The city of Montpelier, reeling from damages and lost revenue because of the July flood, has put a hiring freeze in place, and a number of projects and equipment purchases have been deferred, according to an email that City Manager Bill Fraser sent to city department heads last week. “The city’s finances are in bad shape,” Fraser wrote, pointing to several factors, including that the city ended fiscal year 2023 with “a sizable budget shortfall.” The 2024 fiscal year began on July 1, and just 10 days later a disastrous flood drenched Montpelier, interrupting almost everything from the date of the flood into the indefinite future. “Now we are absorbing a lot of flood-related expenses with the hope/expectation that most of them will be covered by FEMA and/or insurance,” Fraser wrote. The budget concerns have also been reported in the weekly city manager’s report, in which Fraser has noted that the city’s expected reconstruction expenses “will probably exceed reimbursements from FEMA and insurance, especially as we seek to make improvements.”That alone might be a lot for the city budget to absorb, but it’s paired with the fact that downtown businesses are mostly closed — with some exceptions — so the city is not collecting parking revenue and has not received much rooms, meals, and alcohol tax revenue from its 1% local option tax. Additionally, the city will likely be granting a number of property tax abatements because of damaged buildings, Fraser wrote, and that is expected to reduce property tax revenues in this fiscal year. “All of this together means that things are terrible financially. We’re probably in worse shape than we were with COVID without the option of furloughs with expanded unemployment benefits to keep employees whole,” Fraser wrote. In a strongly worded memo to department heads, Fraser said the financial shortfalls will “have an impact on services and operations.” “There is no money to buy anything that isn’t essential for functioning,” he wrote.