Kevin McCallum ©️ Seven Days
The House Ways and Means Committee on Friday
With huge property tax spikes on the horizon, lawmakers moved forward with a bill on Friday that they hope will lessen the increases by tweaking an education funding law and allowing cities and towns to postpone votes on school district budgets.
Under
H.850, districts can choose to rework their budgets and hold a vote by April 15.
The bill will also repeal a 5 percent cap on property tax increases that was included in the 2022 education funding bill, Act 127, as a way to protect districts from the shock of sharply higher taxes. The legislation will replace the cap with a "cents discount," or a five-year property tax discount for some districts.
It is unclear how many districts might take advantage of the offer to delay. Typically, most districts vote for school budgets on Town Meeting Day, which is March 5 this year.
The House Ways and Means Committee approved the measure by a 12-0 vote. It now heads to the Appropriations Committee.
Rep. Emilie Kornheiser (D-Brattleboro), Ways and Means chair, said the bill was the first of several steps the legislature intends to take to address a “perfect storm” that has led to ballooning school budgets.
Kornheiser, who has apologized for the failures of Act 127, acknowledged that it was “not a great situation” for districts to have to rework their spending plans this late in the budget season, but it was better than the alternative.
“I understand that this process and changing the rules of the game mid-session is incredibly disruptive to districts who choose to re-warn their budgets,” she said.
Due to the late date, the bill requires districts that will hold another vote to automatically send new absentee ballots to anyone who requested one for Town Meeting Day. It also provides up to $500,000 from the state's general fund to help districts pay to hold new elections,
including printing and mailing new ballots.
The bill is an update to Act 127, which sought to increase funding to districts with higher per-student costs, such as rural schools or those with a higher proportion of low-income students or English language learners.
The law revamped the complex state education funding formula to ensure districts with more of those students
would be able to increase services without raising taxes.
For districts that were expected to see tax increases, a 5 percent cap was created to soften the blow. But it didn’t work.
Some districts used the cap as a way to add one-time spending to their budgets for needed capital improvements. This increased education spending overall and drove up tax rates in historically disadvantaged districts that were supposed to benefit from Act 127.
The bill repeals the cap and instead provides school districts that face tax hikes with a proportional "cents rebate" on their homestead tax rate if they lower their budgets.
The rebate, which would be gradually reduced over five years, is estimated to cost $30 million next year.
While t
he cap provision resulted in the strange phenomenon of a district being able to add or subtract millions to its budget without affecting the property tax rate, the cents discount is linear: the lower a district’s budget, the lower the tax rate.
Lawmakers hope restoring a more direct relationship between spending and tax increases will help districts make more rational budgeting decisions and provide more transparency to voters. Some say that, upon first inspection, the cents discount seems like a better solution than the cap.
“Is it perfect? I don’t know,” said Heather Bushey, finance director of Essex Westford School District. But it’s “bringing back that linear relationship between spending and the tax rate I think is hugely important.”
Some have called for Act 127 to be repealed, but Kornheiser has rejected that approach. She acknowledged that the new measure will only soften the tax blow so much. The rest depends on how aggressively districts shrink their budgets, she noted.
The legislature
is considering other measures to lessen residents' property tax burden, and Kornheiser said her committee will be digging into those possibilities soon.
Gov. Phil Scott has said he agrees the cap needs to be eliminated but said more needs to be done to protect people from unsustainable property tax increases. Even some Democrats agree the bill doesn’t go nearly far enough.
“This is a nonsolution to a problem we are pretending to address,” Rep. Jay Hooper (D-Randolph Center) said on Thursday.
Rep. Jim Masland (D-Thetford), who sits on the Ways and Means Committee, said the new transition mechanism would help districts facing steep property tax increases, but only so much.
"You still have a parachute, but it's going to be a hard landing," he said.
Alison Novak contributed reporting.