Walter Freed and Peter Welch: education funding

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(Host) As the Vermont Legislature adjourned, VPR invited House Speaker Walter Freed and Senate President Pro Tem Peter Welch to sit down in the Talk Studio and review the session. Speaker Freed begins the conversation by grading how the Legislature dealt with school funding reform:

(Walter Freed) “It was successful in that it eliminated the dreaded sharing pool, more than anything else, and stayed within the legal requirements of the Brigham decision. But being able to get rid of the most divisive part of Act 60 – the sharing pool- was very significant part of this legislation. The down side: we didn’t do enough to move away from property tax as a funding mechanism for funding education. We would have liked to have done more.”

(Peter Welch) “This is Peter Welch. I think Act 60, actually, was an example of how, when the Legislature is working right, you can get it right. And what we were able to do – and it really was cooperative effort on this -was, number one: radically simplify Act 60. There was a lot of opposition to it, even from beneficiaries because it was so confusing. And we’ve restored that direct link between spending and taxing as one major accomplishment. Both the House and Senate worked hard to make income a much bigger component of how we pay for property taxes. Governor Douglas, just like Governor Dean, was insistent that income not be a factor – the income tax that is. And I think for many of us that’s the one component of this where we’re a little disappointed Because the more your taxes for education are based on ability to pay, the better.”

(Freed) “The income sensitivity portion of the existing tax law already makes income a component of funding education. And that still survived through the changes we made this year. The thing we still can come back to in future years is, how do you convert income sensitivity which is cumbersome – that whole method of rebate-prebate – into more of a simplified tax system.”

(Welch) “Well that’s right and frankly, Mr. Speaker, I think that was good work that the House did initially. And it wasn’t that income-based approach – it was direct. And would’ve gotten rid of the complications of the rebate system. It’s unfortunate we weren’t able to succeed in that.”

(Freed) “And probably the most significant thing out of this is that we had overwhelming support in both the Senate and the House for our final plan. And that’s the toughest thing to do with any school funding mechanism is to come up with votes – a strong show of support. And in the House, Republicans, Democrats alike, Independents – we had over 100 votes out of 150. And I know the Senate also had very impressive numbers.”

(Welch) “Well that’s right. So for Vermonters you’ve got three things: the simplification of Act 60, you’ve got 20% or so reduction in property taxes and then – unfortunately, but you’ve got to pay for it one way – the sales tax.”

(Freed) “But Act 60 has always been saddled with a problem that for towns that have rising property values. That go up fast because somebody’s moving in. They pick that town to settle and they move in from out of state and they buy three houses on the street. And all the sudden all the values in town are being adjusted upward. And in essence you’re a gold town overnight and your tax burden is so much higher. And this is the unfairness of Act 60 – it always has been. To some degree we’ve mitigated it this year but we really haven’t made it go away. And until you deal with Killington issue – the Killington law suit – until you deal with the differences of appraisals, maybe have use value appraisal across the whole state for a property, I think you still have an unfair system when it’s dependent on property taxes.

(Welch) “The concern I have going forward is the focus on costs. That’s the right to focus on. But we have to do it in a way where there’s a partnership between Montpelier and the local school boards. Many of the expenses that are driving education – like special education and health care – are really beyond the control of the local school board. And I am hopeful that in Montpelier we’ll resist doing the simple but really ineffective things of draconian across-the-board cuts. We’ve got to be partners with our school boards that are working hard to keep those costs down.”

(Host) Democrat Peter Welch is president pro tempore of the Senate, and Republican Walter Freed is speaker of the House. On Tuesday they continue their conversation in the Talk Studio, and discuss the Legislature’s efforts to reform the environment permit process.

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