Lawmakers unveiled sweeping changes to education finance that would reduce local control

A key Vermont House committee on Tuesday unveiled the outlines of a major education finance overhaul that would fundamentally change the state's tradition of local control over school budgets.

An initial vote could come as soon as Friday on the proposal, which, starting in 2027, would require the state to make an initial decision on how much school districts should spend, and impose a tax penalty on districts that choose to spend higher amounts.

Decisions about how much Vermont school districts spend are currently made at the local level, although school spending is almost entirely funded by the state. School boards prepare a proposed spending plan for the upcoming year, and, in the spring, put those budgets before local voters. The Legislature then tallies all the voter-approved budgets, then calculates how much money it needs to raise to spend in each district. That's when they set property tax rates.

It's a system that always irritates lawmakers, who complain that spending is out of their control, while voters consistently blame them for high taxes. But those concerns grew more acute this year as lawmakers grappled with unprecedented increases in education spending.

House Ways and Means Committee takes first look this week in legislation Which would fundamentally change the school budgeting process. Starting in fiscal year 2027, the state will calculate how much each district should spend based on its enrollment and demographics, and send “Educational Opportunity Payments” directly to districts. Local school boards can propose, and local voters can approve, “additional spending” on top of these state payments, but local property taxpayers must pay a tax penalty in return.

Rep. Emily Kornheiser, the Brattleboro Democrat who chairs the panel, said in an interview that the proposal aims to give Vermonters more “stable, predictable and knowable tax rates.” And what his committee has heard this year “underlines why we say there is local control.”

Kornheiser said districts should already be mindful of state and federal mandates and guidelines. And because all school budgets are funded by the same statewide funds, each district's spending decisions affect not only their tax rates, but everyone else's as well.

He said, “I think in many ways it's acknowledging the reality that each of our school choices is interconnected and the need for more simplicity to help people focus on what matters to them.” Is.”

The legislation also contemplates some short-term changes to deal with property tax increases this year. It would eliminate the sales tax exemption on cloud-based software, raising an additional $20 million for education funds. The bill would also create an additional one-time property tax credit for income-sensitive homeowners. But the issue of this year's taxes is far from settled, and the panel also plans to discuss other potential revenue sources to offset property taxes, including sports betting receipts.

How much money schools will spend next year — and therefore how much money lawmakers will have to raise to pay for the district budget — is also variable. But latest forecast predict that the average property tax bill for a homeowner will increase by 15.5%; The average property tax bill for non-homestead properties (which includes commercial buildings, rental properties and second homes) will increase by 18.6%.

Although the moratorium is barely a month away, it is a long way from becoming law before the House Ways and Means Committee. A vote in committee on the bill is not expected until Friday, and the panel is planning wall-to-wall testimony in the interim. If the legislation clears the committee, it will still need the green light of the full House and Senate.

Kornheiser said, “The bill we discussed today in committee is a deep draft, with so many decisions left to be made, so many changes left to be made, so much left to be done, consultation with so many stakeholders.” need to.”

Gov. Phil Scott's office said Tuesday that the governor had just received the bill and would need to study it further. But in an email, Scott's press secretary Jason Maulucci also indicated that the Republican governor wants aggressive steps to be taken much sooner than considering the legislation.

“With the damage to this year's increase already done, structural changes cannot be postponed to future years,” Maulucci wrote. “The governor is also opposed to reducing the property tax increase by imposing new tax increases elsewhere. This is actually taking Vermonters' money out of a different pocket, without actually addressing the underlying affordability concerns.

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