Here Comes the New Legislature!
By John McClaughry

With a new and potentially veto-proof liberal legislature arriving in Montpelier next week, it's worth reviewing the items on its agenda, if for no other reason than to put taxpayers on notice.

During this year's campaigns, every candidate for legislative office reported that the key state issue on the voters' minds was the rising property tax burden for public education. And rightly so: two thirds of the cost of public education is paid with property taxes.

Since the court-mandated passage of Act 60 ten years ago put state government in charge of our schools, Vermont taxpayers have been made to pay the costs of 20% more full time equivalent teachers and aides, and 21% more administrative and other school staff employees. At the same time the public school population has declined by 9%. In 2007 the projected cost per pupil will be about $14,000.

The legislature's leadership is naturally concerned about voter distress with these costs. And they have a surprising explanation for them. These high costs, they say, are due to rising health care costs, rising energy costs, and an inefficient governance structure.

Thus their proposed solutions are, first, to transform last year's Catamount Health plan, due to come to life in August, into what the Democrats have long yearned for, "universal coverage" for everyone, financed by income and payroll taxation. Speaker Symington has said that this expansion can wait until Catamount Health is up and running, but her party has not given up on the ultimate goal.

Second, the Democrats have all sorts of new subsidies in mind for renewable energy. But since renewable energy is more expensive than conventional energy, it won't lower the energy costs for school systems.

Finally, they are eager to create a new school governance system of multi-town school districts. This will, some say, save tax dollars through efficiencies in administration. More likely, it will make it easier to overcome taxpayer resistance to school budget increases.

The elephant in the living room here is, of course, the compensation paid to school employees, the great majority of whom are represented by the Vermont-NEA union. The Democrats in Montpelier will go to great lengths to ignore this elephant, which accounts for more than two thirds of public school costs.

Why? Because the Vermont-NEA is the single most potent political force in the state, one that can rightfully claim to have created the current liberal majority. That majority will not identify the root of the education spending issue as having anything to do with too many teachers, too many non-teachers, too high teacher salaries, too generous teacher benefits, or too small schools and classes.

Even while expressing alarm at the rise in education property taxes, the Democratic majority will almost certainly give legislative authority for one of the Vermont-NEA's goals, financing for universal preschools. They will likely try to bring about this two-year expansion of our school systems by some backdoor method that avoids a roll call vote that might come to the attention of angry taxpayers.

But if the incoming Senate President pro tem is to be believed, spiraling education property taxes are not the major problem. The major problem, says Sen. Peter Shumlin, is global warming! So look for a higher electrical energy tax to pay for more services by Efficiency Vermont, stricter energy conservation requirements for building construction and rehabilitation, and excise taxes on vehicles that the legislators find to be gas-guzzlers.

The majority's ambitions will cost money. Increasing the property transfer tax (again) to increase housing subsidies (especially in Greater Burlington) is a leading possibility. So is repealing the current 40% exclusion of capital gains from the Vermont income tax liability. Another idea is to tax larger tourist-related businesses to fund new dairy subsidies. There is always the possibility of reviving the "carbon tax" unsuccessfully proposed by enviros in the late 1990s.

The Democrats have long favored increasing the tax on incomes as the "fairest" way to raise needed tax dollars. For tax year 2004, the latest year for which data has been compiled, the top five percent of income tax payers paid just over 50 percent of income taxes collected. Since they generally live in more expensive homes, they also pay high property taxes as well.

To liberals, spending less is never an option. They believe that these rich people can afford to pay more, and "fairness" requires that they should pay more. Whether the new liberal dominated legislature will put that belief into practice by soaking the rich to finance new spending -- and whether Gov. Douglas agrees to it or casts a veto -- may well be the key question of the legislature's coming two years.