Property tax rate falls (7/9/09)

Bills will show 4-cent reduction

July 9, 2009

By Greg Elias

Observer staff

Williston residents weary of annual property tax hikes will get a bit of relief this year.

The combined municipal and school tax rate for the fiscal year starting July 1 will fall by 4 cents to $1.49. That equates to a $120 reduction in the annual property tax bill for the owner of a $300,000 home.

The savings was greeted with muted enthusiasm by one Williston homeowner.

“Of course, I’ll always welcome the $120 or whatever it is,” Jude Hersey said.

But she said town and school officials spend tax revenue responsibly and so would be pleased with the services they provide even without the reduction. She also noted the reduction is barely significant in the context of her other daily expenses.

Not all property owners will pay the same rate. Those who earn less then $90,000 are eligible to have their property taxes capped under the state’s income sensitivity program. Businesses and non-resident property owners will pay a higher rate, $1.63 per $100 in valuation.

Homeowners will not necessarily feel like they’ve received a windfall. A town-wide reappraisal last year boosted residential property values by 43 percent. With commercial values rising by only about half that percentage, the burden of funding schools and town services shifted to homeowners, resulting in rising taxes despite a lower rate.

This year’s reduction reflects an effort by town and school officials to reign in spending. The municipal budget was frozen at last year’s level and the Williston School District’s budget rose by just 0.3 percent.

“We were determined to keep spending down this year and we’re glad we did,” said School Board Chairwoman Darlene Worth. She said the lower property tax rate validated the district’s belt-tightening efforts.

Actions by the state Legislature also factored into the property tax reduction.

The complex formula used to calculate education property taxes for each school district did not change, said Ellen Tofferi, acting commissioner of the Vermont Tax Department. But the Legislature did reduce both non-residential and residential rates by a penny. And the base spending amount increased to $8,544, potentially affecting local tax bills.

The Selectboard on June 29 voted unanimously to set the property tax rate at 20 cents. The state, which uses a complex calculation to set the education tax rate for each town, released its numbers last week. Williston’s education property tax rate will be $1.29 for homeowners and $1.42 for businesses and non-residents who own second homes or property.

In past years, the Selectboard has sometimes decided to shave a penny or two off the previously estimated tax rate by dipping into budget reserves. That was ruled out this year after town staff noted reserves are dwindling and revenue is falling.

“Several things have changed since the January when the budget was finalized,” wrote Finance Director Susan Lamb in a memo. “The economic downturn has continued and some of our estimates may be too low.”

She wrote that the board has over the past two years consumed nearly $900,000 in budget reserves in order to tamp down property taxes. Though Lamb said in her memo that the town still has $800,000 in reserve, she noted a policy of keeping at least 10 percent of the $7.6 million operating budget in reserve will leave little wiggle room for the next fiscal year.

Town Clerk Deb Beckett said her office is trying to mail property tax bills to residents by Friday. Payment on the first of three installments this fiscal year will be due by Aug. 15.


Board nixes separate bills

The Selectboard has rejected a proposal to send separate bills for school and municipal property taxes.

Board member Chris Roy proposed the change last year so residents could see exactly where their money is going. But after learning of the administrative headaches the change would create, he voted along with the rest of the board to skip the idea.

Roy said the state’s complex system for setting the education tax rate made sending separate tax bills nearly impossible. He complained the system hides how schools are funded.

“A cynic might suggest that the Legislature conceived the system to have as little clarity as possible so people don’t understand their tax bills,” he said.

The Williston School Board opposed the change. Town staff was also against the two-bill option. Separate mailings would have cost about $3,100, not including staff time. Two bills in the same envelope would have cost about $1,200.

Town Manager Rick McGuire told the Selectboard that the change might confuse some residents, leading perhaps to one bill being paid but not the other. He also said some towns have moved away from a two-bill system for that reason.

Selectboard Chairman Terry Macaig said he favors the concept of giving residents more information about where their property tax dollars are spent, but sending two bills wasn’t the right way to do that.

“Somehow, it would be nice to make it clearer,” he said. “I just don’t know how.”

— Greg Elias, Observer staff