MIDDLEBURY — Middlebury officials plan to create a committee to decide what to do with any surplus local option taxes the town collects beyond what is needed to pay off the Cross Street Bridge, but they stressed they will not establish such a panel until the $16 million project is completed.
The Cross Street Bridge project is in full swing and is scheduled to be formally unveiled, and put into use, on Oct. 30. The span and related road/infrastructure work is being financed through a $16 million, 30-year bond with debt service coming through a $9 million gift from Middlebury College and a 1-percent local option tax on sales, rooms, meals and alcohol.
Officials advanced the local option taxes (and local voters approved them) as a way of raising around $600,000 annually to go along with an equal, yearly sum from the college to retire the bridge debt. But Middlebury Assistant Town Manager Joe Colangelo noted it is becoming apparent, based on current trends, that the local option tax revenues are likely to marginally exceed the debt they are being asked to cover.
For example, he noted that in fiscal year 2011 — the most expensive of the 30-year bond period, in terms of debt service — the local option taxes are anticipated to produce a $63,392 surplus.
Those surpluses are likely to grow during ensuing years, given a gradual decline in debt service during the remaining years of the bond issue while assuming ongoing healthy commercial/retail activity in town.
“While the debt obligation to the (Vermont Municipal Bond Bank) will continue to decrease every year, it is also reasonable to assume that over the next 30 years the local option tax will generate a greater amount of annual revenue as the years go on,” Colangelo said in a memo to the selectboard.
With that in mind, he has advised the board to begin thinking about what the town could do with any surplus local option tax revenues. Those uses could range from outright property tax stabilization to financing municipal programs and projects. Any scenario will ultimately require voter approval, noted Middlebury Selectman Dean George, chairman of the town’s Cross Street Bridge Committee.
“I think it makes sense to establish a (local option tax) committee,” George said. “My only concern is that… we not take any action until we have closed the books on the bridge project. This money was to be used exclusively for the bridge project until we get that done, and what we do after that depends on what the revenue stream looks like. It makes good sense to have a committee study that, to determine what its best use would be.”
George and other selectboard members noted there is still the potential for some unanticipated costs related to the bridge before the books close. For example, the board received word last week that a 10-inch water main on Main Street will probably have to be dug up and redirected around what will be the center of a new roundabout intersection. That water main project is expected to cost around $40,000.
Selectman Victor Nuovo said that when the project is completed, a top priority for surplus local option tax funds should be for maintenance of the new bridge.
Middlebury Town Manager Bill Finger said there would be no shortage of ideas on what to do with any surplus local option tax money. But he added, ‘There are those who will say, ‘reduce the (property) tax rate, period.’”
Reporter John Flowers is at [email protected].