Advocacy Update – Week 6 – 2026

Education: Maps, Caps, and Inflationary Traps  

The slow slog we’ve described is most apparent in the education transformation conversation. 

Catch up quick: This session’s battles are set up by last session’s outcomes: 

• The Mandate: Act 73 is a massive 2025 education reform law that triggers a move to a “foundation formula” and requires a taskforce to bring back maps targeting 10–20 “mega-districts” of up to 8,000 students.
• The Conflict: The Taskforce refused to bring any such maps, and in their absence, the House Education Chair recently proposed a compromise map of 27 districts to balance state-level scale with local resistance.
• The Ultimatum: Governor Phil Scott has made the passage of this new district map a prerequisite for signing the state budget, effectively holding the end of the legislative session until a map is finalized.

Map-Making Conversation Continues, Despite the Difficulties 

The most significant activity centered on the Act 73 school district redistricting map created by the House Education Chair, which proposes reorganizing the state into approximately 27 consolidated districts. Both the House and Senate spent time reviewing this draft this week. 

Zoom in: House and Senate committees reviewed a conceptual map that would consolidate the state into roughly 27 unified districts, targeting enrollments between 2,000 and 4,000 students. 

Smaller scale, smaller gains? The Agency of Education (AOE) argued that more scale is necessary to provide specialized staff, a consistent curriculum, and a stronger continuum of in-district special education services

Rough roads: Legislators reported extensive public resistance centered on the loss of local connection and control. Some members proposed hybrid models to allow supervisory unions and consolidated districts to coexist.

The “Alligator Mouth” Problem 

Good news, bad news: House Ways and Means reviewed preliminary FY27 school budgets, which show a 4.1% projected growth in net education spending, lower than earlier estimates but still under pressure from declining offsetting revenues.  

• However, offsetting revenues are declining by 2.2%, partly due to the exhaustion of federal funds.

Revenue Gap: The Department of Taxes identified an “alligator mouth” problem where Education Fund costs are growing at roughly 6% annually, while non-property tax revenues (i.e., sales and use tax) only grow at about 3%.

• Tax Pressure: To bridge this gap, property taxes would theoretically need to grow by roughly 7% annually to maintain balance without structural reform

Setting Property Tax Rates 

The House Ways and Means Committee continues conversations on the yield bill, the legislative vehicle to set the property tax rates and yields necessary to balance the Education Fund.

• Deliberations in the House Ways and Means Committee have focused on a potential one-time General Fund transfer of $104.9 million

Additional Property Tax Assistance: Much of the discussion this week focused on expanding property tax credits (income sensitivity) for Vermonters who meet the current $90,000 household income eligibility threshold. 

• Committee members expressed concern that households in the $90,000 to $150,000 range are facing “overlapping fiscal pressures”. The committee noted that these households might be hit by the cumulative impacts of multiple state policy initiatives occurring at the same time. 

Rewind: It’s worth noting that the upper limit has decreased from $138,500 in FY 2020 to an expected $90,000 in FY 2027, while in the same time window, education property taxes have risen by more than 40% 

Creating Future Rates and Classifications 

Looking for more Revenue – The Long-Sought After Second Homes Tax 

Property Tax Classification: House Ways and Means continued detailing a new system to split the “nonhomestead” category into residential to target second homes and short-term rentals, and nonresidential, such as businesses and long-term renters. 

• A major focus was on defining “long-term rental” and “employee housing” to ensure clarity for farmworkers and resort employees.
• The devil is in the details, and much will potentially come down to what is in a “dwelling use attestation” form to be filed annually by property owners

Controlling Spending Preemptively – Capping Spending  

Allowable Growth Rates via S.220: Senate Finance is reviewing a proposed education spending cap designed to provide temporary taxpayer relief in FY 28 and 29 while serving as a bridge to a future foundation formula. This “dual test” cap would limit a district’s growth to either a formula-based percentage or inflation, whichever is greater.

One Thing is Off the Table:  The House Ways and Means Committee discussed HR 1, a federal law creating tax credits for contributions to Scholarship Granting Organizations (SGOs). Members expressed a strong desire to opt-out or designate the legislature as the sole entity to make such an election to prevent the erosion of public education funding.