Home News and Features Do Voters Want to Invest in Infrastructure?

Do Voters Want to Invest in Infrastructure?

Voters check in at City Hall on Town Meeting Day. Photo by Tom Brown
Voters check in at City Hall on Town Meeting Day. Photo by Tom Brown
Following recent water main breaks, and well into pothole season, Montpelier voters will decide how much they really want infrastructure improvements at the polls on March 1. The ballot features four 20-year bond votes totaling $27.4 million, most of which is slated for upgrades to streets, intersections, street lights, wastewater plant improvements, and more. 

The only proposed bond not directly related to infrastructure is a $2 million bond for the purchase of 138-acre property slated for recreation and housing. (See related story here.) 

If passed, the bond votes put the city over the limit for debt ratio set in its policies. And the majority of the debt ($19.6 million) goes into the water and sewer fund, where voters have no say but are responsible for the user fees that support that budget.

In a telephone interview, Montpelier Finance Director Kelly Murphy pointed out that the total dollar amounts up for vote represent the full cost for each project and are based on the known information at the time. However, other funding may be available, but not in time for budget season and a Town Meeting vote. 

In fact, Murphy said, one grant has already come in (for the East State Street upgrade), and federal infrastructure funds are expected as well. Grants and federal funds will likely decrease the total amount the city needs for each project, but the total amount coming to the city is not yet clear, nor is the timeline for receiving it. 

“We’ve got to put what we know right now before the voters so we can proceed,” Murphy said. “We want to be shovel ready.”

The city of Montpelier recently updated its website with a “bond FAQ” and debt-service overview. It takes a while to find it on the website, but here is a direct link. (Murphy apologized for how hard it is to find the document, adding that the city is planning website improvements to make navigation easier).

According to the city’s FAQ about the four bonds:

“On March 1, 2022 Voters are being asked to authorize borrowing up to the amount cited on the ballot for a given project. 

  • $7,200,000 for the reconstruction of East State Street; 
  • $1,815,000 for highway, recreation park, and building infrastructure improvements;  
  • $2,000,000 for the purchase of approximately 138 acres of land formerly the Elks Club, at 203 Country Club Road; 
  • $16,400,000 for sewer systems upgrade to the Water Resource Recovery Facility on Dog River Road”
Because The Bridge has already extensively covered the $2 million bond for the former Elks Club purchase, this article focuses on the other three bonds.

East State Street

According to earlier interviews with City Manager Bill Fraser, the East State Street overhaul includes complete reconstruction from the corner of State and Main to College Street. This will include new water and sewer lines installed underground; a rebuild of the surface; and correction of an ongoing sewer overflow problem.

Four million dollars of this project comes from the general fund, paid for in large part via property taxes. The other $3.2 million will be paid for through the sewer fund, from user fees. this project has already received one grant, Murphy said.

Smaller Infrastructure Projects

The $1.815 million bond encompasses as array of smaller infrastructure projects, including $600,000 for Confluence Park, which matches private funds and grants; $550,000 for phase 1 of the Main Street Corridor Plan; $250,000 for street lighting upgrades and to convert the lighting downtown to LED lighting; $250,000 for a pellet heating system at the Department of Public Works, replacing the oil-fueled system; and $165,000 for Marvin Street slope failure.

Wastewater Treatment Upgrades and User Fees

In the second of two bonded projects (the first, Phase 1, for $16.7 million was passed by voters in 2018), the Phase II $16.4 million bond for wastewater treatment plant upgrades may be eligible for more infrastructure funding, Murphy said. Additionally, this project may generate revenue by reducing biosolids sent to the landfill and potentially creating a dried biosolids product for market (although the product likely will contain PFAS; see related story here); it also is projected to save money on trucking and overhead costs. The debt service for this bond does not appear in the general fund but does show up in the city’s sewer fund. 

A total of $19.6 million of the bonds come from the city sewer fund. Unlike the general fund, which requires voter approval and directly impacts property tax rates, the water and sewer fund does not go to public vote. It directly impacts residents and businesses through user fees, however. The water and sewer fund budgets go to the city council for approval in the spring, after town meeting.

The upshot: any increase in water and sewer user fees associated with the bonds will not be determined or clear to voters until this spring, but voters will not have a say in that budget, other than voting up or down on the bonds. However, Fraser said the Phase 1 bonded upgrades did not increase user fees. 

What Does This Mean for Debt?

If voters approve the proposed bonds, the city will exceed the threshold for debt set by  its own policy. According to the bond FAQ and confirmed by Murphy, Montpelier’s policy on debt ratios are: 

“Total direct debt service (principal and interest) for Government Activities (General Fund and other Governmental Activities) of the City will not exceed 8.2% of the total budgeted revenues for Governmental Activities. Debt service for the total of all city budgets will not exceed 15% of the total budgeted revenues for Governmental Activities.”

However, the four bonds would move the general fund from a debt ratio of 5.4% in FY22 to 8.27% in FY24, 0.27% over the limit set in policy. It also moves the total city-wide debt percentage from 12.84% currently to 17.87% in FY24, well over the 15% threshold in the policy.

“Our policy on debt service limits is a best practice, but well below state limits,” Murphy said. Regarding the debt exceeding limits set by policy, Murphy said,  “From a city-wide scenario this is a worst case scenario … It doesn’t include grants or federal funds or revenue generated.”

The city already has $51,232,581 in debt, according to the debt-service worksheet also available on the city website. The four proposed bonds will increase the city’s total debt by 53.5%, to $78,647,581. 

Current payments on existing debt (in the FY22 budget) come to $865,103. That number increases to $1,012,449 in the FY23 budget (the one up for vote on March 1). Debt service goes up to $1.5 million in FY24. 

The debt-service worksheet accounts for retiring debts, but very few of those show up in the next four years (the worksheet projects only as far as FY26).

To see the city budget up for vote on Town Meeting Day (March 1), the bond FAQ, and the debt-service worksheet, go to montpelier-vt.org/179/Annual-Budget.

Despite the increased debt, Murphy said “We’re trying to get these projects forward because they’re the big ones … because they may be eligible for some of the federal funding, we have to have them on the ballot.”

“It’s expensive,” she added, “but I think if we invest, it’ll go a long way.”

To see a sample ballot go to the city of Montpelier voter guide at montpelier-vt.org/922/City-Voter-Guide.