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City tax rate up 10 percent; council postpones police decision

VERGENNES — When the dust settled this past Friday evening at the end of the second contentious Vergennes City Council meeting of the week, council members did not agree on a budget, but did approve an 8.5-cent tax increase to the city’s municipal rate.
That means that in the fiscal year that began Monday, Vergennes property owners will pay a rate for taxes to cover non-school spending that rose by a little more than 10 percent from 83.5 cents per $100 in property value to 92 cents. 
City Council members set the rate after the discovery of accounting miscues — they were not entirely the city’s fault — that revealed Vergennes’ finances were in better shape than believed earlier in the week. 
Council members on Friday were working with an anticipated $90,000 surplus from the fiscal year that ended on June 30, not on what had been believed three days before to be a deficit of at least $60,000.
City Manager Matt Chabot on Monday said he will prepare a new draft budget for the council to review at its July 23 meeting. It will be based on the revenue generated from the new 92-cent tax rate and other sources, such as interest on city funds. The previous draft budget came in at $2.246 million, exclusive of user-funded sewer spending. 
Chabot said he was working to pin down that new budget number and would have it ready by late this week or early next week. He said based on the new grand list number a penny on the tax rate will raise $22,600, not the higher figure reported in the June 27 edition of the Independent. 
What is certain now is that the Vergennes municipal rate rose to 92 cents. That’s enough to add $85 in taxes per $100,000 of assessed value to Vergennes property, or about $212.50 to a $250,000 home. 
The homestead school tax rate is expected to rise by about 9 cents, meaning homeowners are looking at an overall increase of roughly 17.5 cents. That translates to $170.50 per $100,000 of assessed value for residents who pay based on the value of their homes and not on their income.
About two-thirds of homeowners in most communities pay based on their income and receive prebates and thus do not pay based on the full value of their houses. Prebates typically reach four figures.
Of the 8.5-cent increase almost 4.2 cents is directly due to a $94,000 rise in the cost of providing health insurance to Vergennes employees, officials said. On Friday they said it was a 15 percent increase.

ACCOUNTING ISSUE
The tax rate numbers are lower than originally projected because of an error in calculating the grand list for which the software company NEMRC, that provides data to Vergennes and most Vermont towns, is at least partly responsible. 
Chabot had at the council’s Tuesday meeting projected a deficit from the 2018-2019 fiscal year of between $60,000 and $90,000. But on Friday, June 28, he was confident — after help from former city manager Mel Hawley — in announcing the surplus of around $90,000.
Chabot apologized for the accounting mistakes on behalf of NEMRC and the city.
“Neither of us are proud of the fact that we released bad data,” Chabot said this Monday.
On the other hand, Chabot said — despite Hawley’s criticism at Friday’s meeting of the snafu as “a bit embarrassing, and quite frankly a bit disturbing” — he and his department heads could report good final fiscal year numbers after his first partial year on the job. 
“I would have to say the management of the budget has been as good as ever,” Chabot said. “Everyone worked very hard under very challenging circumstances this year to assist in the transition. And I’m pleased where we ended up. Again, I’m not pleased we had bad data and shared that bad data.”
Chabot and Mayor Jeff Fritz thanked Hawley for coming in to city hall and helping to ferret out accounting problems last week. But on Monday Chabot took issue with another of Hawley’s statements at the Friday meeting.
While opposing hotly debated proposed cuts to the police department — cuts that remain uncertain at this point — Hawley said it was “just ridiculous” that officers who might lose their jobs would receive only two days notice if the council approved the cuts. 
Chabot said potential cuts were no secret, and he, Police Chief George Merkel and council members started discussing them in mid-May.
Chabot said that if the council had voted to reduce the department size, or if it did so in the future, any affected employee would receive adequate notice.
“Accommodations would have been made to give appropriate notice,” he said. “I’ve been in management for over 30 years. That’s (two days notice) not how it’s handled, and that’s not how I would have handled it.”

RATE SET, DEBATED
Council member Lynn Donnelly made the motion for the 92-cent tax rate. Donnelly said it could cover the health insurance cost increases, fully fund the police force at its current size, and pay for other priorities in the budget.
Donnelly had forcefully defended the police department’s performance and professionalism, and said cuts would be a step backwards; Alderman Lowell Bertrand joined her in backing the department. 
“I totally think this is done incorrectly. This is done wrong,” Donnelly said. “It’s horrible.”
But her final motion did not specify budget provisions. And at one point or another four of the seven council members backed some level of police cuts — Fritz and Aldermen Bill Benton, Mark Koenig and David Small. 
Benton, Koenig and Small spoke before the motion was adopted, but made no motion on police spending. 
Benton on Tuesday had proposed a reduction of one officer, and Koenig and Small expressed interest in that suggestion on Friday. After Donnelly spoke, Benton suggested the council could adopt the 92-cent rate and ask all department heads to make cuts, and that tax rate would give the council time to “analyze the police department in more detail.”
Koenig said he was not sure it was possible to make “an equitable reduction across the board” because other departments had been getting by on “just enough to survive for a number of years.”
Small said other departments “don’t have as much to cut,” and reductions “would be at Matt’s (Chabot’s) discretion.”
Chabot noted in an email, “There was a majority consensus to modify my proposal to reduce 1 FTE (full-time equivalent), that fell apart Friday night.”
Chabot said it would be up to the council to decide how to proceed on July 23. 

MEETING FEEDBACK
Input from the roughly three-dozen attending the Friday council meeting mostly, but not unanimously, favored maintaining the police department size and budget. 
Department proponents said the force could slide backward without what they saw as adequate funding, praised its work in community policing and outreach to youth, and said the staffing level was necessary for the safety of the community and its officers.
Former mayor Michael Daniels suggested freezing employee wages, finding cuts elsewhere, and making up revenue from tickets in order to preserve the department’s size. 
Chabot and council members called the wage freeze a non-starter, Chabot said ticket revenue had consistently fallen short of projections, and Fritz described the overall budget as lean.
Merkel said for safety reasons no officers should be asked to be the sole person on duty. He added layoffs would lead to morale problems, including possible further defections. 
“It’s going to adversely affect us all the way down the line,” he said.
Hawley received applause when he concluded: “Keep the police department full, move on, and let’s get the tax bills out.”
Others who said the department could survive a reduction in force also received some applause.
Amy Barr said she appreciated the police department, but that some of the “fear-mongering” she had heard bothered her.
“I have always felt safe in this city,” Barr said. “I would like you when you make your decision not to think too hard about fear-based arguments.”
Cheryl Brinkman told the council the police department could function as a smaller force.
“I don’t think the police department fits the size of the city … We have a lot of wonderful things in the city, and the police department is one of them,” she said. “I think your proposal is very responsible, and I support you.”
Fritz said council members had all been contacted by many residents on both sides of the issue — feedback for which they were grateful.
“We have heard from a lot of people,” he said. “Thank you to all of you.”
Andy Kirkaldy may be reached at andyk@addisonindependent.com.

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