Vermont’s governor and other state policymakers are looking at ways to make their new school-finance-reform plan more palatable to wealthy districts.
Since the law, Act 60, passed earlier this year, affluent towns have been in an uproar over predictions that their property taxes will skyrocket while their per-student funding allotment from the state will be sliced significantly.
Gov. Howard Dean, a Democrat, plans to issue his recommendations later this month for minor changes in Act 60. The law restructured the state’s property taxes and mandated changes in the school finance system. (“Vt. Lawmakers Include New State Property Tax in Finance Plan,” June 25, 1997.)
The changes were designed to even out the distribution of wealth between property-rich towns, such as those in ski resort areas, and communities with depressed property values. The goal was to reduce funding disparities between the city- and town-run school systems across the state by lessening their reliance on local property taxes and enacting a new statewide property tax earmarked for schools.
But now Gov. Dean and some lawmakers say the law may have gone too far, too fast, for residents to stomach the changes--and understand them. Gov. Dean has been working with legislators and meeting with town officials for several months, his press secretary, Stephanie Carter, said. “He and the legislators are working on minor adjustments in many categories,” she said.
Search for More Money
The governor wants to find surplus money in the state budget to help pay for education expenses so well-to-do towns will not see their taxes shoot up when the new state property tax is imposed.
Traditionally, towns with expensive property have been able to generate plenty of revenues even while keeping their tax rates relatively low. But the new state property tax imposes a higher rate than those towns are used to paying, while also sending a greater share of their tax dollars into other districts around the state. To compensate for losing local tax dollars, such districts would have to tack on additional local taxes to break even.
Sean Campbell, the state’s deputy tax commissioner, said Gov. Dean was hoping to find a compromise with the residents of the wealthy towns to avoid lengthy court battles and ease tensions.
“It has become a hot issue politically and is pitting schoolkids and parents against taxpayers in general,” Mr. Campbell said.
Five lawsuits have been filed to try to overturn the law. They charge, among other complaints, that the law does not provide enough funding for well-heeled towns and cities to maintain an adequate education and shifts too much burden to the towns. State courts may begin to consider those cases as early as this month.
One of the governor’s proposed changes might include lowering the percentage change that property taxes could increase next year under the new system, from 40 percent to 30 percent.
Officials in Stowe and other towns adversely affected by the new law have also been negotiating their own compromise plans, Mr. Campbell said. But he maintained that the towns would likely see fewer effects from the new system than they now predict.
Wary in Manchester
Rep. Judith M. Livingston, a Republican from the ski town of Manchester, is wary of any compromise.
She said the law is too flawed to be fixed. In Manchester, the schools spend about $7,000 per student. Under Act 60, the town would have to boost local taxes--while also paying the higher state tax--in order to maintain its present level of funding. All in all, that would mean a 30 percent to 40 percent tax increase, Ms. Livingston said.
That’s unfair to businesses and property owners, she argued.
“The fact that we have highly assessed property does not mean we are wealthy people,” she said.