Vermont Tax Commissioner Kaj Samsom is predicting that robust growth in the tax base should hold education property tax rates flat next year despite projected spending increases.
The forecast comes in a letter to the Legislature the commissioner is required by law to release by Dec. 1 predicting education tax rates. Samsom said in an interview that grand list growth from market appreciation and new construction, along with an anticipated surplus from this fiscal year, are the main reason tax rates are expected to hold steady.
“It’s overall positive news,” Samsom said. “And what it shows is that in an environment of revenue growth, you can maintain reasonable spending growth without increasing the tax rates.”
The tax commissioner in his letter assumes education spending will increase by 3.2 percent. He projects the average residential property tax rate will be $1.50 per $100 in assessed value (the same as this year’s) and that the average non-homestead property tax rate will be $1.58 (also the same as this year’s). About two-thirds of Vermonters actually pay income-based property taxes, and Samsom’s forecast pins the average education income tax rate at 2.45 percent (down slightly from this year’s 2.49 percent).
A steady tax rate does not mean tax bills won’t rise. The average property tax bill is expected to go up by 1.52 percent, according to the commissioner’s forecast, because of increases in property value and rising incomes.
The numbers projected by the commissioner are subject to change. The education tax yield, a number used to calculate tax rates, isn’t finalized by the Legislature until the spring, after school districts have voted for their budgets on Town Meeting Day. But the projected yield included in the December letter is a critical number used by school boards as they begin crafting budgets for next year, and it sets the stage for the education spending debates lawmakers and Gov. Phil Scott are sure to have once the legislative session gets underway.
Samsom’s letter foreshadows those debates, saying that if school boards hold spending increases to 1.7 percent — last year’s spending growth — that $21 million could be freed up to actually lower tax rates and put money toward child care subsidies, a long-standing policy priority for the governor.