendments either failed or were withdrawn.

State Rep. Paul Dame, a Republican from Essex Junction, tried multiple times to pull his hold harmless provision out of the bill to be voted on separately, but was rejected. Dame told Vermont Watchdog on Tuesday that his amendment would have protected districts from the Agency of Education’s spending threshold error while preventing tax increases.

RELATED: Vermont lawmaker says spending cap fix best for taxpayers

One sticking point against the cap was that schools that have kept budgets down the years prior now have a lower cap compared with schools that spent liberally. State Rep. Catherine Toll, a Democrat from Danville, spoke to this issue during comments on one of the rejected provisions.

“Our school boards have worked diligently to stay within the constraints of the spending thresholds,” Toll said. “These same schools for years have cut budgets, cut positions, and cut critical programs in order to contain spending. One of these schools in particular has one of the lowest per pupil spending in the entire state. It has contained costs and has in recent years presented budgets that can finally garner the support of its taxpayers — but they feel they will still be penalized for their very responsible actions.”

State Rep. Joseph “Chip” Troiano, a Democrat from Stannard, floated an amendment to repeal the caps for 2017 and 2018. During his pitch he referenced the concerns he heard from the school board in Walden.

“The school board told me they heard the citizens of Walden, and what they did over the last five years to contain costs was they cut staff, they cut salaries, they cut positions, and they brought their budget down to one of the lowest spending towns in the state, at $11,700 per student and a tax rate of about $1.23,” he said.

“Their question to me was, ‘Why do you want us to do this? We listened, we cut, and we now have a successful school budget and school of about 148 students — cost containment belongs to the citizens of Vermont.’”

Lawmakers rejected Troiano’s amendment after a lengthy, sometimes heated debate. The Stannard Democrat ended up voting yes on the bill.

Education Committee Chair David Sharpe, a Democrat from Bristol, argued for the modified cap, saying the spending thresholds are working in the sense that schools are making tough choices and cutting staff to keep taxes down.

“We were hearing publicly about how terrible they were, how they were destroying districts and how they needed to be repealed,” he said. “What was fascinating was in private conversations we would hear sometimes the very same people say, ‘But you have to keep them in place because they give us the tools to do what we know needs to be done in our school districts with regard to reducing the overhead, staffing, and various issues regarding spending.’”

Turner, asked if Wednesday’s vote will provide clarity for school boards, replied, “I think it does. The bill that passed holds districts harmless, which we all supported. I think that was critical that that was part of it. I think that the districts, on spending, now know what they’re going to pay for a penalty. So, the action the House took today will settle any concern or any questions school districts have. But from our perspective, it’s raising taxes.”

The bill now goes back to the Senate where it may be modified or rejected in favor of another solution.

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Bruce Parker is a reporter and editor for Watchdog.org. His stories have been featured at FoxNews.com, Bloomberg, Politico, The Daily Caller, the Washington Times, Human Events and Thomson, among other outlets. He can be reached at [email protected]