MIDDLEBURY — Middlebury selectboard members learned Tuesday that the fiscal year 2013 municipal budget could, in a worst-case scenario, require a 5-cent hike in the local tax rate, even before crunching the initial numbers on the new spending plan.
The potential tax increase is associated with four financial outlays — some of them optional, others that hang in the balance — that could add $348,364 to the town spending plan that will cover July 1, 2012 to June 30, 2013.
Those financial question marks, according to Middlebury Assistant Town Manager Kathleen Ramsay, include:
•  $134,364 (about two cents on the tax rate) to cover the first installment of debt service on a $4.8 million bond that voters will field on Town Meeting Day to upgrade the Seymour Street and East Middlebury fire stations.
•  $72,000 to pay the town’s portion of a new economic development director position. That person would be charged with bringing new, good-paying jobs to Middlebury and helping current local employers expand their workforces. Middlebury College and the business community would also help finance the position, estimated to cost $150,000 to $200,000, inclusive of benefits and other related expenses.
•  $72,000 in potential lost property tax revenue associated with an assessment grievance filed by the Lodge at Otter Creek retirement community. Owners of the Lodge have appealed the town’s assessment to Addison County Superior Court. If the court finds in favor of the Lodge, the town will have to find new revenues to fill the revenue gap, or cut the budget. The $72,000 figure, Ramsay noted, does not include legal fees or the costs of a new, outside appraisal the town has commissioned to make its case.
•  $70,000 the town hopes to recoup from state and federal sources for Tropical Storm Irene-related repairs to the Middlebury River. The town has applied to the state and the Federal Emergency Management Agency for reimbursement, but it is not guaranteed.
One penny on the Middlebury tax rates raises roughly $70,000.
Ramsay noted some potential new revenue to offset a little of the new financial obligations — $1,000 from a new solar array to be built on town land next to the Middlebury police station, and as much as $15,000 in savings from new, more energy-efficient streetlights.
Officials noted the complexion of the budget could change substantially during the coming months, if the town receives Irene-related reimbursement and/or it prevails in the assessment grievance involving the Lodge — reducing the potential tax increase to around 3 cents. Townspeople will have the option of approving the fire department and economic development director-related expenses.
Other financial wild cards include: Negotiations for a town employees’ labor contract, costs associated with a new flood hazard mitigation plan for the town, upgrades that might be required to the municipal building furnace, and the uncertain status of how much surplus money will be available to apply to the fiscal year 2013 spending plan.
“It is a work in progress,” Ramsay stressed of the budget. “What I wanted to do is give you a glimpse of what is coming up in the fiscal year 2013 budget process.”
The more conventional municipal budget expenses will come into sharper focus during the next two months, as Ramsay and Town Manager Bill Finger wade through individual departments’ financial wish lists. Municipal staff have kept those lists frugal in recent years in deference to the sluggish economy. Middlebury residents last March approved a 2011-2012 town budget of $8,265365, requiring a 2.13-cent increase to a municipal property tax rate that had remained level the previous two years.
“In looking forward to the fiscal year 2013 budget, Bill (Finger) and I have discussed continuing the board’s direction of controlled spending and fiscal sustainability, while maintaining current levels of municipal services, and preserving our investment in capital infrastructure,” Ramsay said.
She noted the town must also keep a healthy fund balance, while seeking grant opportunities and running its services as efficiently as possible.
“As we look ahead to the upcoming budget cycle, this year will be challenging, as they all are,” Ramsay said.
Middlebury selectboard Chairman John Tenny said residents should weigh in with their thoughts on the budget.
“We want people to understand what these forces are that we’re dealing with and are of our choosing as well, and it’s an invitation for folks to make themselves heard,” Tenny said.
In other action on Tuesday, the Middlebury selectboard:
•  Agreed to form a task force to develop a management plan for the Middlebury River as it flows through East Middlebury. The East Middlebury community sustained flood-related damage during Tropical Storm Irene, and the town has drawn some criticism from state and federal authorities for the manner in which it conducted some immediate river-related repairs.
That said, Middlebury officials have set to work on a hazard mitigation plan that would enable the town to qualify for FEMA hazard mitigation funding. Such funding would help the town improve conditions along the river to reduce the chances of substantial damage during the next major flood event.
The town of Ripton in 2009 formed its own task force that planned a project to fortify a section of the Middlebury River flowing through its village. That project — which included the installation of riprap along 700 feet of the north shore and acquisition of easements along the southern shore — cost $157,000, the majority of which was covered by federal grants.
The new Middlebury task force — which will solicit input from East Middlebury residents — will include representatives from the Vermont Agency of Natural Resources, the local planning commission, the Addison County Regional Planning Commission and a river scientist in an effort led by Finger. Technical experts — including engineers with river science experience and hydrologists —  will be retained as needed, noted Ramsay.
•  Received an update on the Middlebury fire stations project. Middlebury Fire Department Lt. Pat Shaw noted some new changes in the plan design, including a shift of the elevator footprint to the interior of the Seymour Street firehouse. The elevator shaft had previously been shown situated within the front façade of the building, an architectural element that had drawn some concerns from some townspeople. Shaw said the plan will undergo more refinements and will be fully explained to residents through a locally produced documentary and public meetings leading up to the Town Meeting Day vote.
Reporter John Flowers is at [email protected].