Committee reviews draft to equalize school property tax yields, create reserve and phase in homestead exemption

Legislative staff spent the meeting walking committee members through a draft bill that would change how Vermont funds education above the foundation formula, including a new calculation for so-called “excess spending,” a statewide education property tax rate, and a proposed homestead exemption to replace the state property tax credit.

John Gray of the Office of Legislative Council opened the explanation, saying the draft defines “excess spending” as "the locally voted amount above the educational opportunity payment." He and other staff described two linked mechanics: (1) a statewide education property tax rate set annually to raise the educational opportunity payment, and (2) an excess spending tax that would be calculated by comparing each district’s voted excess spending to a yield derived from the school district with the lowest taxing capacity.

The nut graf: the draft would guarantee a tax rate tied to a benchmark district so that districts that vote identical dollars per pupil above the foundation formula would be billed at the same rate regardless of local property wealth. Districts with greater property wealth would raise more at that rate; the proposal directs those “extra” dollars into a state reserve rather than letting wealthier districts retain the surplus…