by Gerry Silverstein
Disclaimer: I think my analysis of my property tax bill and buy down revenue distribution is correct but, being human, I could be wrong. Education tax financing in Vermont is fiendishly complex.
A CPA with an MBA from an Ivy League school and 40 years experience was present at a seminar I attended years ago on education financing in Vermont. After the presentation he said in all his years as an accountant he had never seen a more complicated and convoluted taxation program. Amen to that.
The buy down:
The state took $77 million dollars from the General Fund, and added it to $41 million dollars of surplus dollars in the Education Fund, to generate $118 million dollars to be used to reduce the economic pain associated with increases in FY26 property tax bills due to increases in education tax assessments.
The oft quoted statistic by the state was an expected tax bill increase of 5-6% would be reduced to a 1% increase.
I expected my South Burlington (SB) property tax bill in FY26, based upon the voter-approved budget, to show a 7.93% increase in total education taxes (compared to FY25).
In reality the increase was 7.64%. In terms of actual dollars, I saved $16 on an expected increase of $440 dollars.
The $16 reduction “helped” reduce the pain of my total property tax bill that was a little over $8,000.
I should mention that my house has an assessed value of $380,100 which is 13% LESS than the average single-family home in South Burlington.
I went to Vermont Fiscal Facts (2025) and found that 55% of funds in the General Fund (GF) came from resident income tax payments.
Total income tax revenue in the GF (January 2025 projection) was $1.3335 billion dollars.
Since $77 million dollars of the buy down funds came from the GF, that means $42,350,000 (55% of $77 million dollars) of Vermont income tax payments were used in the buy down of FY26 property taxes statewide.
$42,350,000 was 3.18% of all state income taxes in the GF at the time of the buy down.
Of my 2024 income tax payments $63 (3.18% of my income taxes) was used by the state to reduce the pain of the FY26 increase in property tax payments statewide.
Note that as a senior citizen the State grants me the privilege of paying income tax (above a threshold of income) on my social security income.
Vermont likes to stand out among its 49 sister states. In the case of taxing social security income Vermont once again shares the victory platform with 8 other states (in 2026 that number will drop to 7).
In summary, to receive my $16 reduction in property taxes the state used $63 of my income taxes to buy down property taxes statewide.
Moreover this analysis does not include my “contributions” to the Education Fund which had a $41 million dollar surplus that was also used in the buy down.
I have reached out to different branches of state government multiple times asking how buy down determinations were made.
The most recent answer was from the Vermont Dept. of Taxes:
“There are many variables and inputs that go into each property tax bill. More information is available at Education Tax Rate Calculations | Frequently Asked Questions | Department of Taxes.”
I have studied education financing in Vermont for 20 years and, in my assessment, that response from state government provides no clarity whatsoever on what I (and I presume many other residents) received in buy down dollars to help reduce the economic pain associated with FY26 property tax bills.
Low income and low middle income individuals benefit from income sensitivity where the state covers the cost of part of a homestead’s education tax bill. These individuals likely benefited significantly from the buy down, on top of the benefit they already receive from income sensitivity distributions.
For most high income individuals (of which there are quite a few in Vermont) property tax bills are probably unpleasant but they probably do not keep people up at night wondering how they are going to pay their installments.
And then of course there is the hapless middle class. As far as I can tell they continue to get walloped with out-of-control property tax bills.
As a percent of income Vermont has the highest property tax bills of all 50 states, and 75% of tax payments are for public school education in Vermont.
The mega-education tax assessments are needed to support the second highest spending per pupil of all 50 states.
In spite of a massive investment on public school education in Vermont, on 2024 national standardized exams (NAEP, “Nation’s Report Card) in 4th and 8th grade math and reading, Vermont students ranked #34, 18, 32, and 24 respectively compared to the 49 other states.
On in-state 2024 standardized tests (VT-CAP) assessing reading and math proficiency at grade level 9, the highest grade tested, 52% and 60% of Vermont students statewide scored below proficient.
In that same year 53-58% of Vermont students scored below proficient on VT-CAP tests in 5th, 8th, and 11th grade science.
Reflecting on (1) Vermont student academic proficiency scores on standardized tests and (2) the state’s concern for economically crushing high property taxes, what do I think of the FY26 property tax buy down, especially its impact on hapless middle class Vermonters?
Adopting the words of former Gov. Peter Shumlin, the buy down was a big Nothing Burger! Some might even call it a whopper of a Nothing Burger!
Addendum: In South Burlington where I reside mostly brand new members of the School Board are considering a number of spending options for FY27; one option is an increase of 6-7%. If the latter increase occurred every year for 15 years (2 pre-K and K-12) the cost to educate one student in SB would be ~$700,000 (LOL).
Gerry Silverstein taught at UVM from 1985-2007 and remains active sharing knowledge and challenging all learners to master the skills of critical thinking and critical decision making.