For some time now, we have been talking about how, when all factors align, there will come a point when the population of taxpayers in Vermont can no longer afford to pay for the services required to run the state and educate our children.
We may be at our tipping point.
This week brought news that will anger most Vermonters.
In the annual letter forecasting the education tax rate, Commissioner of Taxes Craig Bolio noted, “This year’s letter projects property tax bills to increase by an average of 18.5% next fiscal year, driven largely by a forecasted 12% increase in year-over-year education spending.” He said, in addition, many districts are seeing changes in pupil counts due to implementation of the new pupil weights. Changes in pupil counts affect education tax rates, which are based on per pupil spending.
“I understand that this will not be welcome news for Vermonters,” said Bolio in his letter. “This forecast predicts an unprecedented property tax increase next year, with very real financial impacts at a time Vermonters are already struggling to pay for housing.”
If the forecasts come to pass, the property taxes on a $250,000 home would increase by about $650 next year. The increase in the non-homestead rate likely will put upward pressure on rents as well, he said. A senior citizen living on a mix of Social Security and a modest retirement account that totals $50,000 annually would see their net taxes increased by nearly $200, one Republican lawmaker noted.
Bolio wrote to lawmakers, “Coupling a historically unaffordable housing market with an 18.5% average property tax increase will only worsen the housing affordability problem for Vermonters. At a time when residents are paying more for everything, the Governor has tasked the Administration with working with the Legislature to address our housing affordability problems and to find ways to restore sustainable growth and transparency in the Education Fund.”
Republican Gov. Phil Scott, who has campaigned on affordability and has resisted tax increases whenever possible was aptly concerned.
“At a time when housing costs and interest rates are elevated, higher property taxes will make our housing and workforce crises worse, and I sincerely hope the Legislature agrees,” he said. “For years, I have warned that Vermont is unaffordable for too many families and small businesses. This is why for seven years I focused on holding the line on higher taxes and fees, while offering solutions to reduce the tax burden on Vermonters. And for six out of the seven years, we were successful in preventing new taxes and fees.”
The governor (and other Republican leaders) sent a clear message: “We should all agree it is time for us to take our affordability crisis seriously.”
“We have proven when we work together, we can make historic and impactful investments that produce positive results for our communities, without adding more financial burdens on residents. We can do that again, but it will require more than better budgeting in Montpelier. School boards, who already have a difficult job, will need to do all they can to contain spending to a rate that taxpayers can afford,” the governor urged. “Together, we can, and must, prevent this untenable tax increase, or anything close to it, from coming to pass.”
Bolio noted in his letter, almost contrition in sending the bad news, that Scott has long been concerned about Vermont’s demographics. “Among the most significant impediments to reversing our demographic trends is access to quality, affordable homes for working families.”
Rep. Pattie McCoy, of Rutland, the Republican House leader, agreed the forecast is unacceptable. She put some of the onus back on communities and school districts that are still working on budgets for the next fiscal year.
“Vermont children are our most precious resource. Yet we must be mindful that their care and public education is not supported by limitless resources. Unfortunately, the Education Tax Rate Letter released today does not provide balance that Vermonters can afford,” she wrote in a prepared statement issued Thursday.
“School district education spending requests for next year have not been finalized or warned, and importantly they have not been approved by voters. School boards must consider the tax burden being placed on taxpayers and change course,” she said.
McCoy acknowledged that last spring school districts asked for an additional $127 million from the Education Fund for the current school year, an 8% increase. Next school year they have proposed to further increase spending by $205 million, a 12% increase.
Unfortunately, education is only one factor of the state’s taxation equation.
McCoy points out that an economy growing at just over 2% does not support education spending increases of 12% with associated 18% property tax increases. “No one is asking school districts to do more with less; we are simply asking them to limit their increases to a level that Vermonters can afford,” she said.
“The impact of these possible tax increases are sobering, but when considered in the context of Vermont’s crisis of housing affordability and availability they are nothing short of catastrophic,” she said.
Now is the moment to keep our state from tipping over. Speak up. Get involved. Attend budget meetings. Hold local school officials and superintendents (and municipal officials well) working on these budgets accountable to the limited tax base supporting these towns, school districts and state.
Demand a result we can afford.
