Home News and Features City Budget May Increase Taxes 6.8%

City Budget May Increase Taxes 6.8%

Photo of city hall.
Montpelier City Hall. File photo.
Montpelier voters have two opportunities to comment on a proposed city budget that increases local property taxes 6.8%. Budget hearings are scheduled for Wednesday, Jan. 12 at 6:30 p.m. during the regularly scheduled city council meeting, and Thursday, Jan. 20 at 6:30 p.m. Following the Jan. 20 hearing, the council will adopt a final budget. 

The $16,139,422 budget represents an increase of $1,432,828, or 9.74% over the prior year. 

The proposed property tax increase sugars off to $184 for an average residence valued at $228,000, said City Manager William Fraser in a phone interview last week. 

Factors going into the increase, Fraser said, include the fact that last year’s budget was level-funded because of COVID-19–related lost revenues; four major bond votes that will appear as separate items in the budget; revenue of $2,200,000 in federal American Rescue Plan Act funds; personnel plan changes, some resulting from a collective bargaining agreement; and a 6.8% rate of inflation in 2021. Fraser noted that the property tax increase exactly matches the current rate of inflation.

Four different bonds will be listed on the ballot at Montpelier’s Town Meeting, totalling $27,000,000 to be paid off over 20 years. Some of the bond votes don’t  impact property taxes because they are directed through the city’s water and sewer fund, including a $16,400,000 “Phase II” upgrade to the city’s wastewater treatment plant and $3.2 million of the total $7.2 million infrastructure upgrades to East State Street. 

Additionally, the city budget shows an increase in water fees of $221,192 and an increase in sewer fees of $44,000. City finance director Kelly Murphy said increases in water and sewer fees will be discussed in the spring when those rates are set.

Of the proposed wastewater plant upgrades, Murphy said in an email “there are important factors in play that will likely have a positive impact, such as federal infrastructure bill funding, increased revenue opportunities, and operational cost reduction (such as waste disposal fees). We will present the rate impact when we present the budgets.” 

“Just because it’s a huge bond doesn’t mean it’s going to be a giant sewer rate increase,” Murphy said in a phone interview.

The remaining bond votes will be paid for through the general fund, which directly affects property taxes, and are as follows:

  • $4,000,000 from the General Fund for the East State Street project.
  • $1,815,000 for six distinct infrastructure projects.
  • $1,500,000 to purchase the Elks Club property for a new recreation center (which in itself is expected to cost an additional $6,000,000 in the future).
The proposed city budget assumes that voters pass all of the bonds and includes its first debt payment, totalling $88,400. The debt payment adds 1 cent on the property tax rate according to Murphy, or $23 on the average home worth $228,000 at the currently assessed value. If voters opt to reject any of the bond votes but go on to pass the budget as it is, they may still end up paying that amount. 

“It’s up to the council,” Murphy said. “[the money set aside for bond payments] could be used to adjust the tax rate or be shifted to other capital projects than can be paid for in one year.”

To see the full budget spreadsheet and explanations from city staff, go to city-montpelier-vt-budget-book.cleargov.com/fy2023-budget-book-v.1/2023/budget-overview/executive-overview