Governor Phil Scott presented his annual Budget Address for the second time on Tuesday, laying out his vision for spending $3.86 billion. His budget director referred to it as a “no-frills” event – we couldn’t agree more.  It was light on specifics particularly as it relates to cutting property taxes.

This year’s state budget increases spending by $82 million or 2.3% over last year. Three weeks ago, in his State of the State Address, Governor Scott promised no increases in taxes or fees, including property taxes. But in his Budget Address this week he failed to provide specifics on how he would avoid a property tax increase. Instead, he placed this responsibility on the Legislature.

As one might expect, the Governor focused the majority of his speech on economic and workforce development.  The Governor proposed:

• $3.2 million campaign to attract people to Vermont by targeting those most likely to move
• $500,000 for business investment funds and worker recruitment
• $500,000 dedicated to training programs and re-alignment existing programs to retrain older workers
• $1.8 million for electric vehicle infrastructure
• $7.8 million for new mental health, child health care, and substance abuse treatment programs
• Shifting opiate resources to find jobs for those in recovery
• Investing an additional $20 million in state employee and teacher pension funds to meet obligations

On the education front, the Governor continues to place his support behind the Act 46 consolidation effort by imploring lawmakers to find savings and efficiencies and urging them to “accelerate this work.”

State Board of Education members announced last year that Act 46 would yield little to no cost savings and that efforts to consolidate school districts were really about “improving the quality of education.”

Scott did not offer any specific proposals other than his support for moving the student/staff ratio from 4:1 to 5:1.  This is not a new concept as there have been proponents of this policy for several years including from his own Secretary of Education Rebecca Holcombe.

Deeper Dive on Savings from 5:1 Student/Staff Ratio
The Governor says he expects $100 million in savings annually. If you average those savings incrementally over the five years he expects to get there, it would only amount to approximately $20 million in 2019.

CFV continues to be vocal about the lack of savings that has resulted from Act 46.  CFV believes Vermonters would benefit from simplifying our state’s education funding system. The development of a mechanism where higher-spending districts pay more on their property taxes has some merit.

Although Governor Scott did not mention these plans specifically, there are a few variations on this concept that the House Ways & Means Committee is considering. If, for example, income sensitivity ($170 tax expenditure) were moved out of the Education fund, it would reduce property taxes statewide by 30 cents overnight and simplify the tax system for Vermonters.

One idea that Campaign for Vermont has advocated for since 2011 is to make the statewide education funding system more transparent to the Vermonters who pay it. This work is already underway in the House Ways & Means Committee.

Although both of these policies are good ones, neither of them promise to reduce education spending enough to offset the $70 million deficit created by the Legislature underfunding the Education fund over the past three years. This deficit is projected to force property tax rates up by 7% statewide.

Just last week, we saw the Burlington School district announce their budget cut of $150,000 but they still are anticipating a 7% increase in their property tax rate.  This same narrative expected to play out in other towns all across Vermont as we near Town Meeting Day in March.

If you missed the Governor’s budget address, you can read it here: campaignforvermont.org/governor_phil_scott_2018_budget_address

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