An act relating to homestead property tax yields, the nonhomestead property tax rate, and technical changes to education finance

Property dollar equivalent yield increased from $9,170.00 to $9,401.00 and income dollar equivalent yield increased from $12,576.00 to $12,960.00 for fiscal year 2027, which results in lower effective property tax rates for homeowners.

Nonhomestead property tax rate decreased from $1.698 to $1.643 per $100 of equalized education property value, reducing the tax burden on non-residential property owners.

The entire section reserving $52,450,000 in the Education Fund to offset fiscal year 2028 education property tax rate increases was removed. The Commissioner of Taxes would no longer be required to treat this amount as unreserved when making FY2028 yield recommendations.

The renter credit maximum increased from $2,500.00 to $3,250.00 and the percentage of fair market rent used to calculate the credit increased from 10 percent to 12.5 percent for claim year 2027.

Credit limitation caps were increased: the renter credit cap rose from $2,500 to $3,250, the property tax credit under subdivision 6066(a)(3) rose from $2,400 to $2,600, and the cumulative credit cap rose from $5,600 to $6,000.

The bond exemption for excess spending calculations was extended: voter-approved bonds are now excluded from 'education spending' if approved prior to July 1, 2026 (previously July 1, 2024), giving districts two additional years to pass bonds without triggering the excess spending penalty.

The household income threshold for the circuit breaker (additional property tax credit for low-income homeowners) was raised from $47,000 to $50,000, expanding eligibility to more households.

The mechanism for the City of Barre's $150,576 refund was changed from a direct transfer from the Education Fund to the City to an appropriation through the Department of Taxes in fiscal year 2027.

The entire section reserving $52,450,000 in the Education Fund to offset FY2028 education property tax rate increases was deleted from the enacted version. This means there is no longer a dedicated reserve to cushion future tax rate increases.

The property dollar equivalent yield for FY2027 was increased from $9,170 to $9,401, and the income dollar equivalent yield was increased from $12,576 to $12,960. Higher yields generally result in lower tax rates for a given amount of revenue needed.

The nonhomestead property tax rate for FY2027 was decreased from $1.698 to $1.643 per $100 of equalized education property value, reducing the tax burden on non-residential properties.

The census grant 'uniform base amount' formula was changed from dividing by the actual statewide long-term membership to dividing by a fixed $2,350.00 as adjusted for inflation. This replaces a variable denominator with a fixed dollar figure that is indexed annually.

Credit limitation caps were increased: the renter credit cap went from $2,500 to $3,250, the municipal property tax credit cap went from $2,400 to $2,600, and the cumulative credit cap went from $5,600 to $6,000.

A new section (Sec. 2) amends the definition of 'education spending' for excess spending calculations to explicitly exclude endowments, parental fundraising, federal funds, nongovernmental grants, and other State funds such as special education funds. It also excludes voter-approved bond payments for bonds approved prior to July 1, 2026 (the House version used July 1, 2024).

The renter credit maximum was increased from $2,500 to $3,250 for claim year 2027, and the percentage of fair market rent used in the calculation was raised from 10% to 12.5%. This provides a larger tax credit to low-income renters.

The household income threshold for the circuit breaker (property tax credit) was raised from $47,000 to $50,000, expanding eligibility so more homeowners qualify for the additional municipal and education tax credits.

New sections (Secs. 6-7) establish a five-year transition schedule for the excess spending penalty threshold, starting at 115.5% of the excess spending base in FY2028 and gradually decreasing by 1 percentage point per year until reaching the statutory 112.5% threshold in FY2032.

The simple single effective date of July 1, 2026 was replaced with a detailed schedule assigning different effective dates to different sections, ranging from July 1, 2026 through July 2, 2029, with some provisions applying to specific fiscal years or claim years.

A new section (Sec. 15) caps tuition increases for public or approved independent receiving schools during FY2028-2032 at the relative percentage change in statewide education spending between the two preceding fiscal years.

Section 4 changed the payment mechanism for the $150,576 City of Barre refund: the unofficial version appropriated funds from the Education Fund to the Department of Taxes for a payment to the City, while the official version transfers funds directly from the Education Fund to the City of Barre.

Section 4 changed the legal override from 'Notwithstanding 16 V.S.A. section 4025' to 'Notwithstanding any other provision of law,' broadening the scope of statutes the transfer can override.

Section 4 changed timing language from 'in fiscal year 2027' to 'not later than fiscal year 2027,' giving slightly more flexibility on when the transfer must occur.

Section 4 changed the mechanism for the $150,576 City of Barre refund from a direct transfer out of the Education Fund to an appropriation from the Education Fund to the Department of Taxes in fiscal year 2027 for payment to the City. The section also now explicitly states 'Notwithstanding 16 V.S.A. section 4025,' overriding that statute's restrictions on Education Fund uses.

The statement of purpose paragraph (lines 9-19 of the introduced version) was removed in the House-passed version. This is a standard formatting change and does not affect the bill's operative provisions.