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Ed funding

03/01/07 12:00AM By Dick Mallary
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(HOST)Tonight on VPR's Symposium on the Future of Education in Vermont, the focus shifts to how we pay for our education system, and the thinking behind Vermont's education financing reform movement, which seeks to change the basic laws that direct how we pay for primary and secondary education in Vermont. This morning, commentator Dick Mallary begins the discussion by suggesting that the laws themselves do not need reforming.

(MALLARY) These days we hear a drumbeat of criticism and complaint about Act 60 and Act 68. We are told that they are unfairly driving up property taxes and that they should be repealed so that we can start afresh to decide how we should pay for education.

There is little truth in these complaints. The problem is the cost of education, not the system for paying for it.

Real estate property taxes to pay for education in Vermont have risen rapidly in recent years. This has been driven everywhere by the rapidly rising cost of education and the rapidly rising market value of the real estate being taxed.

A third factor has made the rise exceptionally steep in those towns with highly valued property and few students - the so-called gold towns. The Brigham Decision and Act 60 have forced property taxpayers in those towns to contribute for the first time to general state-wide education costs. However much they may wish it, there is no possibility that those towns can return to their prior favored tax status.

We now support the costs of education with a blend of taxes - property taxes, income taxes and consumption taxes. Each year the legislature decides how much of the support of education costs should come from each of these sources. It does so by setting the rate of statewide property taxes and by manipulating the flows of other taxes into the Education Fund.

This is fundamentally a tax policy decision.

It is unrealistic to think that Vermont can ever eliminate reliance on property taxes for a significant part of the support of education. It can, however, shape them to meet its goals.

The present system, Act 68, achieves equity among towns by means of the state-wide property tax based on equalized grand lists where all towns must contribute their fair share.

Act 68 achieves equity across individuals by its income-sensitization of taxes on primary residences and up to two acres - a system where most residents pay education taxes based on their income rather than on their home's value.

Act 68 and the present system do not, however, do not succeed in controlling the rapid growth in education spending. The relative generosity of the income sensitization program significantly immunizes the majority of residents - those who vote on school budgets - from an excessive tax burden and, therefore, from the effects of their votes on those budgets. The extra burden that they escape falls on those who are not income-sensitized, those with more than two acres and those with non-residential property. And education costs continue to rise at unacceptable rates.

If the legislature this year genuinely wants to reduce the total burden of property taxes for education, it can do so easily by adjusting the statewide property tax rate and supplementing the Education Fund with other funds.

Dick Mallary has served extensively in state government and is a former US congressman from Vermont.
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