A bill meant to limit property tax increases next year is advancing in the Vermont House over the objections of minority Republicans who are highly critical that it doesn’t rein in spending.
What is known as the “yield bill” aims to keep predicted property tax increases to around 15 percent for most homeowners. That’s less than the 20 percent increase that was predicted late last year. Taxes on commercial properties and second homes would increase an average of 18 percent.
The increases are lower partly because of a previous bill enabling school districts to revise and reduce their budgets, as well as new separate tax increases to blunt the property tax spike. These include a 6 percent sales tax on cloud-based software, which is expected to raise $20.4 million, and a 1.5 percent surcharge on short-term rentals, which should generate another $6.5 million. The combined $27 million would be used to "buy down" local property tax increases.
Austin Davis, director of government affairs for the Lake Champlain Chamber, said the software tax will actually be "very expansive," affecting not just software downloads but virtually any business that uses internet-based software programs.
Democrats lauded the progress they’ve made in drafting the bill, H.887.
“I am glad to say that we are passing out a yield bill that continues a very strong commitment to our schools, to our kids and to our families,” Rep. Emilie Kornheiser (D-Brattleboro) said. Kornheiser chairs the House Ways and Means Committee, which voted on Wednesday to advance the bill. It’s expected to head to the full House next week.
But Republicans blasted the legislation as doing little more than raising other taxes to cover up the property tax debacle while dumping any real reform into the lap of a 21-member study committee. “This bill is more of the same thing,” Rep. Pattie McCoy (R-Poultney), the minority leader, said on Thursday from the Statehouse’s Cedar Creek Room, where the bill spawned dueling press conferences. “An increase in taxes and preservation of the failing status quo.”
Rep. Scott Beck (R- St. Johnsbury) said he supported an earlier version of the bill that contained additional measures to help bring school district spending under control. Those cost-containment provisions were stripped from the bill last week following the objections of the state teachers' union and the superintendents association, he said. “Without those provisions, we are simply left with insanity,” said Beck, who sits on Ways and Means.
Other committee members said the provisions Beck sought were unworkable. Rep. Jim Masland (D-Thetford) called the spending restrictions "very problematic" for people in his district. The final bill represented a “fair and equitable and useful compromise," he said in committee on Wednesday.
Gov. Phil Scott said in a release that taxes are "crushing" most residents and that the legislature has failed for years rein in school spending. “Today, it is clear the House’s only plan is to accept an unbearable property tax increase, without any cost containment, while adding other taxes and studying the problem for a couple years," Scott wrote. "That means we’ll be in this same mess for years to come. I cannot accept this, I know Vermonters won’t, and I hope the Senate doesn’t either.”
The bill calls for a Commission on the Future of Public Education to be formed by July. It would be tasked with making recommendations “for the best way to provide a sustainable, equitable and enriching public education for all Vermont kids,” House Jill Krowinski (D-Burlington) said.
Rep. Peter Conlon (D-Cornwall), chair of the House Education Committee, stressed the need for leaders to come together around a transformational vision for education. “Change won’t come immediately,” Conlon said. “But with all of us in the boat together, rowing toward a common goal, we can create a system that all Vermonters can be proud to support. This bill starts us on that journey.”
The commission must finish its work by the end of 2025.
Alison Novak contributed reporting.