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Early School Tax Forecasts Point to Large Increase

Montpelier residents could see an increase of nearly 18 cents in the 2022 education property tax rate under a worst-case scenario.

Because of COVID-19-related revenue shortfalls in the state education fund, Tax Commissioner Craig Bolio has already warned the Legislature that education tax bills will rise by 9 percent statewide unless more money is injected into the fund. That’s just one of the factors that guides the complicated process of setting school taxes.

The total proposed FY22 budget for the Montpelier-Roxbury Public Schools district, including capital spending, is about $25.9 million, up from $25.3 in FY21, a roughly 2.5 percent increase. Much of the spending increase is due to built-in personnel costs, which make up 73 percent of the budget.

One of the drivers of the possible 18-cent jump is a reduction in what the state refers to as homestead property yield, which is used, in part, to determine the amount of money schools receive. As it stands now, that amount was reduced by $235 per pupil for FY22, which alone equals about 4 cents on the tax rate. The impact is even worse when factoring that the yield amount usually rises each year. By contrast the yield rose by $350 per pupil in FY21, so if it had done so again this year the tax rate would have been 10 cents lower instead of 4 cents higher.

Another factor is Montpelier’s hot real estate market. The state “penalizes” districts whose assessed property values are below actual sale prices over a three-year period. The city’s common level of appraisal is about 85 percent of fair market value, which means the city must conduct a full reappraisal, which it plans to do in late 2022 and 2023. The effect of that discrepancy amounts to another 5.5 cents on the tax rate, said Grant Geisler, MRPS business manager.

One advantage the district has over many of its counterparts is that its enrollment is increasing while others are shrinking. That results in more “equalized” pupils and more money from the state. The population at Union Elementary, Main Street Middle, and Montpelier High are expected to rise each year through 2024-25, from 1,146 now to 1,202 in four years. Enrollment at Roxbury Village School is expected to level out at 30 students.

With so many variables still unknown, Geisler and Superintendent Libby Bonesteel are hoping that the ultimate tax rate increase to be decided on Town Meeting Day is closer to the statewide average than the 17.9 cents it appears at the moment. The School Board next considers the budget on Dec. 16.