On Jan. 1, 2017, Vermonters will begin the “transition” away from the property tax to the income tax as a way to pay for our schools. The income sensitivity program that applies to two-thirds of Vermont households will be phased out and the revenue raised for our schools will come from a blend of property tax payments and the income tax.
You’re in good company.
The legislation is part of H.889, which is the bill that sets the base rates for how we finance our schools. It passed the House earlier this month. It was the decision to phase out the small schools grant that gathered the most attention within the bill. Tucked far down in the legislation is this: “Sec. 23. Education Financing Reform (a) By January 17, 2017, the General Assembly shall transition to a tax system for financing education in Vermont that incorporates an education income tax.”
The bill does not propose to study the issue. It’s more declarative than that. The last paragraph of the section reads: “It is the intent of the General Assembly to pass legislation in 2015 and 2016 to implement subsection (a) of this section so that the first year the education income tax would be in effect would be calendar year 2017, and the money raised would provide funding for schools in fiscal year 2018.”
And no one knew?
That is a substantial policy shift in how we pay for our schools. And it appears to have been a debate that engendered little to no public discussion outside the legislative chambers.
Not only is moving from the property tax to the income tax a big step, the timing is this side of incredulous. It’s next January that legislators must also decide how to come up with $2 billion to pay for the state’s single payer health care plan.
Our schools cost roughly $1.5 billion a year to fund. If the Senate approves the same education financing reform wording as passed by the House, then next January legislators will be tasked with the need to find new funding formulas for both education and health care, which totals roughly $3.5 billion.
It’s almost May and we still have a health care exchange that is not fully functioning. How is it that Vermonters are to feel confident legislators are going to be able to figure out acceptable ways to reallocate $3,500,000,000 in taxpayer dollars to pay for our health care and our schools? All in a single legislative session?
There is already a profound sense of unease as to how we will find an affordable way to pay for the single payer health care system. It was something that we were supposed to already have done, but we haven’t because it’s complicated practically, and politically. Hence it’s been delayed until next January, which is an off-election year.
The debate over how to finance our schools is also complicated, practically and politically, and there are numerous questions to answer: What percentage of the cost of our schools is to be funded by the income tax? Will the tax be indexed according to one’s ability to pay and will it be indexed to inflation? If income sensitivity is dropped, which affects roughly two-thirds of all Vermont households, are they protected against having to pay more through the income tax?
If this is a move toward simplicity and ease of understanding the connection between their schools and their pocketbooks, consider part three of the proposed legislation: “(3) The education income tax which shall be indexed to a taxpayer’s federal adjusted gross income and shall be calculated by dividing the per-equalized-pupil amount of the district’s education spending, divided by a State base spending amount, multiplied by the statewide education income tax base rate, and then multiplied by the taxpayer’s federal adjusted gross income…”
Does that clarify things?
For the average Vermonter, next January is beginning to look like a $3.5 billion tidal wave of confusion.
We’re doing this to ourselves on purpose?
When does someone begin to wave the white flag of surrender?
St. Albans Messenger