Montpelier, Vt--The state legislature in Vermont, a state whose schools have traditionally been among the most reliant in the nation on local property taxes, appears ready to enact a bill that would boost state aid to schools by 50 percent.
Last Wednesday, the House of Representatives readily approved the measure, which would raise $22.4 million in new money by increasing the sales tax from 3 percent to 4 percent and the state income-tax rate from 23 percent to 24 percent of an individual’s federal income tax.
With the assured support of the governor and the state Senate’s leadership, the bill appears certain to become law.
The additional money raised would bring the amount of annual state aid to $65 million, close to 40 percent of the statewide cost of education, excluding federal programs and such “extras” as field trips, which are paid for with local funds.
State aid currently accounts for approximately 25 percent of the average district’s general operating revenues (excluding federal revenue), placing Vermont 46th in the nation in state spending for schools.
Nationally, the average state share of state and local revenues exceeds 50 percent.
A similar, if more ambitious, bill failed in January. The earlier proposal, which would have raised the sales tax to 5 percent, met with strong disapproval from legislators representing towns near the New Hampshire border.
Heavy Property-Tax Burden
Since New Hampshire has no general sales tax, lawmakers from the border area feared their communities would lose business to the neighboring state.
But the compromise was worked out because it has become increasingly clear in recent years, legislators said, that Vermont’s current system of financing schools places an inordinately heavy burden on property-tax payers and creates disparities in per-pupil expenditures among the state’s 246 school districts.
For more than a decade, Vermont has had a state-aid provision--known as the “Miller formula"--under which the state was supposed to provide 40 percent of the school districts’ general operating revenues. But in past years, the legislature has not appropriated enough money to meet the formula’s requirements.
The Vermont Education Association and other groups have long complained that education is “woefully underfunded” in the state, and the teachers’ group had threatened to sue to force changes in the finance system.
Furthermore, a land boom in the state has driven property values up, resulting in “highly inflated and unrealistic values,” said Representative Peter Giuliani, a co-sponsor of the reform legislation. Residents whose incomes have not kept pace with the increased property values, he said, have been paying far more than they could afford in property taxes.
While local districts will still be paying for most of their students’ education, the legislation would allow towns and cities to reduce property taxes.
