By Rep. Kate Webb
Last week, the House debated the Education Property Tax bill. Spirited discussion ensued regarding the value of quality education, the burden on taxpayers and finally the complexity of education funding. The end result satisfied the middle ground, but not those who wanted a complete overhaul in education funding right away. We were faced with a choice. Option 1 offered a bold repeal of Act 60 and 68, with a new “to be determined” funding system in place by 2015. Option 2 kept current funding in place for now, but required a recommendation for a new plan for 2015 due next year. I voted for Option 2.
Most all agreed (including the presenter of Option 1) that the Brigham Decision of 1997 was correct: Vermont children should have equal access to education and not be penalized for living in a town with a small tax base. Most also agreed that there are big questions as to the sustainability of the current system, and struggle to respond to frustrated Vermonters watching yearly increases in spending in the face of yearly declining statewide enrollment.
To clarify, school budgets are determined at the local level. How we divvy up these costs is determined at the state level. The anticipated cost of public education is derived from budgets passed by school boards and slated for a vote across the state on Town Meeting Day. With 90 percent of the towns reporting, the anticipated 2013-14 budget is calculated at $1.444 billion, up from $1.392 billion last year. This is typically recalculated in April.
Once budgets are determined, the State identifies who pays what based on a complex funding formula. At this time, property taxes will cover approximately two-thirds of this cost. The State covers the remaining third through General Fund transfers along with various other resources including sales tax, purchase and use tax, lottery, and Medicaid transfers.
If we burrow a bit deeper into the Education Property Tax, we see that only one-third of property owners actually pay these taxes based on appraisal. This is not a simple calculation either, meaning a 5.5 percent anticipated increase in the education property tax does not necessarily translate into a 5.5 percent increase in one’s actual bill. The Shelburne School Board, for example, notes that a property owner in Shelburne with a house appraised at $250,000 probably pays around $3,351 in education taxes this year; and approximately $3,463 next year, a 3 percent increase. This functional lack of transparency is one of the ongoing complaints about the current system; however, when determining a tax, what is “fair” and what is “simple” are generally at odds.
The remaining two-thirds of property owners pay based on income or a combination of income and appraisal. If you pay based on “income sensitivity,” your education property tax will be more closely tied to whether your income went up or down.
I look forward to seeing many of you at the annual supper on Monday, before Town Meeting.