VERGENNES — After debate and a strong plea for more office help from City Clerk Joan Devine, the Vergennes City Council on Tuesday settled on a new budget and a 2.5-cent increase in the municipal tax rate to 83.5 cents.
That change will translate to $25 in additional taxes per $100,000 of assessed value on city property.
Devine and Assistant Clerk Melissa Wright said on Wednesday they expect to hear from the Agency of Education and the Department of Taxation early next week about the city’s final school tax rates.
Addison Northwest School District officials this winter estimated their budget would add about 8 cents to local tax rates, but could not predict the impact of legislative decisions on their estimates. Those who pay based on incomes would eventually receive prebates on what would be an increase of $80 per $100,000 of assessed value based on the ANWSD estimate.
In limiting the increase in the municipal rate to 2.5 cents on Tuesday, the council chose to use $90,600 of a fund balance from the current fiscal year that outgoing City Manager Mel Hawley estimated would be at least $134,000.
Council members also chose to dip into the city’s Water Tower Fund for $72,500 to offset what otherwise would have been a larger increase.
That fund, fed by payments from cellphone companies to install broadcast on the city’s former water tower behind city hall, is limited by council policy to pay for capital improvements.
However, Hawley pointed out to council members that if they chose they could apply the Water Tower Fund to debt service for the police station, a $72,500 line item in the police department budget.
The council had not previously tapped the Water Tower Fund during budget and tax-rate deliberations, but had in 2013 voted to use the fund to make a $100,000 down payment on the police station.
The combination of tapping the surplus and the fund balance reduced a rate that otherwise would have been 90 cents, according to Hawley’s calculations.
Hawley told the council he could make cuts in services and project proposals to get down from 90 cents to the current rate of 81 cents, but that it wouldn’t be pretty.
“I can get to 81 cents very easily, but I can tell you it’s ugly,” Hawley said.
Typically the council has left more of the fund balance in place, with an eye toward the future. But council members Lynn Donnelly and David Austin argued for using more of the surplus immediately.
Donnelly suggested new housing developments would add to the grand list and lobbied for using even more.
“What is the damage of using $120,000 instead of $90,000?” Donnelly said.
Austin suggested the council look to new sources of revenue in the year to come, specifically beginning to assess impact fees on developers, and said given the unknowns about the future more of the balance should be used now.
“There are a lot of the variables out there. I just think it puts us in a difficult position if we don’t use it,” Austin said.
Mayor Renny Perry and Alderman Matt Chabot said they were concerned the council could be hamstrung a year from now if there were no fund balance, especially without Hawley, who retires later this month, in charge.
“The only downside would there would be less surplus next year,” Perry said, adding, “We can take the pain today, or we can take it next year.”
Hawley advised some caution.
“What if the audit comes around and you’re off by 20 grand,” he said.
Alderman Mark Koenig, also member of the Addison Northwest School District Board, which is dealing with the same issue, pointed out the increasing cost of providing employee benefits is helping to push city spending higher and is out of council control.
“There’s nothing this group can do about the rises in health care,” Koenig said.
One item in council control — an administrative position — was put back in the budget after Devine spoke up. Hawley, unlike virtually any manager who will replace him, handles routine payroll chores — he said on Tuesday he has actually memorized the codes for data entry.
Devine said her and Wright’s plates are already full before considering adding more work the impact of transitioning first to an interim manager and then a permanent manager.
“You are putting me and Melissa right up against the wall,” Devine said, adding, “I’m feeling panicked.”
Hawley backed her, saying he was “dumbfounded” the council had cut the position, which with withholding would cost $16,600.
“It’s not just about hiring a city manager. It’s about all of those hats (I wear),” Hawley said.
The council agreed to restore the line item.
Police spending also came under scrutiny. Chabot pointed out it represented 40 percent of the city’s budget, exclusive of user-funded sewer spending, and that police revenue was declining. He repeated support for a decision the council made last week to reject Police Chief George Merkel’s request to replace two of the department’s five cruisers.
Chabot said at some point police spending could not keep rising.
“That is an unsustainable model,” he said.
BUDGET DETAILS
The total budget the council approved on Tuesday — again, not including the sewer budget that is funded by user fees — was $2,369,755. The increase over spending from the current fiscal year, which ends on June 30, is $137,755.
Of that total $865,680 is devoted to the police department, an amount that is essentially level with the current fiscal year. But without the infusion of cash from the Water Tower Fund to wipe out the $72,500 Bonded Debt line item, police spending would have increased by about $71,500. The cost of health insurance alone is budgeted to rise by about $35,000. Other factors include salary hikes and $10,000 for a capital purchase.
Public works spending is set to increase by about $24,000 to $778,850. Raises ($10,000 more), health insurance ($14,500 more), and sidewalk spending and vehicle maintenance ($5,000 more each) are among the line items that are rising, while the department’s debt service is dropping by about $28,000 to a little less than $17,000.
The category of General Expenses rose by about $34,000 to $235,206, largely because of increases in the city’s share of supporting its fire department, due to a new truck purchase; Bixby Library support, due to a higher per capita request approved by the council; and the cost of operating the city’s recycling center for the next six months, due to higher recycling expenses. The fate of the recycling center after this year is uncertain.
Administration expenses are also rising, by about $72,000 to $456,140. Again, higher health insurance costs are triggering some of that increase. The new position in city hall is contributing $15,600, not including benefits, and the budget includes a high-end salary for a city manager of $95,000, about $20,000 more than Hawley’s wages. Raises for other city hall employees, including a new zoning administrator to replace Hawley in that role, are also figured in.