The Douglas Administration just blinked.

Not that that it gave up much. It surrendered but one point, and did it as belligerently as possible. Expect it to return to the fray wide-eyed and armed with fact (or at least its version thereof) and rhetoric for what looms as Vermont’s biggest battle of 2009-Gov. Jim Douglas’s fight to reduce spending on public schools.

Yes, the word was ‘reduce.’ Not just ‘hold down the increase,’ or ‘restrain growth,’ but ‘spend less,’ as in, spend less next school year than this one.

Douglas himself hasn’t yet put it quite that bluntly, though it’s hard to see what else he meant when he contrasted  the spending cuts being forced on most state agencies with the projected increases in school spending.

But one of his senior administration officials, Tax Commissioner Tom Pelham, said in an interview that he thought there should be an actual cut in school spending, and that he was trying to make that case in one of the two letters he sent to the leaders of the Legislature.

The other letter was the blink. Monday afternoon, a day before a Washington County Superior Court judge was going to hear arguments on a lawsuit trying to force Pelham to recommend a two-cent tax decrease in next year’s statewide education property tax rate, the tax commissioner did just that.

“I hereby recommend a two-cent reduction,” he wrote.

That’s what he refused to recommend on December 1, in defiance of a law. The law is something of a technicality-Pelham doesn’t set the tax rate; the Legislature and the governor do-but the State School Boards Association and four school districts went to court over it.

Pelham called the suit groundless and another administration official called it “frivolous,” but on further review, as they say in the National Football League, Pelham decided, “it’s not worth fighting over,” perhaps because he might well have lost.

So the lawsuit is off. But the battle is on, and it’s a little confusing. The administration, which wants to cut school spending, resisted making the recommendation to cut the tax. The School Boards Association,  which usually wants more revenue for schools, insisted on it, painting itself as the taxpayer’s friend. What’s going on?

Part of the explanation lies in the simple fact that there’s a difference between a property tax rate and the amount of revenue collected. If the total value of taxable property goes up, even a lower rate can bring in more revenue.

That’s what’s happening, Pelham said, arguing that the rate should go down even more.

“The value of the equalized grand list (that’s the value of taxable property) is going to grow 6.9 percent,” Pelham said.” That’s not conjecture. That’s fact. With the grand list value growing almost seven percent and tax rates only going down by two cents , that leaves the School Boards Association and their constituencies in the position of having millions more to spend.”

Pelham said he thinks the schools have been spending too much for years. Decrying a “spending expansion,” he pointed out that even as “Vermont’s school enrollment has dropped by almost 10,000 students since 1977, school staffs have increased by 3,500 positions, or 22 percent.”

In his letter to outgoing House Speaker Gaye Symington and Senate President Peter Shumlin, Pelham specified that “a two percent reduction…”results in a $31.2 million property tax increase,” a result “Vermonters will not welcome.”

“I don’t know what he’s talking about,” said School Boards Association Executive Director John Nelson. “It’s just baloney. He’s trying to say it in a way that makes the reader think this two-cent reduction will be responsible for a $31 million  increase. It doesn’t give (schools) more to spend. It gives them $20 million less.”

Can they both be right? Sure. Cutting the residential property  tax rate from 87 cents to 85 cents per hundred dollars of assessed value, and the non-residential rate from $1.36 to $1.34, would bring in some $20 million less than not cutting them. But even the lower rate would bring in more money when applied to a higher base.

Calling that a “tax increase,” as Pelham did, is technically accurate, but misleading if people interpret it to mean their taxes will go up. The grand list rises largely because of development; houses and stores built on empty lots, rooms or garages attached to existing homes. Most home-owners would probably end up paying less if the rate is cut by two cents, even as the total take goes up.

Making the argument politically more difficult for Douglas, Pelham et al. It’s harder to get taxpayers upset if their own taxes aren’t actually going up. The argument that  keeping the rate at 85 cents is the functional equivalent of a tax increase because a steeper cut might mean that many a  homeowner’s property tax would actually go down, is not frivolous. But it lacks the punch of screaming against an actual tax hike.

Politicians who put pressure on schools to cut costs have another difficult challenge: figuring out how to do it.  Nelson said that neither Douglas nor any of his associates have  “indicated in any respect where they think reduced spending ought to happen. They have not had one idea.”

About a year ago, Nelson said, he and his board of directors asked to meet with Douglas  to talk about ideas for reducing school costs.

“We said if you can’t come to us we’ll come see you. His office called and said, ‘we have your invitation and we’re going to decline.’”

The combatants here seem far from a meeting, much less a meeting of the minds. The fight goes on.–Jon Margolis

Tags: Jim Douglas, John Nelson, Tom Pelham

This entry was posted on Wednesday, December 31st, 2008 at 6:00 am and is filed under Schools, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.