Could Dispute Over Property Tax Send Vermont Into A Government Shutdown?

May 14, 2018

Gov. Phil Scott says he's confident that he'll be able to reach an agreement with Democratic leaders in an upcoming Special Session over the issue of education spending. But Scott says raising property tax rates will definitely not be part of any agreement.

The governor says he believes a compromise will be reached because lawmakers will come to understand the wisdom of his policies.

"I'm confident that they will see the light," said Scott. "We can put this program together, this education plan, save money over the next five years stabilize tax rates and everybody wins."

Scott's plan is to use $58 million  in one-time money to ensure that there will be no increase in the statewide property tax rate for education next year.

"They're not going to get to raise taxes. I think that's the bottom line. I'm not going to allow that to happen." — Gov. Phil Scott

He's also backing a five-year plan to reduce property taxes in the future by implementing larger student-to-staff ratios, a statewide teachers health care contract and changes to special education programs.

The governor says he's willing to compromise over elements of his five-year plan but there's no way he'll accept an agreement that includes any increase in property tax rates.

"They're not going to get to raise taxes,” said Scott. “I think that's the bottom line. I'm not going to allow that to happen."  

Scott hasn’t changed his stance and neither have lawmakers.

Senate President Pro Tem Tim Ashe argues that there are better uses for the one-time money.

He says taxpayers could save as much as $100 million over time if $35 million of the one-time money is used to meet obligations in the teachers’ pension fund. And Ashe says what the governor is doing is artificially supporting additional education spending.

"The governor's approach is this non-negotiable trickery in an election year." — Senate President Pro Tem Tim Ashe

"The governor's approach, which is this non-negotiable trickery in an election year, where you find one-time money to patch over a problem, only so in a non-election year people will have to pay the tab,” said Ashe.   

Ashe says the legislative plan calls for a roughly two percent increase in the statewide property tax rate to reflect the small budget increases that were approved on Town Meeting Day.

"School districts did precisely what they were asked to do both by the Legislature and the governor,” said Ashe. “So having the tax rate float up as the funding formula requires it to bring in the money to pay for what the voters wanted seems to be the appropriate thing to do."  

Vermont must have a new budget in place by July 1 or risk shutting down parts of state government.

To ward against that, in the final hours of the session on Saturday night, House Republicans backed a plan to adopt a continuing budget resolution in the event that the tax stalemate is not resolved.

This proposal would keep state government open at current spending levels until an agreement is reached.

It's a process that has been used many times in Congress in recent years.

House Minority leader Don Turner urged his colleagues to support the plan.

"This is simply an insurance policy,” said Turner. ”Vermonters did not elect us to play games with important government services."   

House Appropriations chairwoman Kitty Toll strongly opposed the idea. She read from a letter that her committee had just received from State Treasurer Beth Pearce.

"Regarding our governance and budget process a lack of a clear and sustainable budget would adversely affect us in respect to Wall Street, office of the State Treasurer," said Toll.   

The amendment was defeated by a 2-to-1 margin largely along party lines.

Only the governor has the authority to call a special legislative session. It's very likely that he will do this once he has vetoed both the tax bill and next year's budget bill.