By Ethan Weinstein/VTDigger and Polly Mikula
Vermonters can expect a 5.9% average increase in education property taxes next year absent major changes, according to the annual forecast from Craig Bolio, Vermont’s tax commissioner.
The news arrived Monday, Dec. 2, in the form of the “Dec. 1 letter,” an annual projection required by law that represents the first public-facing estimate of expected education property taxes for the fiscal year starting July 2025. It relies on data from the state Agency of Education and local school districts, which are already engaged in their budget-making processes, and is produced in collaboration with the Vermont Legislative Joint Fiscal Office.
In a written statement, Gov. Phil Scott said that “with this projected increase, Vermonters will have seen a 33% increase in education property taxes in the last three years. This is the result of unsustainable costs, an aging demographic, and smaller workforce.”
Vermonters “simply cannot afford more,” Scott said, calling on lawmakers to work with his administration to reduce the tax burden. He also thanked school administrators and school board members, who he said “have made difficult decisions” to prevent more substantial projected tax increases.
Last year’s Dec. 1 letter forecasted an 18.5% education property tax increase. Ultimately, after local school budget revisions, new taxes and injections of one-time funds to buy down the surge, the average increase wound up at 13.8%. Health care costs, student mental health needs, ailing infrastructure and inflation all contributed to last year’s increase.
For the next fiscal year, officials project education spending will rise by about $115 million. The use of roughly $69 million in one-time funds last year also added cost pressure, Bolio wrote in the letter, a figure slightly offset by about $33 million of unused money from the current fiscal year, FY25.
Because lawmakers made a few changes to Vermont’s educational finance system last legislative session, and as cost pressures on schools have continued, stakeholders worried about a similar double digit spike this year. The worst fears appeared to be avoided, but officials cautioned the 5.9% increase is still substantial, especially on top of multiple years of escalation.
“We know Vermonters are already struggling to pay for this year’s unprecedented increase in property taxes, I expect another projected increase will be difficult to hear,” Bolio said in a statement alongside his department’s letter. “It’s important that we continue to work together to find solutions to make our education funding system sustainable.”
He also said the Scott administration “will propose a framework for discussion during the legislative session that builds upon prior proposals and recent statewide discussions.”
Scott’s team and Democratic lawmakers have sparred in recent years over whether the administration should develop new policy proposals or whether prior ideas remain as relevant as ever.
Rep. Emilie Kornheiser, D-Brattleboro, who chairs the tax-writing House Ways and Means Committee, said on Monday that the letter’s forecast would not change the work ahead for lawmakers.
“We’re going to need to look at new ways of doing things,” she said. “Certainly the number was not as high as some people’s worst fears, but that doesn’t mean that Vermonters can sustain continued increases.”
Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, said in a statement that the projected increase, though not the worst case scenario, is “not just unacceptable — it continues to constitute an evolving emergency that the Legislature must make its first priority come January.”
Republican leaders in the Legislature, meanwhile, signaled they would pursue “tax relief” this session, calling on their colleagues to implement “fundamental systemic reform” to Vermont’s education finance system.
“Some have proposed that education tax increases can be averted by simply dedicating additional revenue to the Education Fund or cost-shifting,” said Rep. Scott Beck, R-St. Johnsbury, who was recently tapped to lead Senate Republicans when he joins that body in January, and House Minority Leader Pattie McCoy, R-Poultney, in a written statement. “Others believe if we craft a correct system of penalties and thresholds, the problem can be solved. We strongly disagree.”
“The Administration believes achieving sustainability and reducing property taxes will require a strategy that focuses on how much we spend, and how we fund and deliver education services. The strategy will need to ensure high levels of accountability, transparency, and fairness for taxpayers and students across Vermont,” Bolio wrote. “Modernizing our education funding system is complex and will take a multi-phased approach that will be challenging, but will be worth it when we achieve a world class educational system that taxpayers can afford.”
Statewide adjustment
By January 1, the Dept. of Taxes will have completed its “Equalization Study” that determines the CLAs for each Vermont town. But unlike prior years, beginning in 2025 these CLAs will not be applied to each town’s education property tax rates, according to the state at tax.vermont.gov. Instead, every town’s CLA will be divided by a single “statewide adjustment” and the result will be applied to each town’s education property tax rates.
“The statewide adjustment can be thought of as the average level of appraisal of the entire state,” the state explained at tax.vermont.gov/statewide-adjustment. “For example, if a town has a CLA of 60%, but the statewide adjustment is 75%, then the adjustment factor applied to education property tax rates in that town will be 0.60 / 0.75 = 0.80 or 80%. All Vermont property will still be taxed at 100% of fair market value, but the factor applied to education property tax rates will be calculated differently,” the site explained by way of example, the actual SA is 72% according to the Dec. 1 letter.
“The statewide adjustment component is intended to help districts more easily predict the impact of the common level of appraisal on local education property tax rates,” the state dept of taxes noted in a presentation to town officials across the state at the Town Fair held in Killington, Oct. 14.
The table below shows how the SA is applied and how a sample town will see the same final tax rate using the new SA (75% in this example) as it would have under current law without the SA.
School district tax rate is the school district’s per pupil spending divided by the homestead property yield. The yield is set annually by the Legislature. Final homestead tax rate under current law is the school district tax rate divided by the town’s CLA (common level of appraisal). Starting July 1, 2025, the final homestead tax rate will be the school district tax rate divided by the number resulting from dividing the town’s CLA by the new statewide adjustment.
