BRATTLEBORO — The bottom line: Property taxes for 2020 could rise by 3 cents per $100 of assessed value, “a higher number than we intended or hoped for,” said Town Manager Peter B. Elwell.
That's because of unanticipated insurance costs, offset in part by increasing revenues from rooms and meals tax.
Budget season is underway, and at the Nov. 6 regular Selectboard meeting, Elwell presented the board with a fiscal year 2020 budget season preview, noting that “our work is ahead of us.”
In a Nov. 5 memorandum to the board about the FY20 proposed budget, Elwell wrote, “Staff approached preparation of the FY20 budget with the dual goals of maintaining all current levels of service and containing the cost of town government to the greatest degree possible.”
He acknowledged success with the first goal. There are no planned service reductions.
Town personnel came very close on the second goal, creating a proposed $17.8 million General Fund budget for the next financial year.
It is $68,563 more than the adopted FY19 General Fund Budget, a 0.4-percent increase.
Elwell told board members that, especially considering the increase of slightly more than 5 cents per $100 for FY19, he and his staff wanted taxes to go up no more than 3 cents per $100.
What nudged the number over the line, Elwell explained, is the big - and unanticipated - increase the town must pay in health insurance costs for municipal employees.
Elwell expected a 4 percent rise for that line item, but the insurance company is raising premiums by 12 to 14 percent, which will cost the town almost $280,000 extra.
The town is not asking staff to cover any additional health-care-related costs, he said.
Elwell noted municipal staff wages are down 1.2 percent because some departments will begin using contracted services instead of employees for some of their functions.
Without the insurance-cost increase, the budget would have raised property taxes by almost 2.5 cents “if all other aspects of the budget were the same,” said Elwell.
Because of this surprise increase, Town Manager staff has taken some departments' wish-list items out of the FY20 budget “because this is not the year to do that,” said Elwell.
He offered the new human resources position as an example. This position, and its associated $60,000 cost, was approved in the final FY19 budget.
“This year, we have nothing like that,” said Elwell.
Department costs are proposed to go up by 1.8 percent, which Elwell described as “basically flat.”
These figures include regular department purchases and services to conduct basic operations, but no big capital items. This portion of the budget also doesn't include personnel-related costs, but it does include contracted services.
“I really think the department heads have been as lean as they can be” with the FY20 budget, said Elwell.
The Solid Waste Fund is a bit of a wild card, and the proposed budget shows an 8.5-percent increase, for a total of $510,000. Because of the unstable and fluctuating recyclables market, the town's recycling costs have increased.
At the same time, pay-as-you-throw bag sales have been lower the last few years because more Brattleboro households are taking advantage of the town's curbside composting and recycling pick-up programs. Raising the budget on this, said Elwell, “will bring us closer to an equilibrium” in the solid waste line item.
“There's so much uncertainty in the international recycling markets that [these figures are] an educated bet more than an analyzed, defensible number, but we think that it's reasonable,” he said.
The risk section of the proposed FY20 budget, which covers liability and workers' compensation insurances, will go up by $97,225, or 13 percent, a “substantial increase,” said Elwell. He said he and his staff will try to lower the workers' comp costs, but there's no real room for negotiating the liability insurance costs.
More visitors, more money
It's not all rotten eggs for the FY20 proposed budget. The good news is found on the revenue side.
More people are staying in hotels and eating in restaurants in Brattleboro and West Brattleboro, and that means “the rooms-and-meals tax has been significantly increasing in the last few years,” said Elwell.
The town gets a cut of this revenue. Using recent years' figures, the proposed FY20 budget includes $55,000 more income from the rooms-and-meals tax, for a total of $420,000 - an amount “we think [is] appropriate and not overly aggressive,” said Elwell.
An anticipated additional $16,000 will come in FY20 as payment in lieu of taxes (PILOT). Some organizations that are exempt from paying property taxes because they are schools or are chartered as tax-exempt nonprofit charities offer the town a voluntary annual fee. This past year, the Retreat Farm and Health Care & Rehabilitation Services (HCRS) each entered into an agreement to provide Brattleboro a PILOT.
The town plans to bring in an additional $62,000 in the “miscellaneous revenues” line, and most of that is from an increase in investment income.
As Elwell explained, the Selectboard previously approved moving some money into higher-yield - yet safe and insured - investments, a decision that he said is paying off. Elwell noted this increase is a conservative estimate.
A million-dollar milestone achieved
The town will have more money in the capital needs fund, which covers infrastructure repairs and maintenance.
Elwell was excited to announce FY20 is the first year the town will reach the goal of keeping $1 million in cash in this fund, plus what's available in the fund balance.
“We've been working hard over the last several years to commit $1 million in cash to capital each year,” he said, “but it still really isn't funding our needs.”
The town has some aging infrastructure and has to prioritize replacement and repairs because there's not enough money “to do everything,” he said.
One of Elwell's pet projects for the last few years is convincing the Selectboard to use the fund balance for capital purposes, and “not just as a balancing number,” he said.
About 10 years ago, the Selectboard voted to reserve a fund balance of 10 percent of the proposed operating budget in a “rainy day fund,” for emergencies. This year, that amount is $295,000.
Elwell promised more information in the coming weeks on a number of items, including a 25-year projection of planned repairs and replacement of equipment and vehicles, an expanded code-enforcement program including a new fee structure, and a sustainability officer.
Still subject to change
Selectboard Chair Kate O'Connor noted the figures discussed are far from final.
The process, which takes about 10 weeks, begins in early October, when department heads submit their best estimates of budgets to the Town Manager's office, which then compiles the data and presents it to the Selectboard.
Over a series of special and regular meetings, the Selectboard and Town Manager staff discuss the details and take public comment. In late January, the Selectboard will approve a version of the budget, which then goes to Representative Town Meeting for final approval.
Town Meeting members will have the opportunity to make changes in their deliberations.
O'Connor announced the scheduled budget session meetings, which happen during regular and special Selectboard meetings. The first was held on Nov. 13, and subsequent meetings are scheduled for Nov. 20, Nov. 27, Dec. 4, and Dec. 11.
“If we need more [time to discuss the budget], we keep going,” she said.
This budget, Elwell said, “is subject to small changes and big changes.” He noted part of the process is for all parties to offer recommendations on ways the town can be more cost-effective in its operations.
Elwell pointed out “there are many opportunities for the public to be involved and for changes to be made” on the budget.
O'Connor invited the public to visit the town's website, brattleboro.org, to view the FY20 proposed budget documents “so you can follow along at home.”