Editor’s note: This article is by Miranda Orso of the Waterbury Record, in which it was first published Aug. 7, 2014.
State school-tax rates have put Waterbury, Duxbury and 110 other communities in an unusual situation — town residents will pay higher tax rates than nonresidents.
This is a first for Waterbury taxpayers, according to Municipal Manager Bill Shepeluk.
“This is definitely the first time this has occurred and I think there’s more and more towns in this situation,” he said. “I think that’s a recent reality.”
Of 262 towns in Vermont, 112 have higher homestead rates than nonresidential rates this year.
Waterbury’s homestead tax rate for this year has been set at $15.427 per $1,000 of assessed property value. That equates to a bill of $3,085.40 on a house valued at $200,000. The nonresidential rate is $14.750 per $1,000 of value, which equates to a bill of $2,950 on a $200,000 property.
The circumstances are similar across the river in Duxbury, where the tax rate for residents is $15.916 per $1,000 of value; it’s a $15.027 rate per $1,000 for nonresidents.
The differences are even more pronounced in other communities, such as Stannard and Isle La Motte.
Stannard’s tax rate for residents is $23.085 per $1,000 of property value, and only $15.374 for nonresidents. On a $200,000 property, a resident will pay $5,886.68; a nonresident will pay $3,074.80 — a difference of $2,813.88.
Isle La Motte rates are $22.079 for residents and $15.899 for nonresidents; on a $200,000 property, a resident will pay $4,415.80 in taxes, a nonresident $3,177.80 — a difference of $1,238.
Fayston, Moretown and Waitsfield are all in similar situation.
The homestead tax rate, paid by town residents, is based partly on how much money is spent for each student from that town. However, the formula is tricky, because students in different situations are assigned different numerical values, and the formula is based on money spent “per equalized student.”
Michelle Baker, director of operations and finance at the Washington West Supervisory Union, said many factors are at play in the tax calculation. Beyond school spending per equalized pupil, a town can be affected if it’s a member of one or more union school districts.
Waterbury and Duxbury are each part of two separate school districts — the Harwood Union and Waterbury-Duxbury school districts.
“The homestead tax rate has a lot of variables. Some are set by the Legislature and some are based on voter-approved budgets, but there’s also the revenue component,” Baker said. “The number of pupils is also changing a little bit.”
Baker said there’s no single reason why school tax rates are higher this year.
“It’s spending, it’s pupils, it’s revenues and it’s the fact that there are two different districts,” Baker said of the higher rates for residents of Waterbury and Duxbury.
And, there’s been a slight decline in local school enrollment, based on the count of equalized pupils. Fewer pupils means less state aid.
This year, the Waterbury-Duxbury district has 655.1 equalized students, down from 659.64 the previous year, a decline of less than 1 percent.
Harwood Union saw a 3.5 percent decline, from 769.72 students to 743.07.
Many residents still end up paying even less because of income-sensitivity adjustments, based on household income. Nonresidents don’t receive income-sensitivity breaks.
Under income sensitivity, homeowners pay school taxes on their primary residence based on income, rather than on the home’s value, according to the Vermont Department of Taxes.
A taxpayer with a total household income less than $90,000 can pay an income-based school tax on a primary residence with less than 2 acres of land.
About 60 percent of all Vermont households receive income-sensitivity tax breaks, which cost about $150 million, according to the department.
There’s also another piece to the tax puzzle this year, because of the higher homestead rates. Homeowners who were late filing their Vermont homestead declaration form may face a higher penalty this year. It’s normally 3 percent of the school taxes due on a property; homeowners who didn’t make the April filing deadline will pay an 8 percent penalty.
However, state law allows local governments to reduce or even waive the late filing fee.
Shepeluk said Waterbury has already decided to waive the fee.
But homeowners still left having to pay can also appeal any penalties, based on hardship — such as a serious illness or disability, full-time military duty outside the state, or the disability or death of the homeowner or an immediate family member.
