Representative Kloepner of Burlington introduced bill H177, proposing a phased move of education funding from a property-value base to an income-based system.

"People would like us to do something about their property taxes," Representative Kloepner said, framing the bill as the next step in a long transition to link education funding to household income rather than property value. She told the Ways & Means Committee the bipartisan Tax Structure Commission unanimously recommended moving education funding to an income base and that the change would "make Vermont's tax system more fair by more closely matching the tax with the ability to pay."

Kloepner and several members emphasized the complexity of the analysis needed to compare household property value and income, including how to incorporate rental data and homeowner data. She said, based on her review and with several caveats, roughly "65 to 70% of Vermont schools would have a net tax cut," about 10% would be roughly a wash, and about 20% of Vermonters could see a net tax increase under the proposed brackets.

Committee members asked several clarifying questions. One member asked whether the bill would remove local control of school budgets; Kloepner said it would not and that H177 does not itself centralize those local votes. When asked whether moving to an income base would discourage enrollment in current-use land programs, Kloepner said the bill applies only to homesteads and would likely not affect most current-use enrollments.

Kloepner acknowledged the numerical tax rates in the bill are placeholders: the draft uses current Vermont personal income tax brackets because legislative counsel recommended inserting numbers rather than leaving blanks. She said the Tax Structure Commission’s recommended rates were less than half of what appears in the draft, and the placeholder values have led to confusion and consternation among members and constituents trying to calculate individual impacts. Kloepner said the Joint Fiscal Office (JFO) provided partial analysis but could not complete every requested calculation.

No committee vote on H177 was recorded at the hearing; the bill was introduced and discussed with questions and answers.