An article on page 14 in the Dec. 13 issue of The Charlotte News, “Commissioner of Taxes Releases FY2019 Education Yield Letter,” quoted Jeanne Jensen, the chief operating officer of the Champlain Valley School District (CVSD), as saying, “Finally, taxpayers should remember that we will be receiving the second year of our district consolidation tax incentive, which will provide CVSD tax payers with an 8 cent reduction on their tax bill.” That is not quite correct. We will be receiving an eight-cent merger tax incentive, but that does not mean that the tax rate on your tax bill will be eight cents lower.
The merger tax incentive is only part of the equation to arrive at the final homestead education tax rate.
A crucial component of that equation is per-pupil spending for the Champlain Valley School District. That number is affected by expenditures, revenues and the number of equalized pupils. If expenditures increase more than revenues increase, then per-pupil spending increases. If the number of equalized pupils decreases, per-pupil spending also increases. To date, per-pupil spending in the CVSD is unknown.
The state has projected per-pupil spending for next year at $9,842. This is not finalized yet, but last year that number was $10,160. How does this affect the tax rate? Last year per-pupil spending for our consolidated district was $15,400.95. That amount divided by $10,160 is $1.5158. Last year the merger tax incentive was 10 cents, which when applied to the homestead equalized tax rate of $1.5158 reduced the rate to $1.4158. The CLA (Common Level of Appraisal) for Charlotte last year was 99 percent, which yielded a FY17/18 homestead education tax rate of $1.4301 ($1.4158/.99).
So, let’s say per-pupil spending next year in the CVSD is the same as this year, $15,400.95, and the state’s per-pupil spending is reduced to $9,842. $15,400.95 divided by $9,842 yields a tax rate of $1.5648. The eight-cent merger incentive reduces that rate to $1.4848. However, Charlotte’s CLA is now 98.2 percent, and dividing $1.4848 by 0.982 yields a tax rate of $1.512—eight cents higher than last year’s rate of $1.4158, even after applying the eight-cent merger incentive.
If equations are too confusing to follow, consider just this: per-pupil spending remains the primary determinant of a town’s tax rate. Per-pupil spending is further negatively affected by the state decreasing the base per-pupil spending from $10,160 to $9,842—the state refers to this number as the “homestead yield.” A decrease in the CLA from 100 percent increases the resulting tax rate.
Yes, we are receiving an eight-cent tax incentive for consolidating. But, no, that does not necessarily mean an eight-cent reduction on your tax bill. The homestead yield decreasing from $10,160 to possibly $9,842 is costly to taxpayers.