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Senate’s Education Funding Bill: Small Tax Relief, Big Changes Deferred

In State
May 23, 2024
senates understanding of education funding bill

Vermont’s Senate recently passed its version of the education funding legislation, showing some potential relief for property tax hikes faced by residents.

Despite the measures, there was reluctance to overhaul the existing system regarding finance in education.

Initial projections suggested a significant increase in property tax; however, recent events have adjusted these numbers downward, although not as substantially as some had hoped.

The legislation known as the “yield bill” experienced minor alterations from when it left the House, mostly due to a combination of education fund revenue boosts and a slight reduction in school spending.

These changes resulted in a marginally reduced school property tax increase forecast.

Senator Ann Cummings expressed a wish for a more marked decrease in taxes but mentioned the limited time her committee had to investigate more impactful reforms.

Despite this, the bill may not come into effect as Governor Phil Scott indicated he might veto the bill unless certain changes are made.

In efforts to mitigate property taxes, lawmakers proposed using around $25 million from a one-time budget surplus alongside two new taxes potentially adding $27 million more in revenue.

However, this sum pales in comparison to the anticipated $182 million increase in education spending.

Changes in the legislation also addressed taxes on short-term rentals and software, with the Senate opting for a higher tax rate on rentals and a more focused approach on software taxation, affecting mainly businesses.

Aiming for fiscal restraint, the bill proposes resurrecting and lowering the excess spending threshold, which aims to discourage extravagant spending by penal grating districts that exceed the state’s average spending by a certain percentage.

Instead of introducing new finance policies, the Senate Finance Committee is considering assembling a summertime study group, tasked with scrutinizing various aspects of education funding—ranging from classroom sizes to district consolidations and alternative finance models.

The bill also intends to modify the Common Level of Appraisal (CLA) principle to smooth out fluctuating local tax rates post-assessment, easing the tax rate jolts that have upset many Vermonters.

One notable departure from the House version is the Senate’s postponement of a commission dedicated to examining Vermont’s public education system. Critics argue that expansive collaboration is needed to tackle such a complex issue.

Finally, the Senate voted against amendments focused on cost containment in private education funding realms.

The fate of the yield bill rests upon the House’s decision to either adopt the Senate’s amendments, propose their own, or reconcile differences through a conference committee.