Commissioner of Taxes Releases FY2021 Education Yield Letter
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. Using statutorily prescribed calculations, the Agency of Education, Department of Taxes, Department of Finance and Management, and Joint Fiscal Office collaborate to establish the yields and rate.
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 six-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. Additional resources for understanding education tax rates are available on the Department’s website and from the Vermont School Boards Association.