A new estimate puts the projected average property tax bill increase next year at more than 20%. 

In response, the House tax committee is considering its options, including changing a controversial cap on local property tax rate increases.

Summarizing lawmakers’ views, Rep. Emilie Kornheiser, D-Brattleboro, chair of the House Ways and Means Committee, said in a hearing Tuesday that the immediate priorities would be finding new revenue sources for the education fund, adjusting the income-based property tax credit, and — perhaps most controversially — changing Act 127’s 5% cap on homestead property tax rate increases.

“What seems obvious to me is that that cap, that 5% is not working the way it was intended,” Rep. Carolyn Branagan, R-Georgia, said. “So we ought to ditch it.”

Act 127, the latest target for lawmakers and educators frustrated with Vermont’s education finance system, is intended to direct more education money to schools that have students who are more expensive to teach. It does that by increasing the “pupil weight” ascribed to high-poverty and rural students, as well as English language learners.

As a result, wealthier and generally less rural districts saw their pupil weights decrease, requiring those districts to increase taxes to pay for the same level of spending as the year before.

To make that change more gradual, Act 127 capped increases to homestead property tax rates at 5% for the next five years. In theory, the cap would allow districts to adjust to the new constraints on spending, or higher taxes, over a longer period of time. 

More recently, though, legislators and education officials alike have grown concerned that the cap may be pushing districts to spend more than they otherwise would have. 

“Absolutely some transition mechanism will still be needed,” Kornheiser said, referencing the 5% cap, but that mechanism would be more “surgical” than the existing law, which applies to any district —- not just those losing pupil weight.

The latest property tax projections for 2025 — a product of new data collection from the Vermont Agency of Education and modeling from the Joint Fiscal Office — rely on newer, more specific information than previous outlooks. 

Since the last estimate, more than 100 districts submitted budgets to the state, with a handful of others offering more recent projections regarding education spending increases. All in all, the new numbers represent the vast majority of spending — for 97% of the so-called “weighted” students in Vermont’s systems.

The average education spending increase, according to that data, is 14.84%, up from 12% predicted earlier this year. Previously, the average property tax bill was expected to grow by more than 17%. Now the projected increase is 20.59% to homestead tax bills. 

Last week, education leaders from across the state testified regarding their frustrations with Act 127, though their aggravation with this year’s budgeting extended far beyond the law. Rising costs of health care, teacher salaries, dilapidated school buildings, student mental health needs and more were all contributing to increased spending, they said. 

On Tuesday, House Ways and Means Committee members discussed their concerns that the complexities of Vermont’s education finance system have alienated voters from the direct impacts of their local school budgets. 

One product of that system could be that more districts vote down their budgets due to the increased spending, yet school boards can’t adequately respond to the feedback of voters. 

“Districts could cut a huge amount from their budgets in an effort to be responsive to taxpayers, and still not actually lower their tax rates very much,” Kornheiser said, citing the way Act 127 affects local tax rates. “And so voters won’t feel that those school boards and superintendents are being responsive to their rejection of a budget.”

As discussion continued, lawmakers from the House Committee on Education joined the committee hearing. 

Rep. Peter Conlon, D-Cornwall, chair of the education committee, pointed out that even the districts whose pupil weight barely changed due to Act 127 nonetheless are having a uniquely challenging budget year.

“For so many districts, it was much more all the other factors than it was pupil weighting that was affecting their tax rates,” he said.

And amid these discussions of why education is becoming more expensive, and how the Legislature might address that expense, Rep. Erin Brady, D-Williston, a teacher, directed attention in a different direction. 

“Our educational system lacks any leadership or vision,” she said, summarizing testimony from educators that her committee has heard this year. “We’re at a crossroads here.”