By Amy Ash Nixon, VTDigger.org
The House-proposed statewide property tax increase is lower than the rate of growth that the Legislature passed last year.
The state needed to generate $50 million to support increases in statewide education spending for the current year. And it needs $16 million in new taxes for school spending in fiscal year 2016, according to Mark Perrault, senior fiscal analyst with the Joint Fiscal Office.
That’s because House lawmakers are banking on a slightly lower spending rate increase, other expected revenues, growth in the state’s Grand List (the value of property statewide) and $11.5 million in reserves from the education fund. The House Ways & Means Committee supported using the reserve to keep tax rates down.
Perrault said the $11.5 million available in reserve funds is above and beyond a set-aside for the “stabilization fund.” Each year the state must put at least 3 percent of the value of the overall education fund in the fund. In fiscal year 2016, the House plans to put 4.8 percent in the fund, about $1.2 million short of the 5 percent level, which is considered to be a “full reserve,” Perrault said.
Statewide education spending increased by an average of 3.1 percent last year. The average spending increase is expected to be 2.95 percent this year.
Vermont’s education funding system is unique. Education spending rates are set by local districts, while the statewide property tax rate is set by the Legislature. School districts pay for education with state and local taxes. The formula under Act 68 is designed to provide equalized funding for education across the state.
The education fund has grown by $30 million to $60 million per year over the last five years even though student enrollments across the state have continued to decline. In fiscal year 2015, the education fund was $1.5 billion. A decade ago, the fund was $1 billion.
The Legislature is trying to find a way to pull the state’s 277 school districts into fewer, much larger, school systems to find cost savings and improve educational opportunities for students statewide.
The House recently passed education reform legislation, H.361, that would eliminate the existing supervisory union structure and create integrated education systems with a minimum of 1,100 students. The bill is now in the hands of the Senate.
The homestead property tax rate as passed out of the House Ways & Means Committee calls for the same rate in fiscal year 2016 as this year, $0.98 of taxes to be assessed on every $100 of property valuation.
For non-homestead ratepayers, the rate will go up 1 cent from $1.515 to $1.525.
The household income rate is going up from 1.8 percent to 1.94 percent. People who are eligible for income sensitivity prebates will pay more in education taxes as a result of the change.
The House has set the base education amount for fiscal year 2016 at $9,459. In fiscal year 2015, the base education rate was $9,285. The base education amount is part of the formula used to calculate local tax liability.
