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Time Running Out For Changes This Year to Vt. School Funding

Montpelier — Prospects appear to be dimming for big changes this year in how Vermont governs and pays for its public schools.

About three dozen local school districts have voted down their school budgets in the past five weeks, the largest number since 2003. That was the year lawmakers passed the last big overhaul of school financing, splitting the rates for homesteads and nonresidential properties.

Lawmakers say the local school district defeats — and dozens of others in which budgets passed narrowly — reflect growing frustration with school tax increases at a time of declining student enrollments.

Senate Finance Committee Chairman Tim Ashe, a Democrat-Progressive from Burlington, said the coming years may see lawmakers “attempting to recalibrate the funding system in light of what now appears to be the new normal in terms of the number of students in the system.” Vermont’s school population has declined from more than 106,000 students in 1997 to fewer than 90,000 now.

Lawmakers are responding to the pressure on two fronts: The House Education Committee has drafted an ambitious measure calling for larger school districts in the hopes that money can be saved by streamlining their operations. The bill would shrink the number of districts from more than 270 to fewer than 50, allowing consolidation and coordination of functions ranging from the school business office to special education, backers say.

Senate Education Committee Chairman Dick McCormack, D-Windsor, expressed doubt there would be enough time in a legislative session slated to wrap up by early May for his committee to give the House panel’s proposal “due diligence.”

“As every day goes by, its chances look less and less,” McCormack said of the House committee’s measure, which is under review in the House Ways and Means Committee.

But if the measure fails to pass this year, lawmakers say it’s likely to re-emerge next session.

On financing, a House bill passed Friday setting new and higher statewide school property tax rates included a provision calling for the state to move toward a more school tax system based on income taxes by 2017.

Rep. Jim Condon, D-Colchester, said lawmakers had been considering that for years but couldn’t get data from the Vermont Tax Department to analyze possible outcomes. A law passed last year allows legislative fiscal researchers access to that information while continuing to protect its confidentiality.

Condon said the school property tax would not disappear completely. Nationwide, schools rely on property taxes for an average of 40 percent of their financing, Condon told his House colleagues. Property taxes in Vermont provide about 65 percent of funding for schools, he said, adding that he wants to move Vermont closer to national norms.

Condon and his fellow Ways and Means Committee members said big questions remain about the income-based school funding idea. Vermont’s income taxes already draw criticism from some quarters as being too high, especially for high earners. There’s fear adding on a school income tax could worsen that picture.