Dear Chair Cummings and Members of the Senate Finance Committee,
Thank you for your ongoing work to address the trajectory of education spending through S.220. We urge the Committee to adopt enforceable mechanisms that align spending growth with the sustainable capacity of the Education Fund and provide immediate relief to Vermont property taxpayers.
Since the passage of Act 60 nearly thirty years ago, Vermont’s per-pupil education spending has grown at a rate nearly triple the national average. This expansion has also doubled the rate of inflation and, crucially, exceeded the growth of the consumption tax revenues that support the Education Fund. Because the Fund is self-leveling, any spending growth that surpasses organic revenue growth creates a deficit that is shifted onto property taxpayers.
What we can see in the chart above is that over the past several years overall spending has increased at a faster rate than consumption taxes, which is leading to more and more pressure on property taxes. Since 2020, homestead property tax collections have increased 62% compared to a 48% change in the sales & use tax revenues. To ensure long-term stability, it is essential that we implement meaningful spending constraints so excessive growth does not necessitate an ever-increasing burden on residential and commercial property owners. Spending needs to be brought back in line with organic revenue growth.
While the discussion around caps and lowering the excess spending threshold is a necessary starting point, these measures should serve as a definitive bridge toward a foundation formula. Given that spending growth has been a persistent challenge since Act 60, the most effective action this legislature can take is to implement the foundation formula quickly to introduce permanent fiscal restraint. While some argue that governance reform must precede this shift, Vermonters facing historic tax pressures cannot afford to wait years for governance changes to materialize.
The foundation formula remains the most effective tool to apply downward pressure on spending. Furthermore, its implementation can serve as a catalyst for necessary local governance decisions. Only if a consensus on an immediate transition to the foundation formula cannot be reached should alternative methods, such as caps, be considered. Should the Committee proceed with caps or a revised excess spending threshold, we urge you to set these benchmarks at a level that meaningfully compresses statewide spending growth. The current version of S.220 does not yet provide the degree of constraint necessary to stabilize the Education Fund.
We respectfully ask the Committee to prioritize these structural reforms to ensure a predictable and affordable education system for all Vermonters. I am available to provide further data or testimony to this effect at the Committee’s convenience.
Best Regards,
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Ben Kinsley Executive Director |
CFV is a nonprofit, nonpartisan advocacy organization comprised of over 20,000 Vermonters and dedicated to the vision of a more prosperous Vermont and growing middle class. We seek to accomplish these goals by reconnecting Vermonters to their government and advocating for more transparent and accountable policymaking.