STATEMENT: WE DON’T NEED TO RAISE TAXES TO SAVE $100 MILLION
Montpelier, Vt. – Governor Phil Scott today issued the following statement:
“After years of taxes being raised and new taxes introduced, Vermonters need a break. That’s why in my first term as Governor, I’ve been clear: I will not sign a budget or bill that increases taxes, including property tax rates. And that’s why I will not support the budget and tax bills passed by the Legislature this month, which raise property taxes by $33.4 million.
“The Legislature’s decision to raise property taxes is even more perplexing in a year the State has about $160 million more in revenue than we did last year – without raising taxes or fees.
“I put forward a five-year plan that eliminates the need for a tax increase this year, implements policy reforms to increase the efficiency of our education system and yields up to $475 million in savings over five years. These savings would be used to hold property tax rates level for five years, pay back the one-time money we need to keep rates level this year, and leaves hundreds of millions in additional savings to invest in early care & learning, technical education, higher education, and more. Along with helping homeowners and renters, we can help make it easier for employers to grow – creating more jobs for Vermonters – by giving them five years of stable property tax rates as well.
“In recent days, I’ve heard Legislative leaders contend they’d rather make an additional payment of about $34 million on our unfunded pension liability than to use that money to invest in my five-year plan. But, the fact is, if we move forward with my plan, we can meet both objectives without raising property tax rates this year.
“It’s important to note, the State is required to make annual payments to the teachers’ retirement pension fund through 2038. Per this schedule, the FY19 payment is already $97 million. For the next 20 years, these annual payments range from $100-$200 million every year (see Page 1 here). In the end, more than $3 billion will have been paid to this fund.
“It is true that making an extra payment this year, as the Legislature has proposed as an alternative to my proposal, will yield future savings in avoided interest. But, Legislative leaders are ignoring the fact that they’d be raising property taxes by $33.4 million in order to make this payment, and Vermonters won’t see a penny of savings until the year 2038 when the final payment would be $100 million less (see Page 2 here).
“I didn’t run for Governor, nor do I recall anyone in the Legislature running, on a plan to raise taxes in order to make an extra payment to the teachers’ retirement pension fund.
“Fortunately, we can still achieve these savings if we move forward with my plan and commit a portion of the future savings to pay down this pension liability, without raising taxes to do so.
“This is a year in which we have options – we simply do not need to raise property tax rates. I’m confident we can reach a resolution that achieves the priorities of both the Administration and the Legislature.”