Vermont lawmakers are moving forward with H.949, the annual “yield bill” that sets statewide education property tax rates, promising an average increase of roughly 7 percent for fiscal year 2027. That number, however, is built on a foundation of one-time money — and the people who assembled it say so themselves.

Without a $104.9 million transfer from the state’s General Fund and another $22 million in one-time Education Fund surplus, the increase taxpayers would be facing this year would run closer to 10 percent. Strip out both pots of temporary money, and the number climbs toward 12 percent — a figure the state auditor had already flagged.

The 7 percent rate is real. The relief behind it is borrowed.

🍁 Make a One-Time Contribution — Stand Up for Accountability in Vermont 🍁

How the Yield Bill Works

Vermont’s education property tax system operates on a simple arithmetic principle. Total education spending is calculated first, driven primarily by local school district budgets. Non-property-tax revenues dedicated to the Education Fund — sales and use taxes, among other sources — are then subtracted. Whatever remains must be raised through property taxes.

When that remainder is too large for the political moment, lawmakers have another lever available: supplementing the Education Fund with money from elsewhere. That is what H.949 does this year, and at a scale that dwarfs routine adjustments.

The $104.9 million General Fund transfer recommended by the governor and included in the House-passed budget is the centerpiece. Lawmakers opted to split the application across two fiscal years — approximately $52 million applied to FY2027 taxes now, with the other half reserved to cushion FY2028. The $22 million Education Fund surplus is being layered on top for this year only.

The Joint Fiscal Office presented those figures in committee. Representative John Gray walked through the mechanics of Sections 1 and 2. JFO fiscal analyst Julie Richter then put numbers to what the bill would look like without each layer of relief — yielding the 10 percent and nearly 12 percent benchmarks that give context to what the 7 percent figure is actually hiding.

The Structural Problem Nobody Is Denying

What makes the committee testimony notable is how candidly members described the underlying dynamic. Education Fund expenditures are growing faster than the non-property-tax revenues dedicated to supporting them. That gap is what drives the recurring need for intervention.

Rep. Anne Kornheiser ( D – Windham-7 ) acknowledged it directly: the committee has been using one-time money because the recurring revenue base is not keeping pace with spending growth. She also noted that structuring the General Fund transfer as a two-year distribution was a deliberate choice — applying the entire amount in a single year would have created a steeper cliff in FY2028.

Sen. David Weeks ( R – Rutland District ) pressed on this during the committee hearing, asking what the property tax increase would actually be without the one-time money. The answer confirmed what the numbers already suggested: the headline rate is not reflecting the full cost pressure.

Sen. Seth Bongartz ( D – Bennington District ), the committee chair, put it plainly near the end of the discussion: “We’re kicking the can down the road.” That is not spin from a critic. That is a member of the committee that assembled the bill describing what the bill does.

The Shadow Beneath the Rate

The framing that Vermont property taxpayers are getting a break deserves some scrutiny. The underlying cost of the education system has not decreased. What has changed is which tax pocket is being used to pay part of it.

By routing $52 million from the General Fund into the Education Fund this year, the state is covering a portion of what would otherwise appear directly on school tax bills. Vermonters still pay for that General Fund transfer — through income taxes, sales taxes, and other state revenue sources. The obligation does not disappear. It moves off the property-tax line, where it is visible, and onto other revenue streams, where it is less legible.

Richter also flagged a detail that deserves attention on its own: state revenue growth is expected to slow in the coming years. That matters because the math behind the two-year distribution assumes the state will be in a position to absorb future education-cost pressure through something other than property taxes. If revenue projections miss, FY2029 could arrive without either the surplus or the General Fund cushion that made the current arrangement possible.

Technical Provisions

H.949 includes several items beyond the tax rate calculation. A change to the special education census grant formula sets a per-pupil base amount of $2,350 for FY2027 and adds an annual inflation adjustment using a three-year rolling average — described in testimony as a correction to prior statute that had inadvertently omitted an inflation factor. Fiscal staff indicated the provision aligns with existing budget assumptions and carries no new cost impact.

The bill also corrects a calculation used in determining property tax credits and provides reimbursement to the City of Barre for an overpayment tied to a tax increment financing district caused by a prior software error.

What Comes Next

H.949 remains under consideration as it moves through the Senate. The final rates will depend on legislative action and whether any further adjustments are made in the coming weeks.

The larger question — whether Vermont’s education finance system can be restructured in a way that aligns recurring spending with recurring revenue — remains unresolved. Lawmakers say they are continuing to examine longer-term options. Until those options produce results, the yield bill will keep arriving each year requiring the same choices about which pocket pays the bill, and how much of the cost stays visible to the people writing the check.

If you found this information valuable and want to support independent journalism in Vermont, become a supporter for just $5/month today!

Dave Soulia | FYIVT

You can find FYIVT on YouTube | X(Twitter) | Facebook | Instagram

#fyivt #VermontTaxes #VTEducation #VermontPolitics

Support Us for as Little as $5 – Get In The Fight!!

Make a Big Impact with $25/month—Become a Premium Supporter!

Join the Top Tier of Supporters with $50/month—Become a SUPER Supporter!