Property Valuation and Review
Frequently Asked Questions
How are the school rates set?
For tax year 2009 (FY10), the base education tax rate for homestead property is $0.86. It is adjusted by the district spending adjustment, and by the school district’s common level of appraisal (CLA).
For tax year 2009 (FY10), the base tax rate for nonresidential property is $1.35. It is adjusted by the school district’s common level of appraisal. The nonresidential tax rate is not multiplied by the district spending adjustment.
What is the purpose of the common level of appraisal?
The common level of appraisal is used to equalize education taxes statewide—to ensure that properties of equal value pay equal taxes. It wouldn’t be fair to use the locally established values and the same tax rate in every town without the common level of appraisal adjustment. If your town had just reappraised, you would pay at a higher rate than the owner of a property worth the same amount in a town that hadn’t reappraised in a few years.
Let’s say you have a camp in East Overshoe that is worth $100,000. Your listers did a complete reappraisal for tax year 2009 and they’ve assessed you at $100,000.
There’s a camp across the town line in West Overshoe that is also worth $100,000. The Town of West Overshoe is planning to reappraise for tax year 2010, but for tax year 2009 that camp is assessed at $85,000.
It wouldn’t be fair if you were taxed at the same $1.35 rate. You would pay $1,350. Your West Overshoe neighbor would pay $1,148.
Rather than thinking of the CLA as adjusting the tax rate, think of it as adjusting the listed value of the property to fair market value. The West Overshoe camp is adjusted by the common level of appraisal to bring its listed value into line with the market.
$85,000 ÷ .85 = $100,000
The adjustment by the CLA means you and your neighbor in the next town pay the same amount of education tax on properties of equal value.
How does the spending level voted in my town affect the homestead tax rate?
The tax rate levied on homestead property is adjusted upward if the residents of that school district spend more than the “base education spending” amount. The base is $8,544 per pupil for tax year 2009 (FY10). Here’s an illustration of how the rate is adjusted.
Say your local school budget provides for spending of $9,200 per pupil. The homestead tax rate of $0.86 will be adjusted. It will be higher in proportion to the amount your voters decided to spend over $8,544 per pupil. In this example, the district spending adjustment is:
$9,200 ¸$8,544 = 1.07678 or 107.678%
The effective homestead tax rate is $0.86 x 1.0768 = $.9260
If the common level of appraisal in your town is 90.00%, your homestead education rate to be applied to homestead properties becomes $1.0289.
$0.9260 ÷ 0.9000 = $1.0289
Keep in mind that some town districts are also members of union school districts or unified school districts. In those instances, the tax rate is a combination of the individual rates of the different districts of which you are a member.
Is the nonresidential tax rate of $1.35 adjusted to reflect spending over the “base education payment?”
No. The rate for nonresidential property is the same for all property in Vermont. It is adjusted only by the common level of appraisal. If the CLA is 90.00% the rate becomes:
$1.35 ¸ .9000 = $1.5000.
Will there be towns where the nonresidential tax rate is lower than the homestead tax rate?
Yes. In towns with per pupil spending in excess of $13,412 the homestead rate will be higher than the nonresidential rate for fiscal year 2010. Consider a school district with spending of $13,900 per pupil.
The homestead tax rate will be $1.3991. That’s $0.86 times the district spending adjustment.
District spending adjustment = ($13,900 ¸ $8,544) = 1.62687
$0.86 x 1.62687 = $1.3991
The nonresidential tax rate is $1.35.
Of course, both these rates would then be adjusted by the CLA.
Is there an additional adjustment for school districts whose per pupil spending is a lot more (excess spending) than the average statewide?
Yes. If a town has “excess spending,” then the Department of Education includes that excess twice in the computation of its district spending adjustment. 32 V.S.A. §§5401(12) and 5401(13). Excess spending means the per-pupil spending (less eligible construction costs) is in excess of 125 percent of the excess spending base. For FY10 the excess spending base is $11,187. So the threshold is $13,984 (1.25 x $11,187). Let’s look at an example:
Your school district spends $14,500 per pupil. The excess spending base is $11,187. 125% of $11,187 is $13,984.
Your per-pupil spending exceeds the threshold by $516. ($14,500 – $13,984) This is your school district’s excess spending.
The district spending adjustment is: (14,500 + 516) ¸ 8,544 = 1.75749
Rate becomes (1.75749 x $0.86) ¸ CLA
If the CLA is 85%, the homestead rate is (1.75749 x $0.86) ¸ .85 = $1.7781
In this example, the excess spending adjustment adds about 6 cents to the homestead rate.
My town is completing a reappraisal for the April 1, 2009 grand list. Using the common level of appraisal to adjust the tax rates doesn’t seem fair. Our common level of appraisal was 85% based on last year’s grand list. The tax bills for this year will use a grand list that is at 100% of market value. Will the tax rates be adjusted to account for reappraisals?
Yes. In those towns that have reappraised for 2009, the common level of appraisal used to calculate the rates will be the ratio of the reappraised 2009 education grand list to the equalized education grand list certified January 1, 2009. The Director of PVR is charged by statute with determining whether a reappraisal has occurred that warrants a new CLA. 32 V.S.A. §5406(c).
Towns also levy taxes for highways and other municipal services. Are there different rates for homestead and nonresidential properties?
No. Municipal taxes that pay for highways and other municipal services are levied on the municipal grand list. With the exception of the few communities that have different rates in accord with their charter, municipal taxes are not subject to tax classification.
The selectboard determines the amount to be raised from taxes and divides that figure by the total municipal grand list established by the listers. 17 V.S.A. §2664 . There is no adjustment for the common level of appraisal as there is no need to adjust the municipal values to a single point in time. This is not a state tax requiring equalization across towns.
It says on material with my tax bill that some people are able to pay their education tax based on income rather than on the value of their property. How does that work?
There is a property tax adjustment worksheet on the Tax Department website. It can used to estimate the property tax adjustment credit. Click the link below:
The classification of property as homestead assures that a Vermont resident will not pay more than the statutorily established percentage of household income for property taxes on his or her housesite (house and up to two acres). The difference between the taxpayer’s property tax bill and the property tax based on household income is paid by the State in the form of a property tax adjustment credit. The money is paid directly to the Town. The Town then issues the homeowner a property tax bill for the net due. The property tax adjustment calculation uses prior year household income and prior year property taxes.
Who do I contact if I need more information?
Call Taxpayer Services Division at 802-828-2865 or toll free in Vermont at 866-828-2865.