Local News

6% projected property tax increase is forecast statewide

Acting Commissioner of Taxes Craig Bolio has released the statutorily required education tax rate letter which forecasts the education tax yields for resident homeowners and the nonhomestead tax rate (formerly called “nonresidential”) for the upcoming fiscal year (FY) 2021.

The forecasted FY21 homestead property yield is $10,883 compared to $10,648 for FY20 (the current property tax year). The forecasted FY21 income yield is $13,396 compared to $13,081 for FY20 and impacts credit claims submitted in the spring of 2021.

The increase in the forecasted homestead property yield would result in an average homestead tax rate increase of 5.5 cents. The statewide base nonhomestead tax rate is forecast to be $1.654 in FY21, a 6-cent increase from FY20.

Statewide education spending is forecast to grow by $71.5 million while the equalized pupil count is projected to decline by 427, creating a 5.53% increase in average equalized per pupil spending. This rate of growth is nearly double the expected growth in tax year 2020 property values (3%) or income (2.5%), and is the primary cause of the projected rate increase.

Because of the forecasted increases to education spending, coupled with property value appreciation and income growth, the average bill across the state would increase by more than 6%.

Moreover, as in all years, changes in each district’s per pupil spending will result in very different property tax impacts across the state, as locally voted spending amounts are still the primary determinant of a town’s homestead education tax rate.

The forecast this year leads to challenges for affordability.

However, if districts can restrain budget growth to less than 1.4% cumulatively (1.9% per pupil), average rates could stay the same as last year.

In an accompanying letter sent to legislative leaders, Secretary of Administration Susanne Young said, “One of the key performance indicators we use to measure how effectively State government is helping to make Vermont more affordable for families is the percent of household income (HHI) spent on state taxes and fees. It is our view that if the percent of a household’s income captured by government is increasing, government is having a regressive economic impact on households. The fact that projected education cost increases continue to exceed the rate of growth in education fund revenues — and the rate of growth in household — remains a cause for significant concern, particularly as the number of students in Vermont’s schools continue to decline.”

She cited the cost of health care’s impact on school costs: “Of the expected $72 million increase in the education payment, about $28 million would cover local school districts’ portions of premium increases.”

She added, “The Governor supports increasing education spending where we can demonstrate that it yields added value, and equity, for students. Given the state of Vermont’s declining student population and performance scores, it’s difficult to argue the escalating tax rates do much more than maintain a status quo of rising costs and growing inequity.  We need to work together to ensure the investment Vermonters are making is yielding more equitable opportunities and better outcomes for our kids.”

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