Commentary: Wrestling with education funding reform
One problem is that some of the costs in the Education Fund are not pre-kindergarden through grade 12 education. The state has shifted the cost of property tax support and of General Fund items into the Education Fund, and this has driven up property tax rates. Another issue is that the system of property tax adjustment that allows most resident homeowners to pay for education based on their income, rather than their property value, is complicated and inequitable. This income-sensitivity support has insulated many taxpayers from the full tax implications of the rising education budgets that they might vote to approve.
Still another problem is that, although the number of students has been declining, the cost of education still rises quickly, in large part because of the growth in staff compensation, which grows faster than Vermonters' incomes.
This year's base property tax rates will have to increase by up to 8 cents to cover the rising costs in the Education Fund. This is related to the long-standing problems already described, exacerbated by last year's nonrecurring surpluses having been used to keep base property tax rates level.
The committee is evaluating a proposal to reduce homestead property tax rates by adding a new education income tax to make up the lost revenue. This would probably be around 1 percent of adjusted gross income, with low-income taxpayers exempt and the total amount capped for high incomes. Because of the new income tax revenue, all resident homeowners would pay a much lower property tax rate that is set at the Town Meeting. The total amount of revenue raised would be the same, but some of the burden would be shifted from the homestead property tax to the new income tax. Renters above a low-income level would be paying for education directly in this new tax. High-income taxpayers who own their home might have the added income tax offset by the reduction in the property tax rate.
This proposal would eliminate the complexities of the income-sensitivity property-tax adjustment. Some of the burden of education goes onto income instead of property values, and this might be more equitable and progressive. However, I would like to see a thorough purification of the Education Fund by putting noneducation costs in the General Fund, where they can be financed by income and sales tax revenue directly, rather than adding a new income tax revenue source to the Education Fund. Also, there is no mandated cost-control requirement that can reliably limit future increases in education costs. And it appears that some think we can make this big change this year, and I am not sure we can get things right so fast.
I will do my best to ensure that any reform of education finance is truly an improvement for education and for taxpayers. But at this moment it is not clear to me which of the many forces involved in this process will win this wrestling match.
Cynthia Browning, D-Arlington, represents Arlington, Manchester, Sandgate and part of Sunderland in the Vermont House of Representatives.
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