Despite pleas from district residents who are concerned about huge property tax increases if the current property tax cap is eliminated as proposed, lawmakers on Friday announced that the district will not be able to vote on the budget on April 15. He rushed to push for a bill that would allow the government to postpone the move until the end of the day.
Members of the Senate Finance Committee voted in favor of H.850 on Friday. A day earlier, Stowe residents told the committee that despite cuts to school budgets, they still faced a 27% tax increase and that working-class residents were at risk of being forced out of their homes.
Sen. Ann Cummings (D-Wash.) said it can be difficult to pay high taxes yourself. Nevertheless, it rejected calls to delay the vote. She said as Town Meeting Day approaches, it's even more important to communicate clearly to the town about the new rules regarding school budgets.
“I think it’s a city. We need to know that this is not tied up in the Senate and the 5% cap is gone,” Cummings said before Friday's vote.
The bill is now headed for a full Senate vote on Tuesday, despite criticism that it will do little to help towns blindsided by soaring property taxes.
The bill, passed by the House this week, is an emergency update to Act 127. The 2022 law was intended to increase funding for school districts with higher per-pupil costs, such as rural schools and schools with large numbers of low-income and English-language students. language learner.
As a result, schools with fewer such students faced reduced state education funding. To ease the transition for areas where only a handful of neighborhoods were expected to be negatively impacted, Act 127 includes a 5 percent cap on property tax increases for those areas. It was.
But that “transition mechanism” failed spectacularly this year as school spending soared due to rising health care costs, general inflation and construction costs, pushing all school districts over the tax cap.
Sen. Tom Chittenden (D-Chittenden, SW) said the cap would be a “perverse move” on local spending because it has been shown to prevent property taxes from increasing by more than 5%. “I feel like it's creating an incentive,” he said.
The new bill would eliminate the cap, exposing dozens of districts to property tax hikes of up to 40% in some cases. To soften this more painful blow, H.850 would replace that cap with a “cent discount,” a tax discount for negatively affected districts that would be phased in over five years. Scheduled to be deprecated.
The bill would also allow affected districts to cancel Town Meeting Day votes on school budgets, rework the numbers and vote on them by April 15. The bill would require clerks to automatically send new absentee ballots to anyone who requested an absentee ballot on Town Meeting Day and would prevent districts from paying for new elections. He received $500,000 to support him.
Chittenden said he hopes the district will be able to remove extra funds from the budget, saving the state “more than $100 million” and reducing the tax burden on districts across the state.
Sen. Mark McDonald (D-Orange) compared the unprecedented scenario to the airline industry.
“We're aiming for an uncomfortable landing. We're going to turn around and try to land again,” he said.
Finance Committee Chairman Cummings said the Senate is under intense pressure to pass the bill because the community needs to know whether to move forward with the Town Meeting Day vote.
“We need to provide fair information to the town,” she says. “It's not going to be perfect.”
Stowe residents argued that the fairest thing to do would be to kill the bill and rewrite it to cap runaway spending in districts across the state.
The Stowe School District, part of the Lamoille South Superintendent Union, was one of the districts hardest hit by Act 127.
At an emergency meeting Wednesday, the Stowe Board of Education voted to cut $1.6 million from the school's budget and hold a budget vote on March 15th instead of March 5th.
The new $17.2 million budget would eliminate one teacher position and eliminate $1.5 million in costs that Lamoille South Superintendent Ryan Heraghty characterized as “critical safety needs.” .10% increase over last year.
Despite the proposed new “cent discount,” Stowe's estate property taxes are projected to rise by an eye-watering 27 percent unless Congress takes further action. Stowe's budget had to be cut to $15 million to avoid the 10 percent tax increase, according to the school district's budget statement.
That would mean cutting 19 teaching positions, which would make it impossible for the town's schools to operate, administrators said.
Several Stowe residents appeared before the Senate Finance Committee Thursday, urging lawmakers to consider the devastating impact lifting the cap would have on their town. Stowe School Board Chair Tiffany Donza told lawmakers that, in her view, the core problem is that Vermont's education funding cannot be sustained by the state's small tax base.
Donza said Stowe's school building is “decrepit” and that a $39 million bond that was supposed to fix it “failed miserably” in November. That's because many Stowe residents don't qualify for a reduction in property taxes based on their income, and instead pay taxes strictly based on value. of their home.
By comparison, Burlington was able to pass a $165 million bond to build a new high school in 2022 because the majority of voters were not directly affected by the tax increase, Donza said. said.
Donza suggested that one long-term solution would be to change the tax code so that second-home owners and short-term rental owners, a sizable group in Stowe, pay higher tax rates than businesses. did.
Currently, all of these categories pay the same nonresidential real estate tax rate.
But in the short term, Donza eliminated the “cent discount,” arguing that it was not enough to reduce spending across the state and instead capping district totals at 10% to 15% from the previous year. He urged lawmakers to impose the tax. Annual expenses.
“It's going to put out the fires that are raging in the state. That's the only thing,” she said.
Poor Keeland, a parent of two who rents a home in Stowe, said the town was already facing a housing affordability crisis. Homes that hit the market attract attention from second-home buyers, she said. Even if Keiland could afford to buy a home, she says it would be “insane” to do so with exorbitant property tax hikes on the horizon.
Retirees on fixed incomes are also “barely scraping by,” he added.
The testimony prompted senators to brainstorm ideas on how to reduce property tax increases, but no significant progress was made. Sen. Kesha Lamb Hinsdale (D-Chittenden Southeast) wondered if towns like Stowe, which have a lot of vacation homes, would be helped by higher taxes on such properties. ing.
Financial analyst Julia Richter's answer is that while the state's education fund may benefit overall from such additional revenue, it won't help Stowe any more than other communities. That's what it was. Similarly, senators wondered whether reserves could be used to lower property taxes.
They learned from Richter that a $13 million “tax rate offset reserve” was already factored into the calculation. In addition, a $57 million “stabilization reserve” fund could be tapped, which could have a negative impact on the state's bond rating, and school construction is on the horizon. Cummings said it was unwise to do so.
Mr Cummings downplayed the idea of introducing a new sales tax to raise the needed cash, pointing out that a sales tax would be regressive and mean it would hit low-income people the hardest.
Senators rejected the idea of a new spending cap, saying it risked perpetuating the very disparities between districts that Act 127 sought to address.
“Has there ever been a cap on school board spending?” McDonald asked.
“It won't happen in my lifetime,” Cummings replied.
Alison Novak contributed reporting.
