'It's Due For An Overhaul': Vt. House Lawmakers Consider Education Funding Reform

Jan 30, 2018

The Vermont House Committee on Ways and Means is taking a serious look at making some significant changes in the way education is financed in the state.

Backers say the plan is designed to provide a stronger connection between local spending decisions and residential tax burdens.

Calais Rep. Janet Ancel, chairwoman of the House Ways and Means Committee, says the new plan shifts part of the burden of education financing from the property tax to the income tax.

She says revenue from the income tax will make it possible to reduce current property tax burdens by more than a third.

"We've been hearing for years now that people feel overwhelmed by their property taxes and there's been a lot of interest in moving to something that better reflects ability to pay," said Ancel. "Income is a good measure of ability to pay."

"... There's been a lot of interest in moving to something that better reflects ability to pay. Income is a good measure of ability to pay." — Rep. Janet Ancel, Vermont House Ways and Means Committee chairwoman

Ancel says budget pressures in many parts of state this year could provide an opportunity for lawmakers to consider a new approach to funding schools.

"When we're looking at increases this year averaging about 7 percent or the 9.4 cents that people have talked about, it may be a year where, you know, the political interests of various people come together and that we're actually able to make a change,” said Ancel.

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The proposal has two main parts. The first is a new income tax that would have a progressive rate structure that's very similar to the state's current income tax system.

Ancel says the rate will be the same for individuals in every town because it won't be tied to local spending.

She says all property owners and renters will pay the tax, but she notes that the first $47,000 of a person's income will be exempt from taxation.

"If we maintain this idea of having the first $47,000 of income subject to a zero rate, ... a substantial majority of renters are under that amount, so they wouldn't end up paying anything,” said Ancel.  

Ancel says the second part of the plan is a property tax that will be linked directly to local budget decisions.

Non-residential property won't be affected by the new approach; there would continue to be a statewide tax for all non-residential property.

"This method of funding schools, this tax support of public schools, has lasted 20 years," said Sharpe. "That's twice as long as any funding system I recall in history, and so it's due for an overhaul." — Rep. David Sharpe, Vermont House Education Committee chairman

Bristol Rep. David Sharpe, the chairman of the House Committee on Education, says it's definitely time to adopt a new approach to funding education in Vermont.

"This method of funding schools, this tax support of public schools, has lasted 20 years," said Sharpe. "That's twice as long as any funding system I recall in history, and so it's due for an overhaul."

And Sharpe says it's critical to link local spending decisions to local property tax burdens.

"People have known this sort of in a general way for many years — if you vote [an] increase in your school budget, you're gonna see an increase in your taxes," said Sharpe. "But there's a lot of fuzzy math in between voting for your school budget and what you end up paying in taxes, so I think this is much clearer."

Ancel says her goal is to have lawmakers vote on this proposal during this session.