Fri Sep 13 17:36:00 UTC 2024: ## Vermont Faces Another Challenging School Budget Cycle: Governor Scott Warns of Potential 7% Tax Increase

**Montpelier, VT** – Vermont Governor Phil Scott has issued a stark warning to school leaders, highlighting the looming challenges of another difficult school budget cycle. In a letter sent this week, Scott emphasized the need for a collaborative effort to contain education spending growth, noting that a 7% property tax increase could be on the horizon for the next fiscal year.

Scott pointed to several factors contributing to the tight budget situation, including:

* **Act 183’s $69 Million One-Time Funds:** While these funds helped lower property tax rates for the current fiscal year, they did not address long-term structural issues. This has left the state with a $60 million budget gap for FY26.
* **Rising Health Insurance Costs:** The Vermont Education Health Initiative, which tracks school health insurance costs, is expected to report significant increases this fall. These increases could add approximately $50 million in education spending pressure.
* **Persistent Spending Growth:** While the actual average tax rate increase was slightly lower than initially predicted, nearly every town in Vermont experienced homestead tax increases from 2023 to 2024.

The governor’s letter echoes concerns raised by the Vermont School Boards Association, Vermont Superintendents Association, and Vermont Association of School Business Officials. These organizations have urged school districts to begin their budgeting cycle early and take steps to mitigate cost drivers.

To address the upcoming budget challenges, Scott has directed his administration to limit spending growth to no more than 3% for FY26, while also providing technical support and information sessions for schools. However, he acknowledged that the state faces a difficult road ahead, warning that a failure to make tough choices now could lead to even greater tax increases in the future.

The Vermont Commission on the Future of Public Education is tasked with mapping the way forward for education finance. While it’s still too early to assess the commission’s progress, Scott emphasized the need for continued collaboration to navigate the complex challenges facing the state’s education system.

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