Sticker shock! This is the term that appropriately describes Vermonters’, including Charlotters’, reaction to the school budgets that are going to be voted on at Town Meetings across the state. The subsequent effect on property tax rates might make one wonder if their school boards and state legislators have gone off the deep end and just don’t care about the amount of taxes their constituents have to pay. I would argue that, while that might be an understandable reaction, it is very far from the truth.
No one goes to Montpelier with the intention of raising taxes of any kind. However, with the goal of providing every Vermont child access to a good quality education, the costs of education are spread across the entire state. The Education Fund is funded mainly through the statewide property tax, but also through sales taxes, the lottery and transfers from the General Fund. As your State Representative, I want to explain how and why the statewide property tax rate has increased.
Since the amount of money that needs to be raised is determined by spending decisions at the local level, the legislature can only determine who pays, not how much to spend. At the local level, school board members have deliberated long and hard over the Charlotte Central School budget. If you don’t believe this, refer to the CCS Board meeting minutes and read the article by Board member Kristin Wright in the February 21st issue of The Citizen. She describes in detail the decisions of the last several years to minimize and even eliminate budget increases. Yet, this year external cost pressures, including declining enrollment, teachers’ health insurance increases and contracted salary increases, have forced a 6.4% increase in the budget. When the 6.4% increase is divided among fewer students it results in an 8.5% education property tax increase in Charlotte.
The base statewide property tax rate of $.94 per $100 is based on the total proposed school spending for all Vermont school districts, the total number of students in the state, and the total grand list property value of the state. Since district spending per pupil varies, a formula is used to adjust the tax rate proportionally. For Charlotte per-pupil spending is $15,189 leading to a tax rate of .94 x 15189 / 9151 = 1.56. Another factor is the CLA or Common Level of Appraisal, or how closely the assessed value of a property is to the fair market value. Because Charlotte’s assessments are 2% higher than market, the final rate is adjusted downward to 1.52.
[Note: I only used the CCS numbers in this analysis. I did not include the effects of the CVU budget. - MY]
But this is only half the story. For those households with incomes below $90,000, property tax is based on income or ability to pay. The base income rate is 1.8% of household income, and the same spending ratio determines Charlotte’s income sensitivity rate to be 2.99%. This is the upper limit of education property tax on the first $500,000 of value of a house plus two acres that a household is subject to. So, for a house site assessed at $500,000 for a household with an income of $90,000, the tax is limited to 2.99% x $90,000 = $2691. Furthermore, the statewide education property tax subsidizes the Current Use program, which helps Charlotte maintain its rural character.
Our School Board has worked hard to keep costs as low as they could while still maintaining the high standards CCS is noted for. Just as we have no control over the price of gasoline or heating oil, there are costs that the School Board has no control over. As you decide how to vote on the school budget, consider whether you are one of the 42% of homeowners who received an income sensitivity property tax adjustment last year or whether some of your property is in the Current Use program. If so, you, too, are benefiting from our statewide educational funding formula.
As always I welcome your feedback on any issue or topic of concern. You can contact me by phone at 425-3960 or email me at myantachka.dfa@gmail.com.
Legislative Report 2/28/2013 - Reflections on the Cost of Education
