BRATTLEBORO — The proposed municipal budget for fiscal year 2022 shows less of an increase than staff initially expected, Town Manager Peter Elwell told the Selectboard last week.
Elwell presented the recommended FY22 budget at the Selectboard's Nov. 3 meeting. The proposed budget reflects his staff's “best efforts” to estimate the cost of municipal operations and services, he said.
As proposed, the property tax increase will be 2 percent, bringing the tax rate to $26.90 per $100,000 of assessed property value.
Elwell explained that, at that rate, the increase in property tax for the average home, valued at $190,000, will amount to $51.11 for the year.
Thanks to the town's health insurance premiums and liabilities (such as workers' compensation insurance premiums) staying level, the tax increase is less than staff initially estimated.
The projected increase, based on the town's long-term financial planning, had started with a 2.8-percent increase, or 3.7 cents per $100,000, Elwell said.
Generally, the news is good for the proposed $19.5 million municipal budget, given the public health crisis and economic upheaval that is the COVID-19 pandemic.
The pandemic has affected some municipal revenues, with less income from parking and from the rooms and meals tax. Based on taxes collected during the pandemic, staff predict a 12.5-percent decrease in the total rooms and meals tax collected in FY22 compared to the current fiscal year.
Other revenues, such as the 1-percent local-option sales tax approved by Representative Town Meeting in 2019, have remained strong, Elwell said.
Compared to FY21, however, revenue from the local- option sales tax is expected to increase by 31 percent in FY22. Elwell explained that the estimate is based on purchases made in town and online purchases shipped to Brattleboro.
Accounting changes create illusions
Elwell cautioned the board that, on paper, the FY22 budget appears to increase 6 percent compared to the FY21 budget.
“This figure is artificially large,” he said.
The “on paper” increases include an accounting change that reflects how the town will handle its solid-waste expenses. Historically, the town has tracked these expenses separately from the General Fund. Beginning with FY22, however, staff have moved these expenses into the General Fund.
Doing so will make the “those revenues and expenditures more transparent to the public,” Elwell said. Staff have also proposed using $530,000 of the unassigned fund balance - similar to a household's savings account or rainy-day fund - for one-time expenses or capital projects.
Since these funds are already in the town's coffers, they do not need to be paid for using property taxes. Elwell acknowledged that the request from the unassigned fund balance is higher than in previous years.
“This significant increase is made possible by the increased amount of fund balance available for FY22,” he said. For the next fiscal year, staff recommend the town use $75,000 of the unassigned fund balance to upgrade the municipal website, brattleboro.org.
An unspecified amount, less than $50,000, is recommended to be transferred to the parking fund to cover a deficit to offset the reduction in parking fees due to COVID-19.
The rest would fund infrastructure projects such as sidewalk replacement and upgrades at Living Memorial Park.
“So the numbers are higher, but we're not spending more on town government,” he said.
Reaping the benefits of long-term financial planning
Since taking the position of Town Manager six years ago, Elwell has emphasized stabilizing town spending - and, therefore, property tax increases - through long-term financial planning and putting aside cash annually for capital improvements.
“Last year, I specifically recommended that the town's annual 'real time' cash commitment to capital be increased to $1.5 million through a series of small incremental increases over several years,” he said.
Prior to 2014, the town's capital investments had often lagged behind capital costs. At times, it meant the town would borrow instead of paying for projects with cash.
Starting in FY18 with an increase of 395.5 percent to the capital fund, the town started long-term planning in earnest. The next three fiscal years saw both increases and decreases in the investments made to the capital fund.
Starting with FY22, however, the projected investment is an increase of 4.2 percent. By FY26, staff expect the annual investment to the capital fund to be 1.7 percent.
Stormwater management obligations
Bringing the conversation back to the current budget, Elwell said the town will see an increase in stormwater management costs.
He attributed the increase to “state-mandated changes in the specifications for stormwater-related roadway maintenance and infrastructure.” The expected increase to the General Fund is $21,100 compared to the previous fiscal year.
“Other Vermont municipalities have created stormwater utilities to fund these costs more equitably, based on each property owner's amount of impervious surfaces, rather than on the value of their property,” Elwell wrote in a Nov. 3 memo. “The state of Vermont (which, of course, pays no property taxes) would be a substantial ratepayer to a stormwater utility in Brattleboro, due to the large amount of impervious surfaces on I-91 and other state-maintained sections of highway,” he continued.
For now, the stormwater costs will be accounted for in the General Fund. Elwell anticipates recommending that the municipality create such a stormwater utility, a process that can take months, if not years, to establish, he said.
Staffing costs are expected to increase by 2.9 percent or $221,143. Elwell's office is not recommending any new positions.
The budget does reflect a proposal to increase the assistant assessor position from part-time to full-time. Elwell said this recommendation is based on existing workload as well as preparation for a town-wide reappraisal.
The numbers also reflect a slight increase in staff benefits due to annual increases in Social Security and retirement benefits.
For the first time, human resources will appear as its own department. The majority of the money recommended for the department comes from existing line items moved from other departments, said Elwell. A proposed new expense of $12,500 is mostly earmarked for HR software.
A dedicated department is relatively new for Brattleboro. The human resources director position was created in FY19.
“We believe that showing the human resources budget separately and in one place will more transparently document the investment the town makes in maintaining a safe and welcoming work environment, ensuring compliance with state and federal employment regulations, increasing employee training, improving employee recruitment, and advancing the town's work in fulfillment of our commitment to diversity, equity, and inclusion,” Elwell said.
Funding the police
Elwell made a special note regarding funding for the Police Department.
At this stage, the recommended budget for FY22 “assumes no change in the BPD's previously approved staffing or levels of service,” he said.
Funding levels for the police department could change, depending on the results of a review process. The town is undergoing a community safety study, through the Community Safety Review Committee (CSRC), examining how the town funds and provides for community members' safety.
The committee, which will study the police department in the context of its larger mission, will report its initial recommendations to the Selectboard by Dec. 31.
“Since we don't know what the CSRC will recommend or how the public and Selectboard will react to those recommendations, we have proposed a budget to fund BPD operations at the same level of service as in FY21,” Elwell said.
The board will review the recommended FY22 budget over the next three months. During that time, board members will discuss the budget with town staff.
Members of the public are welcome to comment and ask questions. Town Meeting members will consider the budget at Annual Representative Town Meeting in March.