Milton taxpayers may notice a higher municipal tax rate this year, thanks to a lower-than-expected grand list value.
Town officials say the fiscal year 2019 residential municipal rate increased by 1.5 cents from $.5251 to $.5392, nearly an entire penny more than the selectboard predicted at budget time last winter.
The culprit? The town’s three hydroelectric dams, owned by Green Mountain Power, were devalued by nearly $8.5 million, from $53.8 million to $45.3 million, finance director Jessica Morris said.
The town had to increase its tax rate to make up for the lost revenue. Now, a homeowner with a $250,000-assessed home value will see a $35 increase on their municipal tax bill when it was only supposed to be a $13 bump, town data shows. Tax bills were sent out last week.
At the Aug. 6 selectboard meeting, town officials were quick to blame the state for reducing the dam’s value so dramatically. And they alleged Green Mountain Power had curtailed the dams’ production levels in favor of other renewables.
But the Milton Independent learned neither of those things happened. The town’s own assessor’s office set the dam’s value, as it does for every other residential and commercial property in town. And GMP data shows Milton’s dams have produced a consistent number of megawatt hours over the last 10 years.
Rather, Milton assessor Ed Clodfelter, a contractor with NEMRC, devalued the dams in line with a state-approved formula for valuing the facilities.
“He thinks it’s fair and the right thing to do,” town manager Don Turner said. “He’s the professional, so I’ve nothing really to say about that other than it’s late in the process.”
Clodfelter’s calculation weighs heavily on the 10-year average of power prices reported by ISO New England, the region’s energy grid manager, said Douglas Farnham, director of the Vt. Tax Department’s Policy, Outreach and Legislative Affairs Division.
“Town are not obligated to use the model, but we recommend it for consistency,” he said.
According to GMP vice president of innovation Josh Castonguay, this 10-year average dropped significantly since 2008, the start of the recession. Now that 2007 isn’t included in the calculation, the decade average dropped, and the dams’ assessed values fell in turn.
“It’s all things that are not in our control,” Castonguay said, adding GMP uses the dams as long as water is flowing.
“Water is free, and we crank those things as much as we possibly can,” he said. “Definitely the biggest driver here is the market price of energy.”
He now has the correct information, but Turner is still frustrated with the outcome: that taxes are higher than planned for during the budget process. He said the town built the budget around a conservation grand list increase of 1.2 percent, but it landed at .9.
“It’s just disappointing for me,” he said. “We worked really hard to try to keep the budget down.”
Turner said Clodfelter told him a month and a half ago to expect the dams to be devalued, but he didn’t anticipate an $8 million hit. Granted, the town didn’t complain last year when the dams’ values increased by $2.5 million, Turner said.
The volatility is concerning, however, and Turner said officials need to understand dam valuation going forward. He plans to ask Clodfelter and maybe a GMP representative to appear at a selectboard meeting, and he may investigate whether the utility and tax department would consider setting a stable valuation for the next three or five years.
“We have to look at this differently,” he said. “We have to be monitoring, especially the dams.”
Indeed, a few other pieces have an impact on the final grand list, albeit a much smaller one. Morris, the finance director, said both disabled veterans’ and voter-approved exempt properties’ values increased. And some landowners enter the current use program, an agreement to tax properties based on their agricultural or forest use instead of their market value.
“It’s not the assessor’s office fault,” Turner said. “It’s all these things that are moving until the end, which makes it challenging.”
Further showing just how unpredictable tax rates can be, the residential education rate came in a penny below the school district’s projections.
Thanks to an adjusted common level of appraisal – the state’s way of ensuring each town pays equitably under Act 60 – Milton taxpayers owning a $250,000-assessed home will see a $28.75 decrease in school taxes when an increase was expected.
Because the town rate essentially went up the same amount the school’s went down, that same homeowner should only notice a $6.75 overall increase from last year, town data shows.
“We are fortunate that happened,” Turner said. “It could have been worse.”
Clodfelter was not immediately available to comment by press time Tuesday.