By Donella Meadows
–April 10, 1997–
Vermont is in a tizzy over a set of gnarled-together problems that plague every state — schools, land, property tax.
I don’t suppose any place can boast of a happy solution to school funding or land taxes. Most of us live with a set of compromises that endure only out of habit. No one questions the status quo very hard, because once you start tinkering, exposing little illogical holes, a lot of suppressed steam is likely to burst out.
Vermont’s Supreme Court did just that. The steam is blowing.
Once upon a time Vermont paid for local schools with local property tax. Like many states, it assessed land for tax purposes at “fair market value.” That means the amount developers will pay for land to turn into house lots, which is much more than farmers can pay to keep it in pastures and woodlots.
“Fair market” assessment shifts the tax burden onto second-home owners and farmers. It is a sure way to drive land into houses, which opens up a vicious cycle. New houses bring new kids into town, which raises school costs, which increases property taxes, which causes more landowners to sell out, which brings in more houses, more kids, more school costs, and so on.
Vermonters recognized they were sinking into that hole and decided, sensibly, to stop digging. They adopted a current use exemption, as other states have done. As long as land stays in farm or forest, it is assessed low. If the land is housified (“developed” has never been the right word), a punitive tax is slapped on — never, given the strength of the real estate lobby, a high enough tax to make up for the loss of town income from the lower current use assessments.
Now here’s the uniquely Vermont part of the story. To sell current use, the state promised to “make the towns whole” by providing state money to make up for current use losses. (As we know, state money comes from no one. It is manna from heaven.) That kept things quiet, until the state broke the promise. It started cutting current use reimbursements, more in some years than in others, depending on state budgets and politics — which made town budgets and politics go crazy.
The towns turned their ire toward the land in current use. “Rich summer folks and farmers are shifting taxes onto us,” became the war cry. Nothing could be farther from the truth, of course. People with kids had long ago shifted the burden of educating those kids onto summer folks and farmers. Then the burden was shifted onto the state (which meant income and sales taxes, less visible or controllable than the big local bite of property taxes). Now school costs are coming home to roost, back to the houses with the children, often strapped houses, struggling houses, houses that can’t bear a property tax increase.
At this moment — the timing couldn’t have been worse — the Vermont Supreme Court handed down a stunning decision. It said that children in property-poor towns cannot have cheaper educations than children in property-rich towns. Similar decisions are in the works in New Hampshire, Ohio, and maybe the nation as a whole. The federal court once decreed that black kids and white kids have a right to equal education. It makes sense that the same should be true, in a land of supposed equal opportunity, for rich kids and poor kids.
So Vermont has to rethink its school funding and property tax system, leading the way for the rest of the nation. It’s a wonderful opportunity, though it doesn’t feel that way.
I look at Vermont out my window, but I don’t live there, so I can only offer a few unpopular but unquestionable truths to keep in mind, as Vermonters, in whom I have great faith, work through this problem.
1. Undeveloped land is a benefit to everyone. Not only is it beautiful to look at and the foundation of the tourist industry, it also feeds us, provides us with firewood, paper, lumber, wool, and syrup, cleans the waters, charges the aquifers, prevents floods, moderates the climate, shelters wild species, pollinates crops, recycles nutrients, builds soils. Land without houses does not put kids in school. It doesn’t create garbage or demand that roads be plowed. Taxing land to pay for expenses incurred by houses makes no sense.
2. Educated children are a benefit to everyone. You don’t want your kids to grow up in a land of ignorance. You don’t want to meet uneducated, desperate kids in a dark urban alley. You don’t want to hire them or work with them. You don’t want them voting for your leaders. If we aren’t jointly responsible for kids while they’re growing up, we’ll end up having to be responsible for them for the rest of their lives.
3. Educating children costs money. There is no better investment.
4. When you have a child, you impose a cost on other people. (The school cost isn’t the only one, but it’s the biggest.) The more children you have, the more you raise the tax burden. If you’re grown up enough to have a child, you should be grown up enough to shoulder a large share of that child’s education.
5. Rich people have more money than poor people. Taking a hundred bucks from a rich family causes much less pain than taking it from a poor family. If you have more than your share of money, you should pay more than your share of taxes — because you can, because you have a great stake in the future of the land and the people, and because you are where the money is.
I’m sure it’s possible to transform these difficult facts into a fair formula for assessing each other to support good schools for every child. I expect Vermonters to call on their deepest wisdom and show us the way.
Copyright Sustainability Institute 1997