• State leaders warn of education tax hike
     | December 04,2012

    Vermont’s small class sizes and their cost, among the highest in the nation, will once again take a heavy toll on property taxpayers in the coming 2014 fiscal year unless school spending statewide is leveled, according to newly released information from Vermont Gov. Peter Shumlin’s office and State Tax Commissioner Mary Peterson.

    In a letter to the Legislature on Friday, Peterson referenced a recent report analyzing the state’s education property tax system which called for more restraint in hiring teachers and staff as the state loses more and more students each year.

    For the coming fiscal year, the state’s student population is expected to drop by 670 students, down to 89,940, according to Peterson.

    Even though the state’s population has been dropping for the last 15 years, school spending — 85 percent of which is for teacher and staff salaries and benefits — continues to rise.

    For next fiscal year, the forecast for how much schools spend is projected to increase from 3 percent to 4.8 percent, which could drive the statewide education base tax rate up 5 cents, from 89 cents to 94 cents.

    The statewide rate is the baseline school districts use to set their tax rates, before the value of any given town’s property grand list is factored in.

    About $55 million more in payments will be made to schools to pay for education out of the statewide pool of public money for pre-kindergarten to grade 12 called the Education Fund if spending increases by 4.8 percent, according to Mark Perrault, the Fund’s fiscal analyst with the Legislative Joint Fiscal Office.

    Those payments will be made with the addition of new property taxes, a 35 percent increase in the amount of state sales tax that flows into the Education Fund, and $6.6 million more from the General Fund transferred into the Education Fund, Perrault said.

    If spending were to remain flat, which is highly unlikely, the statewide base tax rate won’t go up, according to Perrault and Peterson.

    If spending goes up with the rate of inflation at 2.2 percent, the statewide base tax will go up 2 cents.

    Total public education spending statewide this current fiscal year is $1.2 billion, Perrault said.

    In a Nov. 26 letter to school districts, Shumlin asked school leaders to “redouble efforts to constrain, if not reduce, education spending. By all accounts, our spending levels are among the highest in the nation. Along with changes in the statewide grand list, local spending is the driving factor in whether and how much education property tax rates rise or fall.”

    Perrault said schools level-funding their budgets is highly unlikely this coming year because of a number of factors.

    Property values statewide continue to decline, at a rate of 1.5 percent for fiscal year 2014.

    Health insurance for teachers is expected to jump 14 percent.

    Many teacher contracts statewide have already been settled, with salary increases, for years to come.

    And special education costs, with some services mandated by the federal government, are up 7 percent statewide, Perrault said.

    “It’s hard for districts to keep spending down,” he said. “If they were going to keep it flat, the only way to do that is to reduce the number of teachers and staff.”

    But, Perrault said, few cost-cutting initiatives have been discussed at the state level because the amount spent on Vermont schools remains in the hands of local voters.


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