Montpelier, Vt. – Statement from the Office of the Governor:
In May, 111 legislators voted for H.887, known as the “Yield Bill,” which sets statewide property tax rates based on a funding formula, school budget votes and several other factors (House and Senate vote count). In June, 125 legislators voted to override Governor Scott’s veto of this bill (House and Senate vote count), imposing an average property tax bill increase of 13.8%.
Governor Scott has been working to prevent this type of unsustainable increase since first coming to office. He’s proposed several initiatives to allow the state to manage the Education Fund and address cost drivers like school employee healthcare, while re-investing in educational programming, all of which have been rejected by the Legislature.
When vetoing their Yield Bill, Governor Scott proposed an alternative package to bring down this year’s property tax rates, while setting parameters to help slow growth and prevent significant increases next year.
Since passing this historic property tax increase, many in the Legislature, and the Lt. Governor, have sought to justify their decision by providing inaccurate information and mistruths about the Governor’s proposal.
But here are the facts:
- LEGISLATORS’ CLAIM: The Governor’s proposal “would have resulted in 30% higher taxes on our businesses.”
- TRUTH: This statement about the Governor’s proposal is simply not true. The proposals Governor Scott put forward would have reduced the average bill increase for both residential and non-residential (business) ratepayers to about 5%. (Source: Proposal Sent to legislators and media)
- LEGISLATORS’ CLAIM: The Governor’s proposal “triggered deficit spending.”
- TRUTH: The Governor’s proposal did not deficit spend. He proposed using unspent budget dollars from Fiscal Year (FY) 2024, unallocated revenue surpluses from FY 2025, funds in the Education Stabilization Reserve (meant to stabilize the Education Fund in times of crisis), and reverting to a needs-based school lunch program. Surpluses and reserves are comprised of money taxpayers already paid to the government. (Source: Proposal Sent to legislators and media)
- TRUTH: The Governor presented his proposal as a “menu” of options. With any one of these funding sources, the Legislature could have reduced the rate and lowered the property tax increase for Vermonters. But they did not adopt any of them. (Source: Proposal Sent to legislators and media)
- TRUTH: The Governor asked that the Legislature – at a minimum – account for the $4 million in savings local school boards achieved over the spring and summer. Instead, the Legislature’s Yield Bill collects this $4 million, which is more than needed to fund the budgets voters passed. (Source: Proposal Sent to legislators and media)
- LEGISLATORS’ CLAIM: The Governor’s proposal would have resulted in “much bigger increases next year.”
- TRUTH: The Governor’s proposal brought down rates this year, and, importantly, it would have set an “allowable growth rate” for next year to limit system-wide spending growth, as well as beginning work on a new education funding formula for medium- and long-term structural reform. This is in contrast to the Legislature’s approach to buying down rates without significant reforms to limit spending in future years. (Source: Proposal Sent to legislators and media)
- LEGISLATORS’ CLAIM: The Governor’s proposal would have negatively “impacted the State’s credit rating.”
- TRUTH: The Treasurer and Scott Administration met with all three credit rating agencies in May, and all three elected to maintain the State’s credit rating, announcing the ratings several weeks before the Legislature rejected the Governor’s proposal. (Source: Rating Agency reports available via Office of the Treasurer)
- TRUTH: The ratings agencies were aware of the property tax dispute, the proposals on the table, as well as the Governor’s plans to veto the bill, and yet it did not impact the rating. (Source: Rating Agency reports available via Office of the Treasurer)
- TRUTH: Ratings agencies have consistently cited the State’s aging demographics and structural imbalances as risks to Vermont’s credit rating rather than pointing to any particular proposal. (Source: Rating Agency reports available via Office of the Treasurer
- LEGISLATORS’ CLAIM: The impact of Act 127 of 2022 (which applied a pupil weighting element to the formula) on property tax rates was a surprise or “anyone’s guess.”
- TRUTH: The Governor forecasted the impact on property taxes in a letter to the Legislature in 2022, and called on the Legislature to make changes to the law to prevent this added pressure, noting: “We also know this bill risks further increasing the cost of our education system in a way that compounds these underlying issues - particularly if we continue to see fewer and fewer students alongside annual school budget growth of three to four percent, on average. At the same time, the Legislature passed several other new policies, including universal school meals and PCB remediation, community schools, literacy reform and facilities repair that will likely lead to even higher costs for taxpayers. I urge the Legislature to work with my team, alongside our schools, to address cost containment and transparency to moderate the tax burden of the education funding system in the coming years.” (Source: Governor Scott’s Signing Letter)
These are just a few examples of false statements made about the Governor’s plan, his past proposals (of which there have been many), the options available to legislators this year, and the impact of tax increases.
Here’s the bottom line: Vermonters did not have to face an average 13.8% property tax this year, and much more could have, and should have, been done this year – and in prior years – to address this unsustainable pressure on Vermont taxpayers. Governor Scott just needs a willing partner in the Legislature.
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