Everyone wants answers about why property taxes are going up another 12% next year. Some blame small schools, some blame administrative overhead, some blame legislative inaction regarding our education funding system and school governance.
Sadly this news was inevitable. While the Legislature, the Governor, and local Vermonters negotiate over what the next iteration of public education looks like in our state, they bought down property taxes last year using one-time monies. The Governor and the Legislature were both in alignment on this, but these one-time funds[1] created a $98 million hole for property taxes to fill in FY2027 (which is the 2026/2027 school year) before schools even spent a dollar more.
Of course, schools did spend a dollar more, or $114 million to be precise. At least that is what the state estimates schools will pass this upcoming Town Meeting Day. This means a combined total of nearly $212 million in new revenues necessary to make the Education Fund whole for next year.
Source: Vermont Education Fund Outlooks – Joint Fiscal Office
From the current year (FY2026) makeup of the Education Fund (EF), we can see that the largest non-property tax revenue source is the Sales & Use Tax, this is joined by the Purchase & Use Tax, the Meals & Rooms Tax, and the Lottery Transfer to make up the consumption tax revenue in the EF. The consumption taxes are projected to increase by $21 million in FY2027. Sales & Use, which is of course the largest of the four, is expected to see only a 2.5% growth rate.
In order to accommodate the expected 5.7% increase in school spending, property taxes must grow at a higher rate because the other revenue sources (particularly the consumption taxes) are growing more slowly than spending is. This leaves $191 million in school spending to be picked up by both the Homestead and Non-Homestead property taxes.
However, school spending (or rather the budgets passed on town meeting day) is not the only spending obligation that the EF covers. There are additional things like special education, pension funds, transportation aid, and universal school meals that are paid directly out of the EF. These additional items are expected to increase $19 million in FY2027 so the total property tax increase for next year nets out at $205 million.
If we break down that increase, there is plenty of blame to go around. One-time monies and school spending are responsible for 43% and 49% of the increase respectively. Essentially, the Legislature, the Governor, and school budgets are all responsible here.
Perhaps the better question is how did we end up here? There has been a 47% increase in school spending since 2019. Adding to that has been a 54% increase in state-directed spending during that same time-period. In dollars, that totals $838 million in new spending. Consumption taxes have only increased $265 million during that timeframe which means that property taxes needed to pick up the slack. That has resulted in a 62% increase in the homestead property tax bills that Vermont families are paying. An average growth rate of nearly 9% annually for the last 7 years.
Source: Vermont Education Fund Outlooks – Joint Fiscal Office
I think most of us have probably felt the weight of these increases. Incomes have certainly not kept pace. In the five year period between 2019 and 2024 the Vermont median household income grew 24.2%. That equates to 4.8% per year while property taxes were increasing at a rate of nearly twice that.
So what do we, as Vermonters who care about both our schools and our wallets, do about this? Well, the Governor has already suggested using another $75 million to kick the can down the road again. This is a bit like a game of hot potato, eventually someone will have to pay the bill.
The real solution is to reduce current education spending and put in place mechanisms that apply downward pressure on future spending. Many of the components of Act 73 do this, the governance changes are intended to reduce administrative overhead, class size minimums will reduce instructional overhead, and a statewide foundation formula will provide the mechanism for downward pressure on future spending.
The best thing we can do at this point is advocate for evidence-based reforms that have been proven to work in other states. And, of course, urge our Legislators to follow through on right-sizing our staffing and put in place a foundation formula that will balance the needs of students and taxpayers.
[1] $77.7 million from the General Fund in addition to the $20.6 million in unallocated funds – EF Outlook
Updated 12/30/2025