By Guy Page
Today is December 1, and that means……
Today, Vermont state employees must return to the office at least three days a week. What began as a Covid-era emergency measure has long since morphed into a tussle over the benefits of working from home (says the union) vs. working in the office (says the governor).
Scheduled for noon today, the Vermont Department of Taxes will publish the long-awaited Property Tax Letter. It’s the annual “heads-up, Legislature” about how much property taxes will be expected to rise if spending remains constant.
Today, the countdown in Congress begins on Republican leaders’ pledge to hold a vote in December on renewing the Obamacare Affordable Care Act.
What they have in common: the growing awareness among both Republicans and Democrats in Vermont and Washington: affordability, and the growing dearth of it for more and more Vermonters.
Something is affordable when it’s cheap enough for people to buy. It’s not beyond their income or financial situation. It often relates to essential needs like housing, healthcare, and education, and not having to choose between one or the other. And maybe having money left over to save for a home, retirement, or children’s education. If you have enough to do all four – and eat and drive a decent car – you are living affordably.
State workers say they should be allowed to work at home because they can’t afford to buy homes in the Burlington – Waterbury – Montpelier corridor, where most of the state offices are located. Last year the average home in Burlington cost $485,000. $417,000 In Montpelier, according to Zillow. Back of the envelope arithmetic means putting $90K down then paying $1700/month, that’s $20K per year, for 30 years.
That’s mortgage payments only…..for property taxes, add about $8,000/year.
Which brings us to today’s Property Tax Letter. Two years ago it rolled like a hand grenade down the center aisle of the State House: a projected 22% increase. The then-Democrat supermajority tried to pretend it was just a smoke bomb, until voters at Town Meeting in March and General Election voters in November informed them otherwise.
The chastened Democrat majority promised education tax reform. It produced (with GOP buy-in) Act 73, promising savings by school district consolidation and other measures.
The Legislature’s own Act 73-created redistricting committee has now repudiated that notion in favor of cost-sharing rather than super-mergers. The governor has sternly told them to go back to the drawing board and deliver the Legislature a new super-school district map, as promised.
Either plan could cut expenses, and therefore taxes, at the administrative level. But no-one with any swing in the Legislature has yet to look at reducing education costs at the school level. Cutting programming – AKA education union jobs – is their sacred cow. The VT NEA, the other big union in Montpelier representing tax-funded jobs, will holler if anyone threatens that slaughter. And the NEA has considerably more House and Senate vote-getting power than the Vermont State Employees Union.
But one wonders if – or rather, when – that might change. Signs of it were seen in the final voting on Act 73, when many Progressive and left-leaning Democrats voted no because, they said, the Legislature just wasn’t listening to the educators. In other words – the NEA and the other education establishment groups weren’t getting everything they wanted. They feared they were being politely told no, something taxpayers and Republicans know all about first-hand. But for the education establishment, it was a new experience.
And legislators, even Democrats in fairly safe ‘blue’ districts, may just be getting the affordability message. Or at least, for now, talking like they do.
Consider this letter posted to Front Porch Forum last week by Rep. Marc Mihaly of East Calais:
In a few days, the Tax Commissioner is going to release a letter called “the Dec. 1 letter.” This letter communicates what the administration expects will be our average statewide property tax next year. I expect it will be high, too high.
As school boards build their budgets, all the fundamentals that drove high spending last year are still in place despite a fast timeline we’ve set for reform. These increases include cost pressures boards cannot fix on their own, including:
— Double-digit increases in healthcare premiums (Last year, increases in teacher healthcare and mental health costs drove total spending up about $100 million, or ten cents on the tax rate.) Combined with the increases in premiums that families are facing for their own healthcare, this creates a “double-whammy” for taxpayers.
— Our severe shortage of housing paired with our aging population means we have fewer school-aged children in our school system. Fewer kids means higher costs per kid to maintain our same basic programs.
— School districts have become responsible for more social services, including for an unprecedented number of unhoused children this year. It is unclear how much upward pressure this will put on school budgets, and whether this is the most efficient and effective way to address child poverty.
We need a new funding formula that appropriately directs resources to make sure every district has what it needs to educate its children.
I am reaching out to let you know this letter is coming, and that it is likely to predict an increase in property tax bills that we all think is unacceptable. Between high housing costs, high healthcare costs and low wages, far too many families are worried about paying their bills – we in Montpelier simply cannot accept this.
I will be working to make sure every child has the opportunities they need at a price taxpayers can afford. Change is inevitable, and we can either manage it or be managed by it. I am open to doing things differently [Editor’s italics added] in order to protect what we care about most for our children, while protecting people from cost increases they cannot afford.
Rep. Mihaly doesn’t specify what he means by ‘doing things differently.’ In general, when Democrats talk about ‘doing things differently,’ they talk about shifting government costs. Republicans talk about slashing them.
For example, some Democrats, especially those with Progressive tendencies, say we should Tax The Rich. Go large on the top tax rates. That’s the catch-all solution that they say has the virtue of never having been really tried in Vermont.
Or, they look at other forms of taxation that could be increased with minimal perceived pain. A likely candidate here is the Payroll Tax, enacted to collect more than $100 million to subsidize childcare. At the time, Gov. Scott and others predicted that relatively low-per-person tax would be the proverbial camel’s nose under the tent. The next time Vermont faces a financial crisis, the taxers will look for somewhere to tax. And the Payroll Tax makes a tempting target.
When Washington sneezes, Vermont catches a cold….
Paying for schools brings us to Congress and the looming ACA vote. The biggest cost driver in education is the cost of healthcare for the multitude of workers. Will what happens in Washington help? Or hurt?
Either way, December is shaping up as a fateful month for the future of affordable living in Vermont.