Increased home valuations, lower municipal tax rate, surplus, state education formula explained
By Brett Yates
MENDON — A previous article in the Mountain Times, “Tax rate plunges in Mendon” (July 28), misstated the municipal tax rate in Mendon for 2021–2022 as 0.3973%. The correct rate is 0.3793%.
Following publication, several readers wrote in to express concerns about the townwide reappraisal that, by boosting Mendon property valuations this year, resulted in the lowered tax rate alluded to in the article’s title. Some worried that the tax rate, despite its significant decline (from 2.0545% to 1.5377% in the total residential rate), had not fallen sufficiently to offset the enormous rise in Mendon’s Grand List and that they’d end up with a higher property tax bill as a result.
On the whole, these fears appear to be unfounded, according to new data released by the Mendon town office, which show that Mendon’s collective property tax bill has slightly fallen in 2021–2022. Over the course of two payment periods, in September and then in March, Mendon property owners will pony up a total of $3,775,423.20, compared to $3,786,554.63 in 2020–2021.
This represents a decline of 0.29% in the cumulative property tax bill, all of which comes from the municipal side, as the town seeks to raise $911,920.10 this year — that is, $48,452.84 less than last year, despite a 2% increase in the town budget. Because the town finished with a surplus, the Mendon Select Board voted in July to use $100,000 in leftover funds to reduce the amount to be collected in taxes in 2021–2022.
Mendon property owners will contribute a total of $2,862,060 to the state education fund, 1.38% more than last year. This increase, however, is smaller than the savings in the municipal bill.
This doesn’t mean that some property owners in Mendon aren’t facing a significantly higher tax bill — some are. The assessed values of some properties jumped more than others, leading to a record-setting number of appeals this year (55, according to Town Clerk and Treasurer Nancy Gondella). The assessed value of non-homestead property increased more than that of homestead property, with the former rising 41.72% after the reappraisal, compared to 31.26% for homesteads.
The Vermont Dept. of Taxes uses a measurement called the coefficient of dispersion (COD) to determine whether municipal property assessments may be unfair or inconsistent. If some properties sell for far more than their assessed value while others sell for far less, the COD will rise, and the state will order a reappraisal — which is precisely what happened to Mendon in 2017, leading to its coronavirus-delayed reappraisal in 2021.
The first recalculation of Mendon’s COD following the reappraisal will come next year, according to Town Administrator Sara Tully.
Tully also expects to hear from the state in December on whether Mendon’s common level of appraisal (CLA) will trigger yet another mandated reappraisal. According to the Dept. of Taxes, a town must maintain a CLA above 85% and below 115%, but owing to the reappraisal just completed (in the midst of the hot real estate market), Mendon’s has jumped from 95.3% to 131.69%, meaning that the assessed values of local properties now significantly exceed sales prices over the last three years.
“I don’t know if there’s anything in their guidance on whether there’s any grace period for the first year that you do a reappraisal. We’ll just monitor that and make sure that we’re following whatever the state requires us to do,” Tully said. “Our CLA might be up that high for the first year of doing the reappraisal — that may be counted or may not be counted, and then we’d be waiting for the CLA for next year and see where that lands on whether or not the state would mandate us to do anything going further.”
In the meantime, having an inflated CLA will not cause Mendon property owners to pay more than they otherwise would in education taxes, despite local fears. A complex formula devised by the state sets the homestead education tax rate for each municipality based on the local school district’s spending per “equalized” pupil — the final step in this process divides the rate by the town’s CLA to ensure that towns with low CLAs don’t pay too little and those with high CLAs don’t pay too much.
“We have been instructed that our tax amount is adjusted by the CLA and that we will be sending the same amount of money to the state as if we didn’t do the reappraisal,” Tully asserted.