Vt’s Education Funding Formula Shakeup Study
BY JOSH O’GORMAN VERMONT PRESS BUREAU, May 29, 2016
MONTPELIER — A proposed change to education funding in Vermont is getting a closer look.
The Joint Fiscal Office is performing an analysis of a proposal from Sen. Anthony Pollina, D-Washington, that would tax a wealthy person based on income rather than property.
About 80 percent of the money for the state’s Education Fund comes from property taxes. Under the state’s income sensitivity program, property owners who earn less than $90,000 a year pay no more than 3 percent of their income on property taxes.
Pollina is proposing that people who earn more than $90,000 also pay 3 percent of their income or their full property tax bill, whichever is more.
During the last legislative session, Pollina introduced a bill to make this change. And while it didn’t get much traction, the bill that set property tax rates for the upcoming fiscal year includes a provision calling for analysis of Pollina’s proposal.
“I think the fact the JFO (Joint Fiscal Office) is going to look at this is a real step forward,” Pollina said. “We think 3 percent of your income is a fair amount to pay. If it’s fair for lower- and middle-income people to pay 3 percent, why isn’t it fair for wealthy people?”
Pollina cited statistics from the Vermont Department of Taxes, showing that, on average, property owners earning $90,000 to $100,000 already end up paying 3 percent of their income in property taxes.
“If it’s fair for lower- and middle-income people to pay 3 percent, why isn’t it fair for wealthy people?”
Sen. Anthony Pollina
However, someone earning $300,000 to $400,000 pays 2 percent of their income in property taxes.
Property owners earning $500,000 pay 1 percent of their income in property taxes, while someone earning $1 million pays one-half of 1 percent.
According to early estimates, Pollina’s proposal would raise approximately $80 million in new revenue, with the money being directed to the Education Fund, a move that would amount to a course correction.
During the past six years, the percentage of money in the Education Fund that comes from the General Fund has fallen from 40 percent to 19 percent, leaving property owners to pick up an ever-increasing portion of education expenses.
“I’m confident that the results of the study will show it generates new revenue and make things more fair,” Pollina said.
The study will be completed by December, in time for the 2017 legislative session.