By Lola Duffort/VTDigger
Lawmakers have sent legislation setting next year’s school taxes to the governor’s desk, and property taxes will go up if the measure is signed into law. But they won’t skyrocket the way they would have had lawmakers decided to use them to plug the more than $100 million shortfall the state’s education fund is expected to incur.
Rep. Janet Ancel, D-Calais, who chairs the House Ways and Means Committee, said lawmakers didn’t want to lean on the property tax to fill the gap. Instead, they opted to set the so-called “yield,” the formula for calculating local property taxes, using the assumptions voters had before them when they approved school budgets in early March.
The average homestead property tax rate, if H.959 is signed into law, would be $1.54 per $100 in property value, according to legislative analysts. That’s a 3-cent increase from this year. Most Vermonters pay their education taxes based on income, and the average rate will rise to 2.51%, up from 2.47%.
Non-homestead properties, which include businesses, rentals, and second homes, will be taxed at a uniform rate of $1.628 per $100 in property value, also up about 3 cents from this year.
Gov. Phil Scott, whose administration earlier this spring suggested all school budgets be revoted, stopped short of saying he would sign the measure at a press conference Friday, June 26, but signaled he was open to it.
“I would like to see us do everything we can to reduce the costs, because we know we don’t want to have the taxpayers be burdened by this tremendous increase in revenue needed for the ed fund,” he said.
The pandemic has dealt a devastating blow to the economy and the state’s coffers. But it has also made it difficult to predict exactly how bad the problem will be. Revenue forecasts have swung wildly since the beginning of the coronavirus crisis, in part because of delayed tax filing deadlines.
Analysts at one point projected the education fund deficit next year to be just shy of $170 million, as meals and rooms and sales tax receipts cratered in the shutdown. The latest projection is significantly lower — $106 million — although still an unprecedented sum.
The Legislature recessed Friday and is expected to reconvene in August, when lawmakers will return to the problem of the education fund shortfall. Ancel said she’s hopeful lawmakers will have a clearer understanding, at that point, of what the needed funds will be.
“We’ve gotten more tax revenue than we necessarily anticipated. And it takes time to figure out whether that’s because lots more people bought stuff online, and those taxes come in pretty quickly and easily, or whether there was actually more economic activity,” Ancel said. “Those are the kinds of questions that we need to have better answers to.”
Lawmakers continue to hope that the federal government or Congress might decide to give states more flexibility around the use of their coronavirus relief packages. Tapping into the state’s $1.25 billion from the CARES Act would be the easiest route, Ancel said, although she’s not optimistic it will be an option.
“I think this is probably going to be a problem that we have to solve at the state level. But we want to give ourselves as much information as we can before we actually take action on that,” she said.
