As we approach Town Meeting Day the
issue of how to fund our K-12 education system is once again in the
news. The fact that we continue to have the discussion from one year
to the next indicates that it is not easy to address all the concerns
regarding property taxes, budgets and services that are needed.
Moreover, the current funding system is nearly impossible for the
average Vermonter to understand and for most legislators to explain.
At a briefing I attended, the remark was made that the system could
be simple or fair, but not both. This year the House Ways & Means
Committee decided to take a fresh look at how we fund education with
an eye toward making it easier to understand while maintaining
fairness in application.
Before describing the proposed changes,
it is important to review the roles of the municipalities and school
districts, the voters and taxpayers, and the state. School districts
decide what is needed to educate their children and put together a
budget, with taxpayer input, to meet those needs. The budget is
presented to the taxpayers who then either approve or disapprove it.
The state, on the other hand, is responsible for raising the money to
fund all the budgets passed across the state. Today, that funding
consist of 36% of the sales tax revenues, 100% of the lottery
revenues, a transfer from the General Fund, federal dollars, and a
statewide property tax. The burden on taxpayers is reduced by
adjustments to the property tax assessments based on household
income, and a fixed rate is assessed on all non-residential property.
The new proposal, which has not yet
been finalized, would keep the non-residential rate the same, but
would change the other allocations significantly. The General Fund
transfer would be eliminated, but 100% of the sales and use tax
revenue as well as 25% of the rooms and meals tax would go to the
Education Fund. The income sensitivity adjustment would be eliminated
and be replaced by a direct school income tax based on adjusted gross
income. Low income residents and property owners would continue to be
assisted by creating a homestead exemption, by exempting the first
$47,000 of income from the school income tax, and by retaining the
renter rebate program. Also, responsibility for several programs that
do not go directly to K-12 education will be moved to the General
Fund. Together, these changes would reduce reliance on the
residential property tax by moving to a tax that is more closely
related to ability to pay and would more closely link decisions on
school budgets to the actual homestead tax paid.
Finally, while the Common Level of
Appraisal (CLA) adjustment would continue to be a factor on the local
level, the per-pupil property tax yield would be reduced from $13,000
to about $5,000. Since the base statewide property tax would be
reduced from $1.00 to $0.25, the Champlain Valley School District,
which spends about $15,000 per pupil, would see an effective tax rate
of $0.75, three times the base rate.
Final details remain to be worked out,
as well as a decision as to whether the new funding system will go
into effect this year or next. The legislature will continue to look
for a fair, easy to understand funding formula that provides a
quality education for all the children of Vermont. I can be reached
by phone (802-233-5238) or by email (myantachka.dfa@gmail.com).
