Brad James (Finance Manager, Agency of Education) shared with the House Ways & Means Committee on Tuesday that 93% of budgets are in and education spending is now projected at 7.8%. The December letter originally projected 8.5%. Burlington is still not in yet, and this has the potential to move the needle. Milton also out, their building manager has been out sick.
The Committee thought that the lower budgets meant savings of around a penny on the statewide tax rate, perhaps a little more. Chairman Kornheiser asked James how these budget increases compare to pre-covid. James thought the spending was usually around 3.5% but the influx of federal Covid funds bolstered district spending. Now those dollars are going away and many districts appear to be picking up some of that spending on their own, he speculated.
The Joint Fiscal Office shared an updated Education Fund Outlook with a new line item that shows the average projected bill changes for property taxpayers. There is also a new budget proposal that holds back $50M of surplus revenue in a reserve for future tax rate offsets. Depending on whether the legislature chooses to fund universal school meals, tax rates could range from $1.267 per $100 of assessed property value, up to $1.339. This is an average increase of 0.54% to 6.23% on taxpayers’ property tax bills. However, this still assumes an 8.5% increase in school spending, which seems high now given the most recent numbers from the Agency of Education (AOE).
On Thursday, the Joint Fiscal Office presented a new Education Fund Outlook with updated numbers. The latest numbers still reflected the 8.5% increase projected in the December letter, not the lower numbers now being projected by the AOE. The new construct of a tax rate offset reserve, which has a placeholder of $50M for this year. This would be held in reserve to buy-down tax rates in future years. The estimated tax rates and the average bill amounts for FY 2024 had not changed from Tuesday. This year we are seeing a unique situation where average tax rates are going down, but grand list values are increasing so quickly that the average bills are actually going up.