H.887 reached the House Floor on Tuesday afternoon. Representative Kornheiser introduced the bill on behalf of the Ways & Means Committee. She shared that they have “struggled mightily to navigate through this issue.” She highlighted that “this work cannot be done overnight or even in a couple months during the legislative session.” The $250M in new spending was described as the primary driver of property taxes, increasing property taxes by roughly $0.25. Other factors identified were weaker performance of non-property tax revenue sources and loss of federal funds. Other measures in the bill have been reported on previously.

There was a question from the floor about whether or not there was a meaningful check on tuition charged by a public school receiving students. After a brief recess, Representative Conlon responded that there was no definitive limit on this but there was a process to resolve disputes through the Secretary of Education. The concern was that a receiving district may be able to pad their tuition rates in order to avoid the excess spending threshold included in the bill. There was also interest in protecting sending school districts from the excess spending penalty, Conlon admitted that there did not seem to be any protection from this happening.

NOTE: While there may be little protection from public schools over-charging sending districts for tuition. This did not seem to be a problem the last time the excess spending penalty was in place in 2019.

Representative Sibilia pointed out that they were removing several carve-outs from the excess spending threshold, including the removal of the teacher retirement contributions, dual enrollment and early college programs, and drinking water and lead remediation. She was “perplexed” about removing these exemptions that were for spending directed by the state and “it will be difficult to vote for.”

Representative Beck offered his amendment on the floor to investigate putting the retirement benefit liability back on school districts instead of the statewide Education Fund. The Government Operations and Ways & Means Committees shared their opposition to the amendment at the current time, although both were interested in investigating this in the future.

Other amendments were also offered:

• Representative Shaw – amendment to remove the Short-Term Rental Surcharge. Instead, he suggested an increase in meals & rooms, wind power facilities, or other consumption taxes. “Is Vermont tourist-friendly or not,” he questioned. “No other state… charges short-term rentals on a statewide basis.”
  • Representative Donahue questioned how many short-term rental operators the Ways and Means Committee had consulted. Kornheiser responded that they heard from an association as well as one individual operator.
  • Representative Lipsky commented that “a lot of discussion” had occurred in his community (Stowe) around this topic. He believes many of the people operating vacation rentals are of modest means and use that revenue to pay taxes and other things. He wondered why we would want to be putting more of a burden on these people than those that operate high-end rentals located within a resort (which the bill exempts). He sees this as an equity issue. Kornheiser reminded Legislators that the tax would be paid by the purchasers of the rental, not the provider.
  • Sibilia commented that “we need to pay for the things we want to do” instead of passing things the legislature wants to spend money on but not allocating funds to do it. She was supportive of the underlying bill (creating the surcharge) in order to fund state mandates.
  • The House voted against the amendment 104-39.
• Representatives Toof and Taylor – amendment would sunset both the Cloud Tax and the Short-Term Rental Surcharge in 2025.
  • Donahue thought the amendment offered “the perfect balance” of immediate relief, but “permanent decisions should come as part of a permanent overall response.”
  • Toof reiterated that the underlying bill “does nothing to solve our problem,” it only adds new taxes and increases education spending in the long-term, he claimed. “I could never understand why this body would want to raise taxes on Vermonters,” he stated. “I urge the body to support this amendment not for me but for our constituents who do not want more taxes and fees put on them.”
  • The House voted against the amendment 100-41.
• Representative Sibilia – amendment would ask the Tax Commissioner include an amount of “state-directed spending” in his December 1st letter projecting property taxes for the following year. “I’m still not hearing a lot of accountability in this body,” she stated. School districts have long complained that state and federal mandates drive up spending, she is concerned that Legislators are largely unaware of their contributions to rising property taxes. Reluctantly, she withdrew her amendment out of deference to the Committees of jurisdiction.
• Representative Harrison – amendment would re-install allowable growth rates instead of the excess spending penalty for FY2026 and 2027. This mechanism would cap every district and not just impact the highest spenders.
  • Harrison shared that “last night I had the opportunity to attend an informational session prior to next week's revote on our school budget. The message received was that property taxes are too high, and spending is increasing at unsustainable levels.” He believed that the allowable growth mechanism would encourage every Community to take a “good hard look” at their budgets and avoid spending too much.
  • Kornheiser noted that the Committee on Ways and Means spent “a great deal of time” this session discussing an allowable growth rate for school districts and included it in some versions of the bill. She expressed concern about a group of school districts that are “chronically underfunded.” The Committee voted against the amendment because it would “cap districts that can barely meet their educational needs now.”
  • It was pointed out that the original draft of the bill was going to have “some real cost containment features,” but they were taken out and put to study, which means it will be two years before we see any meaningful change.
• Representative Carpenter – amendment force designation (instead of choice) when a school chooses to stop operating. She described this as “an actionable step” towards addressing both cost containment and the state's public tuitioning system.
  • Because the Ways & Means Committee voted no on the amendment and instead recommended that the Commission study this question, Carpenter withdrew her amendment.
• Representative Toleno – amendment to remove the Governor from the process of selecting an Education Secretary and instead hand that responsibility solely to the State Board of Education to oversee the leader of education policy in the state. He assured Legislators that this was not a “critique the current Governor,” but rather the “nature of Governors and our system of two-year terms… An independent board provides more strategic stability over time.”
  • Because the Education Committee had Committed to taking up the issue this week, he asked to withdraw is amendment.
• Representative Holcombe - requested a “technical fix” to the pupil weights applied in Act 127, and her amendment related to applying student weighting factors to non-operating school districts. She argued that the weighting study authors confirmed that there is no substantive basis for applying funding weights to students who are being tuitioned out to other schools in the “current construct.”
  • She believed that the weighting study did not include tuition students because their costs are “not variable.” The average announced tuition is the same regardless of school size and population.
  • She acknowledged that this was an “incredibly complex situation.” Out of respect for the Ways and Means Committee's desire to do their due diligence, she withdrew her amendment.
  • NOTE: Holcombe is an outspoken critic of the town tuitioning system. The proposed amendment is unsurprising, but if we believe that weighting factors reflect the actual cost of educating students then it is inconsistent to suddenly say that this particular group of students does not actually have variable costs. However, it is fair to say that those costs are not reflected in tuitions that non-operating districts are paying because they is averaged out over all the students a school is receiving.

Moving back to the underlying bill, legislators offered comments like.

George Harrison predicted what we are doing today when he released this hit with the Beatles. The Commission on the Future of Education in Vermont is supposed to be considering the next five years, 20 years, or 100 years.

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The Commission on the Future of Education in Vermont is finally able to address the whole education system, and I hope that they will not use the same tools as always, but instead invite diversity of thought and therefore Innovation.

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Will families move to towns without schools? Do we want people to move to our state or not? We can study whether towns die when they lose their school, and whether educational outcomes improve or not.

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Hartland has put together a petition to resend the budget again because of a lack of substantial relief in the 77% increase in taxes.

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The Vermont Legislature has enacted thirty-eight education finance studies since 2000. This bill has another commission and another committee.

The vote was 101-39 in favor of the bill.