Taxing issue

Are Charlotte’s higher taxes linked to school consolidation – or not?

By Geeda Searfoorce | The Charlotte News

As the municipal tax rate is set to increase from 14.39 cents to 17.67 cents per $100 assessed property value, taxpayers are struggling to understand if the recent consolidation of CSSU school districts under Act 46 is the culprit. After all, Town Administrator Dean Bloch said in reference to the three-cent increase, “The main driver in the increase was the state education tax rates.” But the facts, when examined a little more closely, don’t necessarily point an accusatory finger at unification for the jump.

Last year’s lower than normal tax rate was a bit of an anomaly and gave taxpayers some welcome and unexpected breathing room. The previous year’s total tax rates, which include municipal and state education taxes, were 16.58 cents (resident) and 16.05 cents (nonresident). A large surplus prompted last year’s anomaly.

Understanding complex property tax issues is a challenge for voters. As Bloch said, “The increase was anticipated when the municipal budget was approved at Town Meeting.” So presumably there should be no surprise when the approved budget moves toward implementation. But State Representative Mike Yantachka was compelled in April, after Town Meeting, to respond to grumblings about tax hikes.

“There are several pieces to the tax equation that work together so that we can’t just look6263542143_28e02e831e_b at the words in a bill and know what effect it has locally,” Yantachka said.

But voters have a perception that Act 46 is still somehow responsible for our three-cent rise in municipal taxes. Detractors of Act 46, which passed on June 7 and will usher in a new unified school district by July 2017, are concerned that unseen costs will soon be headed our way. Does the three-cent rise in municipal taxes signal that the State is increasing taxes in order to be able to afford the tax breaks it is giving to towns like Charlotte that are early adopters of consolidation? Is this the fine print for the increases in educational costs associated with district unification?

At the Sept. 12 Selectboard meeting the public will be able to ask these questions directly to Mark McDermott, chair of the former CCS board and one of the two representatives for Charlotte on the new Champlain Valley School District board. Charlotter Moe Harvey requested McDermott attend the meeting to provide perspective on tax implications.

Yantachka brings up a complicated reality about the economics of the town, one that has consequences that extend beyond the walls of any school district, consolidated or otherwise. “Charlotte’s Common Level of Appraisal (CLA),” he said, “has decreased from 105% to 102% because home sales prices in Charlotte have risen over the past year and are closer to their assessed values.”

But even as home sale prices have risen in Charlotte, there are around 80 properties on the market, and declining enrollment at CCS begs the question: can young families afford to live here and educate their children? Can a renowned school that is attempting to implement creative cuts to forestall budget woes protect itself from potential threats that school district unification may pose? The impact of the answers to these questions—on taxpayers and their own budgets—is complex, a fact with which Yantachka agrees. When it comes to taxes and education, he said, “A simple one-liner does not tell the whole story and can be misleading.”

Transition planning work for the new unified school district is already underway, and its board of directors will assume full responsibility for the entire operations of all schools in the newly created district beginning July 1, 2017.

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FAQs from the CSSU Act 46 Study Committee 

What would be the impact on education tax rates?

Consolidation would have an effect on the education tax rate in two specific ways:

First, the school districts of CSSU would move from individual education tax rates to ONE blended tax rate, adjusted locally for Common Level of Appraisal.
Second, education tax rates would be adjusted for a credit of 10 cents the first year of a shared budget, starting July 1, 2017. In subsequent years, tax rates would be adjusted down 8 cents the second year, 6 in year three, 4 in year four, and 2 in year five.

How would the Common Level of Appraisal (CLA) adjustment be handled in a single district model? 

The CLA is an adjustment made by the state on a town by town basis to the education tax rate to account for the differences in property appraisals. Under Act 46 legislation, each town continues to have its unique CLA.

Would there be any other changes to my tax rate?

Property tax rates in support of schools are influenced by several factors: local school spending and student count, statewide school spending and student count, and local property assessments versus market values. These factors would continue to affect the tax rate whether or not school districts consolidate.