• Tax tinkering
    April 26,2013

    As the Senate takes up a bill addressing issues of school finance, senators should be careful not to be stampeded toward a solution to a problem that doesn’t exist. Better yet, they should take care to define the problem they are trying to solve.

    The House has approved a bill designed to help school districts slow the rapid increase in spending that has occurred in recent years even as school enrollments have dropped. But senators should beware of succumbing to the perennial imperative to curb property taxes by undoing a system that is one of the best in the country.

    People always complain about their property taxes, and politicians always like to act as if they are doing something to respond. And yet the system in place because of the reforms of the last 16 years means that the bite of higher property taxes has been minimized for most people.

    According to critics of the system, that’s part of the problem. Because the system is sensitive to the incomes of taxpayers, tax bills for most residential taxpayers rise only slowly. Protecting homeowners from higher taxes was supposed to be part of the point. Critics of the system pursue a contradictory goal when they seek to make taxes go up in order to force taxpayers to keep them in check.

    So if most homeowners are protected from higher taxes, who is paying the taxes that cover those escalating costs? It must be taxpayers not protected by income sensitivity, plus second home owners and businesses. The Legislature would also like to contain demands by education on the general fund, which is supported by broad-based taxes.

    One of the most important components of the new bill would discourage excessive spending by high-spending schools, thus reducing the statewide burden of education expenses. Another provision would penalize schools that exceed a specified staff-to-student ratio.

    High-spending schools already face a penalty if they pass a threshold that defines excessive spending. Under the bill, that threshold would be lowered. This provision of the bill may survive because it targets school districts with more room to save.

    In fact, the large increase in spending to which legislators are responding may not be the problem they think it is. Rather, it may reflect the success of the present system.

    The passage of Act 60 in 1997 allowed numerous schools throughout the state to catch up — improving programs, refurbishing buildings, hiring high-quality staff — by making resources available to them on an equitable basis. High-spending schools that had the benefit of low tax rates found themselves burdened with higher taxes, and it fell to them to exercise austerity they had never had to countenance before. But for previously impoverished schools, students enjoyed the benefits of equal opportunity. One result was a big increase in spending by schools that needed to increase spending.

    In hard times, school spending has slowed; during the recession many school budgets were held to increases of zero to 2 percent. In the last couple of years as the economy has slowly improved, schools have tried to make up for lost ground, and increases of 5 percent a year have become the norm.

    The Legislature could do serious damage to local control of schools by mandating a staff-to-student ratio. Legislators ought to trust school boards to know what their schools need. It is likely that any personnel who have survived the recession are essential. School boards don’t need to be taught a lesson from Montpelier on how to manage their schools. The bill also attempts to ease the tax burden on those making more than $90,000 by increasing the taxes of those making less. Rep. David Sharpe, of Bristol, said this move would “restore balance.” The added burden on those below $90,000 would be no more than 1 percent, he said.

    If senators plan to provide tax relief for upper-middle-class residents, second home owners and businesses by making most homeowners pay more, they ought to be willing to say so plainly. To be sure, balance is an issue in our tax system but not because middle-class taxpayers are not paying enough.

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