There are lots of changes homeowners will see in their property tax bill this year, which are due to be sent on or about July 15, 2022. One of those changes is a sharp reduction in the Homestead Education tax rate – this is the portion of the bill that funds our schools. This rate will be reduced by about 29.5 cents from $1.7004 last year to $1.4050 per $100 of property value this year.
This is a huge swing historically due to unpredictable and unprecedented economic factors in our economy. As a comparison, in 2019, the education tax rate was $1.73 per $100 of property value, in 2020, $1.74, 2021, $1.77, and last year $1.70.
Two things contributed to these lower education taxes: a surplus in the state education fund, and increased home sale prices. This is not due to any changes to the per pupil cost of education that voters passed in March.
This year, the state found it had a surplus of money in the state education fund (this is where our homestead education taxes go). This was because more taxes (including sales and use, vehicle purchase taxes, and meals and rooms taxes), were raised than needed to fund education statewide. In May of this year, the legislature decided how to spend that surplus of about $95 million. It is devoting $20 million dollars to property tax relief.
The result, which affects the “yield” factor, is a lower tax rate on property tax bills for the homestead education tax. In Springfield, we believe this will result in a reduction of 6.5 cents per $100 of property value from last year.
Increased home sale prices will also result in an additional reduction to the homestead education tax rate on homeowner’s tax bills. Home sale prices determine the “Common Level Appraisal” or CLA. This is the last factor used to calculate the homestead education tax rate.
The CLA compares local home sale prices to town grand list property values. If the grand list is less than sale prices, the CLA is a lower percentage, if the grand list values are more than the sale prices, the CLA is a higher percentage. The higher percentage CLA, the lower the homestead education property tax rate (within certain limits.)
This year, after Springfield’s reappraisal, as compared to fair market values (home sale prices), the CLA is 103%. This higher CLA will result in approximately 23 cent per $100 of property value reduction to the homestead education tax rate on property bills this year. The higher yield and higher CLA mean a total reduction of 29.54 cents in homestead education property taxes from last year.
Since the lower education tax will be applied to a higher assessed value, the best way to see the effects of all these changes is to compare the education tax amount from last year to this year. Look at the homestead education portion of your bill.
No one could predict the massive increase in home sales or the state’s ability to refund surplus education funds on the state level to taxpayers. Neither the yield nor the CLA are tied to local education spending. These reductions to education taxes ought to be viewed as a windfall.
Per pupil spending is always a factor used to determine our education tax rate. This factor is within our control. We hope that our voters will consider these lower 2022-23 taxes in the context of our historical rates. Otherwise, to maintain these rates, future budgets would have to cut spending on our children at a critical time post-pandemic.
To learn more about property tax relief, go to www.tax.vermont.gov/property/tax-credit To learn more about how your homestead education property tax rate is calculated go to www.tax.vermont.gov/property/education-property-tax-rates/faqs For more detail from your school board go to www.ssdvt.org/
The Springfield, Vt. School Board