I’ve heard considerable fear and misinformation being shared about the “yield” bill that sets the sources of education funding, so I wanted to take the time to explain the bill, the veto override, the Governor’s plan, and what we’re doing going forward.
Each year, school districts prepare budgets that they present to their community, the community votes on those budgets, and then the total amount of all the budgets that have been passed across the state is sent to the Legislature. The House and Senate don’t determine how much it will cost to run all the schools in the state – all the communities that voted on their budgets do that – but they are required to create and pass a bill that figures out where that money to fund those schools will come from. That bill is referred to as a “yield” bill.
For the last three years, the cost of education in VT has been artificially low because of all the one-time federal money that flowed into the state. That money has dried up, while the needs it was funding remain greater than ever. This year we faced the double hit of having to pay the full cost without federal subsidies for the first time this decade along with skyrocketing costs of health insurance premiums that are out of our control. Those of us in the Legislature worked as hard as we could to keep the full brunt of this from hitting taxpayers. We used all the tools at our disposal, tapping every non-property tax funding source we could to cover the costs, including using $25 million in general fund money to try to keep the tax rate down. Senator Gulick and I were proposing amendments to cut costs in the budget literally down to the last minutes of the session. While any tax increase is too much given how many people are struggling, I want to make sure to explain that the 13.8% increase is the average across the state, not what each community will face. The total property tax each homeowner will pay is determined by a combination of town calculations including the Common Level of Appraisal (CLA), state formulas, and income sensitivity adjustments and can’t be determined by the yield bill alone.
If the Legislature had not voted to override the Governor’s veto and let the next fiscal year start without a yield bill, several problems would have come up. The non-partisan Joint Fiscal Office did the research (read their report) and informed us that 1. We would have created an $82 million education fund deficit, 2. The non-homestead tax rate would have gone through the roof to an estimated 30%, and 3. Even if we had allowed those two catastrophic issues to come to pass, the property tax rate would have only gone down slightly. We would have started the session in January 2025 trying to figure out how to fix that huge FY2025 deficit while still having to deal with the problem of funding schools in FY2026. The crisis doesn’t go away. It just gets worse.
The Governor’s proposed plan was disappointing, to say the least, to those of us who were really hoping to find a better way forward. His plan was to use the entire education reserve fund to buy down the tax increase and to eliminate universal school meals. The zeroing out on the education fund would have meant a downgrade to our bond rating. Whatever money that taxpayers saved with a lower property tax would have evaporated with the increased costs to the state for borrowing on all bonded projects, and still left us with this same problem of using one-time money to fill a hole that just appears again the next year. That, along with going backward on progress in addressing childhood hunger, made this a completely irresponsible choice that we had to reject.
We can’t keep doing this. The education funding system is incredibly dysfunctional and needs to be completely overhauled. While I am usually skeptical of bills that use studies to delay needed action, in this case, the study that the bill orders gives us a faster, more informed path forward so that we have fully vetted plans to implement when we get back to the Statehouse in January. I’m hopeful we can make lasting, meaningful change. It’s long past due.
I am happy to discuss these facts and data with anyone who would like to and hope this helps community members understand more about education taxes for the 2025 fiscal year. If you’re in the Chittenden Central district and would like to you look at the school budget that passed this year in your community, here are links to the reports:
– Burlington School District
– Winooski School District
– Essex Westford School District
– Colchester School District
As always please reach out if you would like to discuss anything here or anything from the legislative session. My legislative email address is tvyhovsky@leg.state.vt.us
Tanya Vyhovsky 