By Rob Roper
This week 51 legislators voted to uphold Gov. Scott’s veto of H.13, a tax/budget bill that would have raised property taxes on Vermonters. The governor has made a promise not to raise taxes or fees — including property taxes — a cornerstone of his platform since he ran for office two years ago, so his stance should come as no surprise. And, given that the state is running an unanticipated surplus of around $170 million this year, it should be an easy promise to fulfill.
The Democratic leadership, however, makes some legitimate points in their reluctance to adopt Scott’s plan. We should not use one-time money to fund ongoing expenses. Using one-time money to make property tax bills artificially low (based on the budgets passed at the local level) further severs voters from the real impact of their school budget votes, and we do have to address the issue of unfunded pension liabilities, which is where the Democrats want to use some of the surplus funds.
So, here is a modest proposal for compromise:
- Allow the property tax rates to increase in line with local spending decisions as they normally would at 5 cents and 7 cents for residential and non-residential, respectively.
- Put $50 million of the surplus revenues toward paying down the pension liabilities.
- Use $100 million of the surplus revenues to fund a one-time tax rebate check to all Vermont taxpayers, which they can use to cover the cost of their property tax bill – return the money to the people who earned it!
- Use the balance of the surplus revenues to cover inflationary costs of programs between the FY18 and FY19 budgets.
This would be a win/win for all sides.
The Democrats would get the needed pay-down of pensions liabilities they want (and, frankly, all Vermonters should want) and successfully avoid the use of one-time funds for ongoing education expenses.
Scott and the Republicans could legitimately claim that, when you balance the tax increase with the tax rebate check, they did not raise taxes. Although technically there will be a tax rate increase (Scott will have to compromise here), the fact that Vermonters will see the increase only reinforces Scott’s message that reform to the education financing system is still very much needed, so he does benefit in that respect.
All can claim victory in providing a tax relief bonus to Vermonters in the short term, while securing long-term savings for our pension obligations — and avoiding a government shutdown.
The stumbling block to this proposal is the fact that the Legislature intends to spend that surplus money on things other than a rebate to taxpayers. But, whose money is it anyway? That’s a debate we can hash out over the next week and a half as we avert a government shutdown.
Rob Roper is president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.