Covid $ Unlikely to Help Vermont Avoid Consumption and Property Tax Hikes

May 12, 2020

By David Flemming

A few weeks ago, Vermont legislators were optimistic they could use part of the $1.25 billion in Covid relief money they received from the feds 2 months ago to pay down an anticipated $167 million Education Fund shortfall. As this optimism fades, higher property and consumption taxes beckon.

On May 7, the House Committee on Ways and Means and the Joint Fiscal Office met on Zoom to discuss how the fed funds might be used to lessen the property tax impact. Janet Ancel (D-Calais) asked Mark Perrault, Senior Fiscal Analyst at Vermont’s Joint Fiscal Office, about the restrictions attached to the relief money. Mark described how he and his team had considered three possibilities in turn.

  1. “Take that $167 million out of that $1.25 billion and put it into the education fund as a revenue source… fill(ing) that gap with the coronavirus refund $.”
  2. “Take that CRF (Covid Relief Fund) money and direct it right back to taxpayers, so they’re able to pay their bills.”
  3. Direct “this money directly to the school districts, (who would then decide how) to use the money.”

Unfortunately, the federal government issued increasingly narrow restrictions several times over the past few weeks. Perrault believes Options 1 and 2 are both out, leaving only Option 3 on the table. “I think the answer to (Option 3) is yes (we can do it), with a big caveat…any spending that the schools do has to qualify as Covid related eligible costs.”

Perrault says this raises 2 questions: 1)“Can schools identify enough money in their FY21 (fiscal year 2021) spending that would be Covid 19 eligible?” and 2) “Is it worth the “huge administrative headache? Because schools would have to keep very close records as to what they are spending money on and AOE would have to then collect that information in an application process.”

Even before Covid-19 hit, the legislature had decided that we needed to increase our education budget, despite a falling K-12 student population. While our legislators can bemoan the “what if” (…they were allowed to use the funds for whatever they wanted), they have only themselves to blame for creating this gap that has become a gaping chasm, ready to suck in taxes at an alarming rate.

After all, even if our legislators manage to pass all their favorite consumption taxes they discussed (increasing the tobacco tax- $7 million), (candy- $3 million), sugar-sweetened beverage tax ($25 million), cloud tax ($7 million), luxury ($7 million), that’s only $49 million, far from covering that $167 million education fund gap. Thus beckoning higher property taxes. It’s looking ever more likely that Vermonters won’t be able to pull a Houdini with Covid money to get out of the mess our legislators created.

If you would like to watch the committee session you can do so here:

David Flemming is a policy analyst at the Ethan Allen Institute

{ 3 comments… read them below or add one }

Meg Streeter May 15, 2020 at 9:28 pm

Hello David Flemming – If I understand correctly, the Education Fund shortfall has nothing to do with the Covid-19 emergency shutdown of businesses. Since teachers and I would assume administrators have worked to provide distance learning/materials/ and food in all school districts, they are being paid their normal salaries correct? So why in the world would the Legislature think that Covid funds could be used? rhetorical question only

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Ted Robinson May 15, 2020 at 9:42 pm

No, I don’t want to watch the committee of sniveling leftist, progressive idiots who are so out of touch with reality. What I would like to see is the door smack them in their hollow heads as they walk out of office after the next election!

Reply

Mike May 16, 2020 at 12:41 pm

NOTE!!! In these discussions dealing with the revenue short fall in the education fund, there is NOT ONE MENTION of the reduction in spending???? It’s always raise taxes on those least able to afford it. How these fiscally irresponsible idiots keep getting elected is beyond me. At the rate they are going, there will be no one left but themselves to pay the taxes.

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