MIDDLEBURY — The Middlebury selectboard on Jan. 25 will finalize a fiscal year 2023 (FY23) budget proposal that — if approved by residents on Town Meeting Day — would result in a property tax increase of no more than 3 cents per $100 in property value.

The board on Tuesday reviewed a third budget draft that called for $11,921,649 in spending. That would represent a $410,721 (or 3.6%) increase over this year’s budget of $11.5 million.

Town Manager Kathleen Ramsay also at the Tuesday meeting gave the board another version of the budget to consider. That proposal would apply more of a fund balance from prior years ($312,000, instead of $117,000) and use more surplus local option tax revenues ($1,050,000, instead of $1 million), and thus require only a 1.54-cent rise from the town’s current municipal property tax rate of 79.7 cents.

Much of those extra revenues would be earmarked for major equipment purchases — such as a mower and a police cruiser — Ramsay explained. The first budget draft reviewed by the selectboard in mid-December had called for a 5-cent hike in the municipal rate. Middlebury hasn’t seen a municipal tax rate hike that high in more than eight years.

Selectboard members on Tuesday were impressed by Ramsay’s budget proposal calling for the 1.54-cent tax rate hike, but they voiced some concern about its potential impact on Middlebury’s fund balance. As Ramsay also noted, prudent fiscal management calls for a community to maintain a surplus equivalent to 15% of its general fund budget. Her latest version of the FY23 budget would draw down the surplus to 13% of the fund, officials said.

With that in mind, the board has asked Ramsay to return on Jan. 25 with a budget draft reflecting a 3-cent bump in the municipal rate, which would assure the town’s surplus fund stays at the 15%-of-general-fund threshold.

The vast majority of the proposed FY23 budget increase is due to fixed costs and critical capital improvements, according to town officials. Those fixed costs include:

• A $217,523 rise in contracted employee wages and benefits. Specifically, wages are pegged to go up 4.5%, and benefits are slated for a 3.5% bump.
• An 8.5% jump in capital improvement projects, representing a $122,366 increase over the $1,438,219 allocated for that category last year. Projects included on the list include sidewalk projects on Washington and Seminary street extensions; and road construction on Colonial Drive, Cady Road, Lower Foote Street, Maecliff Court and North Leno Lane, among others.
• A 16.2% ($69,052) increase for the replacement of town equipment.

Public works and police are the biggest expense categories for FY23, pegged at $3,605,870 and $2,514,268, respectively.

Selectboard member Heather Seeley, who chairs Middlebury’s Infrastructure Committee, said the town must strike a balance between using tax dollars and surplus.

“We’ve got to raise the taxes a little bit, and we’ve got to take a little from the fund balance,” she said. “I just don’t want to get to the position where we can’t take any more from the fund balance and then have to raise taxes by 8 cents.”

She and other board members said the town’s judicious use of surplus has helped leverage state aid to get major projects done more quickly than might otherwise have been the case.

“We’ve been successful in the past year having shovel-ready projects … and have been able to access considerable state funding for those projects because they were ready to go,” she said. “We did the work and engineering to get them to a certain point.”

Selectboard Chair Brian Carpenter said the town has been fortunate to have reserves to apply to large capital projects, so that the community can “pay cash as much as possible, instead of bonding for everything.”

It’s a strategy that could also come in handy with unprecedented amounts of federal aid available during the pandemic.

“We really feel strategically like we’re going to put ourselves in a position to maybe get more than our fair share of the ARPA (American Recovery Plan Act) funds,” Carpenter said. “We’re doing a better job of planning, and our staff is getting projects ready so they can match our funding.”

Resident Victoria DeWind was the only resident to weigh in on the latest municipal budget draft on Tuesday. She believes the board has done a good job limiting the spending increase, but urged officials to keep the tax impact as low as possible, given the large number of citizens on fixed incomes.

“I thought getting the tax rate reduced to 1.5 cents was really great,” she told the board. “The schools are looking like they’re going to be hitting us with a hefty increase, and I know that’s not your problem, but it all adds up. If you can, without risk, reduce the tax rate (by only 1.54 cents), I think you’re helping everyone — especially in this time … They say the economy has recovered, but inflation is hitting people hard.”

Reporter John Flowers is at johnf@addisonindependent.com.