Lawmakers sent a bill to Gov. Phil Scott鈥檚 desk Wednesday that relies on $118 million in one-time surplus money to keep education property taxes nearly flat.
Homestead tax rates 鈥� which is what residents pay on their primary home 鈥� vary from town to town, depending on local spending. But if the Republican governor signs , as he is expected to, the average tax bill will only rise about 1.1% next year.
Buying down the rate, as this use of one-time money is called, is generally considered bad policy 鈥� on both sides of the aisle 鈥� because it risks creating a tax spike in the following year. Surplus money that鈥檚 available one year can鈥檛 be counted in the next, and that means that even run-of-the-mill inflation could mean tax rates have to play catch-up in the next budget cycle.
Senate president Pro Tempore Phil Baruth, acknowledges freely that he鈥檚 argued against buying down tax rates in the past 鈥� including quite recently.
鈥淲e said that last year,鈥� the Democrat/Progressive said in an interview. But Baruth said the drubbing that Democrats took at the polls in November sent a clear message to Montpelier: Vermonters want property tax relief, now. With Scott 鈥� who has himself in the past 鈥� offering in January to hold property taxes flat if school boards kept spending to projected levels, Baruth said he decided to take his cues from the governor.
鈥淲e are trying our best to follow the governor on this one,鈥� Baruth said.
Each year, the Legislature must pass the so-called 鈥測ield鈥� bill, which sets the property tax rates necessary to fund the school budgets that local voters approved earlier in the spring, usually on Town Meeting Day. Despite aggressive personnel cuts, cost pressures including health care will result in education spending increasing by . To offset the need for property tax increases, lawmakers will use a $41 million education fund surplus and an extra $77 million from the general fund.
Democrats are deviating from Scott鈥檚 initial plan in only one respect 鈥� they won鈥檛 nix the state鈥檚 universal meals program, which requires K-12 schools to feed all students for free. The governor had proposed rolling back the program to get the property tax increase closer to zero.
Despite widespread concern among Democrats about the use of one-time money, only two senators voted against the property tax bill Wednesday: Chittenden Central Progressive Sen. Tanya Vyhovsky 鈥� who tried and failed to amend the bill on the floor to only give a tax break to income-sensitized taxpayers 鈥� and Addison County Democrat Sen. Ruth Hardy.
Hardy said in an interview that she understands the urgency around reducing property taxes. But she argues that a lot has changed since November, and that the state should set more money aside to prepare for the economic shocks coming out of the Trump administration.
Vermont, she said, is a 鈥渧ery, very, very small state that is very reliant on federal funding.鈥�
鈥淚 think we might be sorry that we spent it all this year,鈥� she said. 鈥淭here might be a rainier day next year.鈥�
