Tax Day 2022

Tax Day is here and Adjournment is in sight.

The last few weeks have been a whirlwind. We made it through crossover and we can see the legislation that needs to be carried for the next month to become law. My last newsletter and town meeting report covered most of the bills that are in the mix and you can find it on my website if you missed the email. Since the flurry of cross over bills, the floor has been quiet and House committees have been hard at work tackling legislation that the Senate sent over.

Tax Day is one of my favorite holidays—

For most of my adult life I could count on a big refund from EITC and CTC, plus credits for childcare expenses and student loan interest deductions. This lump of cash would also get me out of a current or future deficit– paying for car repairs or back bills or summer child care expenses. This year I actually filed an extension because I haven’t had time to get my paperwork together.

Taxes are the price we pay for civilization. In 1852 a committee appointed by the governor of Vermont wrote a report for the legislature which included the following:

“Taxation is the price which we pay for civilization, for our social, civil and political institutions, for the security of life and property, and without which, we must resort to the law of force.”

I ran for office because I don’t just think of taxes as a necessary evil but a fundamental structure and symbol of how we each commit to the greater good. With taxes we each pitch in for the project of democracy— and we do it every day— not just on Election Day.

The first paragraph of my campaign materials reads: “I want us to create a government we can trust to hold us to our best selves—to allocate joint financial resources equitably and sufficiently, to secure equal rights and dignity for all, and to make sure everyone has access to quality healthcare, education, affordable housing, and social supports paid for with a progressive and fair tax system. I focus my service as a representative, on bringing people in to the work of government and building participation in our democracy.”

This is hard work, especially on the state level when we know our neighbors and the size of their house or the price tag on their car. When abstract notions of “job creators” or taxing the “1%” might really apply to the person who gave your brother their first pay-check. I was proud to be appointed to the committee on Ways and Means near the end of my first term and have appreciated the chance to dive deep this biennium in my position as Vice Chair.

Our committee on Ways and Means passed a number of progressive tax bills this biennium that are still “in play.” - We’ve restructured our corporate tax structure in S53 to ensure that C-Corps can’t hide revenue in subsidiaries, affiliates, or overseas. We also significantly raised the corporate minimum tax for high earning corporations and lowered it for the tiniest companies;

  • We expanded a tax credit for replacement of manufactured homes that we funded with a surcharge on the transfer of high value homes;

  • We brought more Vermonters under social security tax exemptions;

  • As well as creating tax and fee exemptions for land owned and used by Abenaki bands.

  • With lessons learned from the federal child tax credit we passed a significant Vermont child tax credit that puts $1200 into the pockets of families with young children. This is the largest state level CTC in the country.

This is just a few examples of the tax policy work that I’m proud of from earlier in the biennium.

Since cross over, the House Ways and Means Committee has focused heavily on Education Finance and finding the best path to passing the recommendations of the Taskforce that I co-chaired: The Taskforce on the Implementation of the Pupil Weighting Factors Report.” S.287: An act relating to improving student equity by adjusting the school funding formula and providing education quality and funding oversight is a massive change in our education funding system and a redistribution of spending and tax capacity on a scale that we haven’t seen since Act 60.

Vermont’s commitment to equitable access to education is enshrined in our state Constitution, and has been advanced by landmark legislation such as Act 60 of 1997 and Act 68 of 2003. Taken together, these bills maintained our state’s longstanding tradition of local control over school budgets, while setting up a far more equitable school funding system.

The goal of the new system was clear: Any two towns with the same per-pupil spending amount — regardless of each community’s overall property wealth — will have the same tax rate. And by collecting property tax and other revenues into a statewide education fund, we affirmed that all of us are collectively responsible for educating Vermont’s children. It is a shared rather than a town-by-town commitment.

Vermont’s education finance system is notoriously complex because we’re balancing two goals simultaneously— local control and equity. One of the built-in equity mechanisms, carried over from our previous (pre-Act 60) funding formula, is “weighting,” which adjusts for the varying costs of educating different categories of students. The weights acknowledge that it’s more expensive, for example, to educate high school students or children who are living in poverty.

In 2019, a peer-reviewed concluded that Vermont’s funding system does not adequately account for the different costs — from district to district — of meeting students’ needs.

In January, our legislative task force made a series of recommendations to address this long-standing and long-overlooked component of our school-funding equation. S.287 sets us on a path for more equitable outcomes for all of Vermont’s kids. There is broad agreement that we must act, and we must act now.

The task force proposed two paths: updated pupil weights or cost adjustments. Each would unquestionably deliver on the goal of equity. And each would deliver very similar tax impacts to communities. This must be a shared solution, and here’s why: Every year we all chip in, collectively, to cover the total cost of all voter-approved budgets across the state. When any given district gains tax capacity — spending the same for a lower tax rate — they are contributing less to the Education Fund. That means other districts must lose tax capacity and contribute more. It is symbiotic. And it’s the only way to fix the system and advance equity for every kid, every school and every district across the state.

The bill that we’re working on, S.287, updates the funding formula by fully implementing the adjustment in a single year, so districts that need more resources can deliver on that promise immediately. Meanwhile, districts that will see reduced taxing capacity — requiring a higher tax rate to keep spending the same — will transition through a mechanism that limits the tax-rate increase to a maximum of five percent each year.

I’m in awe of the power of acknowledging the true need of each of our districts, schools, our kids and families. But when we take the next step to calculate each district’s share, it’s really important to understand the interactive effect of the adjustments in our collective education fund. Just because our district has a high number of kids living in poverty, or a small school, doesn’t necessarily mean we’ll see a lower tax rate in relation to other districts. The collective need of another district might be higher than ours, and in our “self-balancing” Education Fund, everything has to work together.

And the devil is in the details— the way we measure poverty under current law is broadly agreed to be inaccurate. By gathering poverty data via a proposed Universal Income Form starting in 2023, we anticipate districts will have much more accurate rates, especially those who like Brattleboro who have not needed to use school lunch forms for a few years — and they will have this data before the new adjustments begin in FY25. This may benefit many districts by capturing the true scope of their need.

In addition to improving our poverty data and limiting tax impacts to five percent annually, S.287 also suspends ballot warning language and the excess spending threshold. Taken together, these provisions create a softer landing.

The bill also fully delivers on the promise of equity for our English Learners and creates the capacity to focus and support EL learning throughout the state. First, it includes a significantly higher adjustment that gives districts the resources they need to deliver high-quality instruction and services — as required by federal law — to ELL students. For example, Winooski, the community with the highest EL rates in the state, could see its tax rate drop to the lowest possible level allowable in statute…or they can use that capacity to spend more money on their kids. Second, it stands up a supplemental categorical grant program, entirely separate from the weights, to help districts with limited ELL enrollment.

We learned through testimony that the weights alone don’t deliver the taxing capacity that a district with very few ELL students needs. So the bill creates a supplemental grant program that provides $25,000 to districts with fewer than 6 students and $50,000 for districts with 6 to 25 students. This would be enough money to hire a part-time EL instructor or to share services across a district. Beyond 25, the weights should suffice, and at 50 students, districts are eligible for federal Title III funds. The bill also strengthens reporting, AOE oversight and accountability for EL programs.

Education funding is a really big lift in the best of times—it is complicated, confusing, and impacts all of us. We know how challenging these times are for ALL of our schools and we’re committed to a new funding formula that doesn’t leave anyone behind. Throughout this process, it’s been inspiring to see communities and school boards and legislators step up, engage in the process — and even accept the potential of higher tax rates — because they know it is the right thing to do.

This work has been both incredibly heartening and a tremendous amount of work over the last year– and we are so close to the finish line. We’ve needed to dive deep into the minutiae to ensure the math works while keeping the big picture of equity for our kids in view. Schools and taxes make people’s feelings run hot, and we need the trust of our communities in order to implement this well. I’m happy to dive into the details with anyone who reaches out– you know how to find me!

More opportunities to participate:

  • Weekly office hours, Sundays at 4pm. You can register here— come for an hour or just pop in with a quick question or piece of feedback.

  • Community Conversations, will restart when the legislature recesses in May. Stay tuned for possible IN PERSON locations.

  • The Montpelier Happy Hour continues with conversations about Act 250 and Truth and Reconciliation Commission. Subscribe wherever you find podcasts or catch back episodes on our website.

Resources available: - There is still significant funding to help pay the bills: mortgages, rent, utilities, internet, and heat. Even if you don’t have back bills yet, please be in touch with SEVCA to learn if you’re eligible. Or reach out to me with any questions.

  • Want to find all the Covid resources in one spot? Check it out. What’s missing, what should we add?

Take good care and please be in touch.

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