Not so fast: ANWSD tax hike not as large as expected
“We figured out the error, and it is that our district was not being given credit for our debt service amount.”
— Elizabeth Jennings
VERGENNES — Addison Northwest School District officials say an error on the part of state Agency of Education and/or Vermont Department of Taxes officials incorrectly inflated ANWSD tax bills.
State officials sent out erroneous tax information to district towns, ANWSD officials said, and school tax increases are actually much lower than on tax bills already sent in some communities and that were about to be sent in others.
Tax bills were already sent out in Vergennes and Ferrisburgh and were about to be sent out in Addison and Waltham.
According to data ANWSD municipal officials provided to the Independent two weeks ago, residential school tax rates were going up by roughly 9 cents in Addison, 16 cents in Ferrisburgh, 21 cents in Vergennes and 27 cents in Waltham.
The Panton selectboard on Monday set a new rate calling for a 24-cent hike. But after news broke about the incorrect state numbers that is now moot.
ANWSD Board Chairman John Stroup wrote to other board members that rates on new tax bills “will decrease significantly; perhaps by as much as $0.09 per $100 of assessed property value.”
ANWSD Director of Finance & Operations Elizabeth Jennings said she anticipates the district-wide rate will be closer to the original district estimate of about a 4-cent increase to $1.7753, but “slightly higher.”
That rate will be changed in each ANWSD community based on its Common Level of Appraisal, or CLA.
Three ANWSD towns have CLAs close to 100 percent: Addison, Ferrisburgh and Vergennes. CLAs measure how towns’ property tax valuations compare to fair market values based on an analysis of their recent sales. If a town’s assessed values are low, its CLA — expressed as a percentage — will increase its school tax rate; if a town’s assessed values are high, its CLA will lower its rate.
Vergennes has a CLA of about 96%, and Panton’s is about 93%. Those CLAs will mean residents’ savings from the coming tax adjustments will be less than that of residents in the other ANWSD communities.
So what happened to the rates?
ANWSD officials dug into the question of why they were so much higher than the district estimated. Stroup said he obtained a spreadsheet from one state agency that was used to calculate the district-wide rates.
He gave that spreadsheet to Jennings, and she discovered the mistake that she explained in a Tuesday email to local municipal officials. ANWSD is carrying a debt load for building improvements that should have been taken into consideration in calculating its rates.
“In the last week we have been attempting to figure out why there was such a huge discrepancy in the union tax rate coming from the tax department to all of you,” Jennings wrote.
“We figured out the error, and it is that our district was not being given credit for our debt service amount. We have worked with the Agency of Education (AOE) and they will be giving the Tax Department information to adjust the union tax rate on our behalf.”
Stroup emphasized in his email to other board members that local school officials have no control over the process state officials use to set statewide and individual district school tax rates.
“(Neither) This Board nor the District has any way to verify the homestead tax rates sent out by the municipalities because our business office does not learn from the AOE the complete picture until after tax bills are sent,” he wrote.
“We only learned about this error because many of us recognized that our union tax rate was likely to be only about a $0.04 increase, and we could not explain the additional significant jump in rates.”
Jennings said she would have eventually uncovered the problem, but not until more towns had sent out bills. On Tuesday morning Waltham was ready to hit print on its invoices, and Panton adopted an incorrect rate on Monday night and was planning to send out its bills within the week.
“I normally would not have caught this issue till the Agency of Education gives our cash flow reports to us and you at the end of August,” Jennings wrote in her email to municipal officials, “however, community and board members prompted us to look into this because the tax rates were so high.”
Jennings said it’s not clear how soon the tax department will update the ANWSD school tax rates — the non-residential rates, covering commercial property, rental property, and seasonal and second homes, should also be lowered. The first set of non-residential bills called for levies ranging from basically level in Addison to an increase of almost 19 cents in Waltham.
“I do not know what the time frame is for them making this adjustment or getting word out to all of you,” Jennings wrote.
PREBATES LOWER BILLS
Of course, many ANWSD residents wouldn’t have paid the full freight of the projected increases, nor will they do so for the new lower bills to come.
Homeowners who pay based on their income do not pay the full amount of school taxes as would be calculated by applying tax rates to their assessed values. About two-thirds of Addison County and statewide homeowners receive Education Tax Credits.
According to 2019 state figures, those credits, or prebates, averaged $1,885 in Addison, $1,932 in Ferrisburgh, $1,432 in Vergennes, and $1,434 in Waltham.
ANSWD voters in March OK’d a 2020-2021 district budget of $21,842,595 that reduced spending by about $300,000, or 1%, over the past school year.
That spending plan avoided programming cuts and closed Addison Central School for use as an elementary school, instead repurposing it for alternative education. Addison’s elementary students will attend Vergennes Union Elementary School under the hybrid in-person/virtual learning plan now proposed in the district in light of the COVID-19 pandemic.
As well as wondering if other districts had similar problems, Stroup summed up for ANWSD.
“When all said and done (again), the district’s estimates are going to be really close to accurate. Final numbers from the AOE and Department of Taxes will confirm in time,” he wrote. “The short story is that we were able to correct a significant error, thereby saving ANWSD taxpayers from an erroneous increase in homestead property taxes.”
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