If your municipality or city has non-approved locally voted exemptions or tax stabilization agreements, you must set a local agreement rate to raise foregone school taxes.
A municipality shall assess a tax on its municipal grand list at a rate sufficient to raise an amount equal to the difference between the municipality's total education property tax liability to the state under this chapter and the amount collected from education property taxes in the municipality after reductions for all tax agreements in effect in the municipality as defined in subsection (c) of this section. Any such tax assessed under this section shall be identified on the tax bill of the municipality as a separate tax for municipally voted tax agreements. 32 V.S.A. § 5404a(d).
The abstract of the grand list (form 411) will indicate whether non-approved local agreements are contained in the grand list. If there are such agreements, a local agreement rate must be levied. The listers/assessor in your municipality can answer questions on these agreements.
Setting the Local Agreement Rate
The local agreement rate reflects how much education tax revenue was foregone as a result of the local agreement. The municipality is required to collect enough revenue to reimburse the state education fund for the foregone revenue.
Example:
<>The municipality voters have decided to stabilize the taxes on a business that is expanding in the municipality. The municipal legislative body has entered into an agreement with the owner to exempt $500,000 business stabilization value for each of the next five years. 24 V.S.A. § 2741.
The voters have also decided to exempt an additional $15,000 list value on homes owned by qualifying veterans. 32 V.S.A. § 3802(11). There are l0 such properties for a total reduction in homestead listed value of $150,000.
| For the purposes of this example: | |
|---|---|
| The nonhomestead (NHS) education tax rate is | $1.7822 |
| The homestead (HS) education tax rate is | $1.5638 |
| The local agreement rate consists of the nonhomestead portion (the 500,000 business stabilization value) and the homestead portion (150,000 veteran's exemption). | |
| The total municipal grand list for your municipality is | $5,020,000 |
- First, convert the total listed values to Grand List (GL) values by multiplying the listed value times .01.
- Then multiply the GL value by the tax rate to get the estimated taxes levied.
- (Business Stabilization Value) 500,000 x .01 = (Business Stabilization GL) $5,000
- (Business Stabilization GL) 5,000 x (NR Tax Rate) $1.7822 = (Forgone NR Tax) $8,911.00
- (Veteran Properties) 10 x (Local Veteran Exemption Value) $15,000 x.01 = (Local Veteran Exemption GL) 1,500