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In the first move toward possible compromise between lawmakers and the governor in the ongoing special legislative session, the House Ways and Means Committee is floating a proposal that would harness surplus money to buy down property tax rates for households next year.
Rep. Janet Ancel D-Calais, who chairs the committee, put on the proposal on table late Thursday afternoon. The plan uses $14 million of one-time money to prevent residential property tax rates from going up next year.
Nonresidential property tax rates, however, would go up 5.5 cents.
Ancel said using $14 million of one-time money buy down rates isn’t good policy, but she’s willing to make the move to strike a compromise.
“When people disagree they have to move to the middle — I’m moving to the middle,” she said.
However, Rebecca Kelley, a spokesperson for the governor, said that Scott won’t support a proposal that raises nonresidential property tax rates.
“If there’s still an increase of 5.5 cents…then we still have some work to do,” she said, noting that the majority of nonresidential taxpayers are Vermonters who live in-state.
The Legislature passed tax and budget bills this month that raise property tax rates — residential rates would see 2.6 cent hikes and nonresidential rates would see a 5.5 cent increase.
Scott has been resolute in his no new taxes campaign pledge and summoned lawmakers back to Montpelier Wednesday for a special session to hammer out a budget deal.
Ancel, who said she hopes to vote her proposal out of committee next week, stressed that she’s not willing to budge any more and that offering $14 million — the original rate buy down from the Legislature was $9.8 million — is already further than lawmakers should go.
“We keep rates artificially low with the use of this general fund one-time money and next year when the school budgets are passed … we have to make up that $14 million,” she said. “We’re in the situation we’re in this year because we used one-time money last year.”
The Democratically controlled legislature has resisted Scott’s proposal to buy down rates and planned to use $34 million of a state surplus to pay off retired teachers’ pension liabilities — a move lawmakers have said will save taxpayers $100 million down the line over 30 years.
Scott’s plan would use $58 million of one-time money to temporarily buy down tax rates. The plan would also enact a slew of education policy changes the administration says would yield $300 million in savings and keep rates level for five years.
But unless significant savings are realized right away, the temporary buy down won’t last and rates will go up next year by 5 cents for residential property taxes and 7 cents for commercial property owners and second homeowners.
The administration says that by enacting its five-year education financing plan, it will be able to pay back the one-time money and invest millions into early child care, higher education and technical learning.
The plan would generate savings through reforms to the special education system, a statewide teacher health care plan, a task force to accelerate school consolidation and a threshold that penalizes districts that spend above a certain level on their schools.
The Joint Fiscal Office and Democratic lawmakers have called the administration’s projected savings into question.
For the second time this month, analysts with the JFO told lawmakers they can’t figure out how the administration has arrived at the savings targets.
The lion’s share of the net savings would come from changes to student-teacher ratios, but there is no mandate for districts to meet those ratios thresholds, and legislators argue that because the administration’s plan would reinvest local savings in pre-K and higher education programs, there is little incentive for districts to cut costs.
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