The Valley Reporter, along with the Waterbury Roundabout has been chasing down and analyzing the impact of ongoing legislative action on local tax rates. Last week, The Valley Reporter published data showing that the impact of H.850 on local education tax rates, with projections for a 30 to 40% increase, which means local voters facing increases of $570 to $790 per $100,000 of assessed value.
The House passed H.850 last week and sent it to Senate where the finance and appropriations committees have reviewed it. Between the House and Senate’s consideration of the bill, a critical piece of the complex calculation that determines each district’s education tax rate was changed. That piece is the ‘yield.’ The House version of H.850 included a yield of $9,171 per pupil (and the rate increases of 30 to 40%). The version under consideration by the Senate committees shows a yield of $9,775 per pupil. That new version could reduce the potential education tax increases from 30 to 40% to 22 to 31.7%, or $417 to $621 per $100,000 of assessed value.
But, take those projections with a grain of salt, the yield is never actually determined until later in the spring, after school budgets have been voted on at Town Meeting – or in this year, possibly later, as H.850 allows for districts to revise and revoke their budgets after a previous piece of legislation, Act 127, was modified. The House repealed a 5% cap on education tax increases for districts that kept per pupil spending increases below 10%.
The FY2025 budget for HUUSD was based on the Act 127 cap and an equalized tax rate of $1.51. The House and Senate versions of H.850 include education tax reductions of one penny per each percent of taxation capacity lost with Act 127. Act 127 creates a way for some districts to increase their taxation capacity, resulting in others losing taxation capacity. HUUSD is slated to lose 9% of its taxation capacity and will get 9 cents off its equalized tax rate this year, 100% of its loss. That 100% drops gradually over the next five years.
The Senate yield of $9,775 per pupil drops the HUUSD tax rate from $1.78 to $1.67 and with the 9-cent reduction to $1.69 ($9,171 yield) and $1.58 ($9,775 yield). Local state representative Kari Dolan reported that the final yield numbers are expected to be finalized in May.
These are based on a Harwood Unified Union School District budget of $50.8 million. The HUUSD Board met on February 14 to decide whether to keep its budget as proposed or revise and re-warn it. That budget includes adding $1 million to a reserve fund as well as adding a fund balance of $535,000 to the maintenance reserve fund. The HUUSD Board is meeting on February 21 as The Valley Reporter goes to press.
See related story from Lisa Scagliotti of the Waterbury Roundabout covering the board’s decision to present the budget as proposed to voters rather than revising and re-warning the budget.
Harwood school board: ‘Let the voters decide’
By Lisa Scagliotti | Waterbury Roundabout
Taxpayers in the Harwood Unified Union School District could expect to see the school portion of their property tax bills go up by 30% to 40% later this year if they approve the $50.8 million school budget on the Town Meeting Day ballot.
That’s the scenario the school board chose last week by opting to stick with the plan it unanimously approved at the end of January.
The budget discussion at the February 14 meeting concluded with a consensus among most members to stick with the board’s original March 5 vote schedule.
“Let the voters decide if [the] budget is too large or the tax implications are too high,” said board vice chair Kelley Hackett of Waterbury.
The sentiment wasn’t unanimous, however.
“I don’t see this budget passing on Town Meeting Day as it is right now. That’s why I think we need to wait,” Fayston member Mike Bishop said. “People are just going to look at how much their taxes are going to go up and that’s how they’re going to vote.”
The board had the option to revisit the budget proposal for voters to consider because state lawmakers are in the process of revising the new state education funding formula that the board followed when it adopted its budget on January 31.
Because of those changes, the $50.8 million budget the board chose has gone from having its school tax rate capped at 5% to now carrying an increase of 17%. That is before the real estate adjustment calculations are made to account for local property values lagging behind the real estate market values over the past several years.
The estimated translation in dollars for every $100,000 of assessed property value now ranges from $570 for Duxbury to $790 in Warren. Waterbury’s estimate is $653, so a Waterbury home valued at $300,000 would see a school tax increase of $1,959.
The Harwood board approved its budget to put on the ballot by following the guidelines in Act 127, the state’s new education funding law being rolled out this year. It aims to make school finances more equitable across the state by making sure districts with students that fall into a variety of special categories receive adequate funding needed to support their education. One feature of the formula involved an incentive to districts to phase in the funding shifts by capping the school tax rates if districts held spending increases calculated per pupil to under 10%.
In Harwood’s case, its budget originally at $49.5 million came in under that threshold, so it qualified for the tax cap. Adding $1 million to the district’s building Maintenance Reserve Fund brought the increase to 8.3%, so the cap still applied. The board then decided to put a $50.8 million budget on the ballot.
State lawmakers are now working quickly to modify the formula. Their bill, H.850, cleared the House of Representatives last week.
It replaces the cap with a new calculation based on each district’s weighted enrollment as a portion of the statewide total. Those districts whose enrollment dropped under the new system – including Harwood – would see their school tax rate “discounted” one cent for each percent of what the state policy writers refer to as a drop in “taxing capacity.”
KEEPING FUNDS FOR FACILITIES
In a slide presentation to the school board on Wednesday night, Harwood’s Finance Manager Lisa Estler and Superintendent Mike Leichliter went over detailed data on several budget scenarios.
Estler calculated the tax impacts of several options that the board could take to cut back on the $50.8 million budget.
The first would be to remove the $1 million addition to the Maintenance Reserve Fund. Next would be to use a 2023 surplus of $535,000 for general revenue rather than putting it into the maintenance fund. A second question approved for the March 5 ballot asks voters to use the surplus for building repairs. Board member Life LeGeros of Duxbury called the $50.8 million plan “too risky” and advocated for postponing the March 5 vote to incorporate both of the first two suggested cuts.
The steps, he said, would show voters the board recognizes the tax impacts from the new state formula and would offer the community “the leanest budget we can without actually reducing staff more than 13” positions the approved version trims. “I’m even willing to even give up the rollover money because I want to see a budget that passes,” he said.
But the suggestion did not get wide support in the group given the district’s long list of capital improvement projects totaling $19.3 million over the next four years and the reserve fund to pay for them currently having less than $3 million.
Projects at Harwood Union Middle/High School account for $5.6 million of that total and include work being discussed as part of a $64-$92 million construction bond being studied. Immediate needs would be addressed using maintenance funds if the bond project does not move forward soon.
And that’s just where the bond study committee is headed. Given the financial volatility surrounding the budget for next year, bond committee chair Ashley Woods of Warren told the board on Wednesday that the group will continue to work on preparing a proposal for the full board based on community and student input and the top-priority building needs. “But we feel like we need to hold,” she said. “We maybe decide to vote on that at a later date, not Election Day in November.”
DEEPER CUTS AHEAD
Other recommendations from the administration for budget cuts would presume the first two steps are taken to not add to the maintenance fund. They then suggest cutting deeper by eliminating the equivalent of either 10.5 or 26.7 full-time positions across the district; the first of those would trim $2.7 million, the second would cut $4.5 million.
The largest cut would bring the bottom line back to a level with a tax rate matching the original budget the board envisioned when it adopted the budget in January with the tax cap offered in Act 127.
Leichliter noted that the proposed budget already reduces 13 positions through attrition. Those reductions account for federal pandemic-response funding that ends this year and was used to hire new staff such as school counselors.
There was no support in the discussion for revising the budget to make additional staffing cuts before a public vote is held.
