After being forced to retrofit their two previous annual budgets to deal with the unexpected impact of the COVID-19 pandemic, city officials have their eyes wide open as they assemble an FY22 spending plan.
The dramatic drop in city revenue, from sales, food, and alcohol taxes, as well as parking and other fees that began roughly 10 months ago, affected both the FY20 and FY21 budgets that were approved by voters before the pandemic took hold. The pandemic left large shortfalls and forced on-the-fly program and service cuts. And it’s not over yet.
The city anticipates a $1.44 million budget gap for FY22, which begins July 1, and is considering a spending plan of $14,686,594. That represents an increase of 0.4 percent over FY21 and would tentatively raise the municipal tax bill on the average Montpelier property (valued at $228,000) by about $11.
City Manager Bill Fraser initially handed the city council somewhat of a bare-bones budget of $14,437,045 that did not include items the city usually funds, such as the Community Fund (which supports more than three dozen area nonprofits and arts groups), the Housing Trust Fund, the Homelessness Task Force, the Montpelier Development Corp., and the Public Art program. The initial budget, which actually reduced the tax rate, also did not include money that voters might approve through separate ballot initiatives, such as Central Vermont Home Health and Hospice.
The city council in its Dec. 9 meeting, restored all of the left-out line items except the Public Arts Fund and the Montpelier Development Corp., which the council hopes to hear from at its next meeting Jan. 6. CVHHH’s request was also approved as a ballot item in the amount of $23,500.
The budget includes a 2 percent salary increase for non-union workers after salaries were frozen in FY21. It maintains the number of city employees at 119.65, although six of those positions are vacant. After a shocking 20 percent spike in health care premiums in FY21, next year’s increase is 4 percent.
Also included is $60,000 for the Downtown Improvement District, $32,600 for Montpelier Alive (which excludes $7,500 for July 3 events and a fall celebration), $5,000 for the Montpelier Energy Advisory Committee, $10,000 for a social equity consultant, $40,000 for the GMT My Ride system, and payment for the city’s monthly article in The Bridge newspaper.
The current proposal also sets aside $130,000 for a citywide reappraisal that could begin in late 2022. Another $130,000 will be needed in the FY23 budget to cover the total cost of the reappraisal. The reappraisal is required because property values on the Grand List are, on average, at or below 85 percent of market value. In other words, Montpelier properties are consistently selling for more than their assessed value.
The budget also assumes that the school district will not fund its half of a school resource officer position as it wrestles with policy over the presence of a uniformed officer in school. The city will fund 100 percent of that position and use the officer for general duty.
Another oddity in the FY22 budget is that there are 27 paydays, which means an extra check for city workers. Fraser said that phenomenon occurs every 12 years.
With a vaccine on the horizon and a new administration in Washington, it is hoped that federal help and a rebounding economy might sweeten the pot before the FY22 ends on June 30, 2023. If so, any windfall can be put back into people, projects, and policy, Fraser said.
“What voters decide on in March is the amount of property taxes to be raised,” Fraser said. “That sets the tax rate but it doesn’t mean we can’t spend more money if we get it. If we get funding from state or federal sources it’s the same as if we got a grant for a certain purpose during the year. If we were to get money, unless it has strings attached, we would probably put that into one-time expenditures like road construction or infrastructure improvements.”
Town Meeting Day is set for March 2, and it is possible that the Legislature could allow for mail-in balloting such as it did in November. That authorization is due to expire Dec. 31. City officials have expressed support for universal mail-in voting for Town Meeting if it is permitted.