Joint Ways and Means–Senate Finance hearing lays out how Vermont’s Education Fund and property taxes work
January 11, 2025 | Ways & Means, HOUSE OF REPRESENTATIVES, Committees, Legislative , Vermont
This article was created by AI summarizing key points discussed. AI makes mistakes, so for full details and context, please refer to the video of the full meeting. Please report any errors so we can fix them. Report an error »
At a joint hearing of the Vermont House Ways and Means Committee and the Senate Finance Committee, Julia Richter of the Joint Fiscal Office gave a primer on how the statewide Education Fund is financed and how education-related property tax rates are set.
Richter said the statewide Education Fund pays the bulk of public education costs and that the single largest appropriation line is the aggregated “education payment” — the sum of districts’ education spending. She summarized that education payment accounts for roughly 80 percent of Education Fund appropriations and that personnel costs are the largest component of that spending.
The presentation explained the two broad revenue buckets that fund the Education Fund: nonproperty revenues (including the state sales and use tax, a portion of the meals and rooms tax, a portion of purchase and use tax, lottery proceeds and other dedicated receipts) and property-tax revenues. “For the record, I am Julia Richter with the Joint Fiscal Office. I work on education finance,” Richter told lawmakers before outlining the mechanics.
Richter reviewed the statutory distinction between homestead and nonhomestead property. Nonhomestead property — including businesses, apartment buildings, second homes and some short-term rentals — is taxed under a statewide equalized nonhomestead rate that is uniform pre-CLA (Common Level of Appraisal). Homestead property taxes apply to a household’s principal dwelling and surrounding acreage and are adjusted locally based on a district’s per-weighted-pupil spending.
Using fiscal year 2025 numbers, Richter noted the homestead property tax ‘‘yield’’ used in state calculations was $9,893 per long-term weighted pupil; districts with per-weighted-pupil spending at that yield produce an equalized homestead rate of $1.00 per $100 of equalized property value. If a district’s per-weighted-pupil spending exceeds the yield, the district’s equalized homestead rate rises proportionally (Richter illustrated with a 150 percent example producing a $1.50 equalized rate). Richter emphasized the presentation used equalized (100 percent market-value) rates for modeling and that actual billed rates are adjusted after applying the CLA to account for towns’ differing reappraisal schedules.
Richter explained long-term weighted average daily membership (LTWADM) and pupil weights, which increase a district’s taxable capacity for students with greater needs or in sparser districts. She listed the principal weight categories in current statute: grade-level weights, economically deprived student weight, English-learner weight, a sparsity district weight, and a small-school weight that only applies where the sparsity weight applies.
On income sensitivity of the homestead tax, Richter summarized the state’s property tax credit and circuit-breaker provisions. She said about 70 percent of Vermont households receive a property tax credit based on household income. High-level income brackets she cited: household incomes under $47,000 are eligible for the circuit-breaker protection; households up to $90,000 may use the credit on the first $400,000 of equalized house-site value; households above $90,000 may use it on the first $225,000. Richter said this year’s estimated breakeven household income — the income above which a household would not qualify for the credit — was about $115,000. The credit is computed after yields are set and is applied as a credit on the following year’s tax bill, which creates a one-year lag between the assessed liability and the credit.
Richter also flagged the Common Level of Appraisal (CLA) as the mechanism that equalizes towns with different appraisal schedules: equalized tax-rate modeling assumes 100 percent market value, and the CLA is used to convert that to the actual rates billed to taxpayers. She said the committee will take a deeper dive into the CLA and into income-sensitivity modeling in subsequent hearings.
The Joint Fiscal Office provided the committees with the December 1 Education Fund outlook and an annotated guide to reading that outlook; Richter said committee requests to model specific policy proposals will be reflected as additional lines in future versions of the outlook. She closed by offering follow-up resources and inviting questions.
Next steps noted during the hearing included detailed briefings on the CLA and a separate session on income sensitivity and property tax credits.
Richter said the statewide Education Fund pays the bulk of public education costs and that the single largest appropriation line is the aggregated “education payment” — the sum of districts’ education spending. She summarized that education payment accounts for roughly 80 percent of Education Fund appropriations and that personnel costs are the largest component of that spending.
The presentation explained the two broad revenue buckets that fund the Education Fund: nonproperty revenues (including the state sales and use tax, a portion of the meals and rooms tax, a portion of purchase and use tax, lottery proceeds and other dedicated receipts) and property-tax revenues. “For the record, I am Julia Richter with the Joint Fiscal Office. I work on education finance,” Richter told lawmakers before outlining the mechanics.
Richter reviewed the statutory distinction between homestead and nonhomestead property. Nonhomestead property — including businesses, apartment buildings, second homes and some short-term rentals — is taxed under a statewide equalized nonhomestead rate that is uniform pre-CLA (Common Level of Appraisal). Homestead property taxes apply to a household’s principal dwelling and surrounding acreage and are adjusted locally based on a district’s per-weighted-pupil spending.
Using fiscal year 2025 numbers, Richter noted the homestead property tax ‘‘yield’’ used in state calculations was $9,893 per long-term weighted pupil; districts with per-weighted-pupil spending at that yield produce an equalized homestead rate of $1.00 per $100 of equalized property value. If a district’s per-weighted-pupil spending exceeds the yield, the district’s equalized homestead rate rises proportionally (Richter illustrated with a 150 percent example producing a $1.50 equalized rate). Richter emphasized the presentation used equalized (100 percent market-value) rates for modeling and that actual billed rates are adjusted after applying the CLA to account for towns’ differing reappraisal schedules.
Richter explained long-term weighted average daily membership (LTWADM) and pupil weights, which increase a district’s taxable capacity for students with greater needs or in sparser districts. She listed the principal weight categories in current statute: grade-level weights, economically deprived student weight, English-learner weight, a sparsity district weight, and a small-school weight that only applies where the sparsity weight applies.
On income sensitivity of the homestead tax, Richter summarized the state’s property tax credit and circuit-breaker provisions. She said about 70 percent of Vermont households receive a property tax credit based on household income. High-level income brackets she cited: household incomes under $47,000 are eligible for the circuit-breaker protection; households up to $90,000 may use the credit on the first $400,000 of equalized house-site value; households above $90,000 may use it on the first $225,000. Richter said this year’s estimated breakeven household income — the income above which a household would not qualify for the credit — was about $115,000. The credit is computed after yields are set and is applied as a credit on the following year’s tax bill, which creates a one-year lag between the assessed liability and the credit.
Richter also flagged the Common Level of Appraisal (CLA) as the mechanism that equalizes towns with different appraisal schedules: equalized tax-rate modeling assumes 100 percent market value, and the CLA is used to convert that to the actual rates billed to taxpayers. She said the committee will take a deeper dive into the CLA and into income-sensitivity modeling in subsequent hearings.
The Joint Fiscal Office provided the committees with the December 1 Education Fund outlook and an annotated guide to reading that outlook; Richter said committee requests to model specific policy proposals will be reflected as additional lines in future versions of the outlook. She closed by offering follow-up resources and inviting questions.
Next steps noted during the hearing included detailed briefings on the CLA and a separate session on income sensitivity and property tax credits.
View full meeting
This article is based on a recent meeting—watch the full video and explore the complete transcript for deeper insights into the discussion.
View full meeting