Plan keeps spending, taxes level
Jan. 29, 2009
By Greg Elias
Mindful of the chilly economic climate, the Selectboard on Monday passed a $7.6 million operating budget that freezes spending and property taxes.
The board unanimously approved the spending plan for the 2009-10 fiscal year. It represents a fraction of a percentage point decrease in spending from the current year and maintains the municipal property tax rate at 20 cents per $100 of valuation.
Monday’s vote represented the culmination of months of budget discussions among town officials. Much of the talk had revolved around the economy and how the town should rein in spending to show solidarity with struggling taxpayers.
Williston resident Mike Isham, who owns a farm on Oak Hill Road and works at IBM, told the board before it voted that he was worried the computer maker will soon lay off more people. He said the town should be talking about spending cuts rather than just maintaining the status quo so it can prepare for even harder times.
“I feel like in today’s current economic situation, we’re not really in a recession any more, we’re in more of a depression,” he said. “People are losing their jobs every day, the paper is full of it.”
Indeed, Isham’s worries proved prophetic. IBM decided on Tuesday to lay off 2,800 workers in North America, according to Reuters. Some of the layoffs hit the IBM plant in Essex Junction, according to media reports, but it remained unclear by press deadline how many.
The Selectboard made only minor adjustments to the budget on Monday, shifting $10,000 from a fund for buying development rights on open land to another pot of money set aside for building a new public works facility. Support had already solidified among initially noncommittal board members for an earlier proposal by Jeff Fehrs to cap spending at the current year’s level.
Instead, a brief discussion centered on worries about revenue, with board members mulling the mounting economic woes of retailers. In particular, they wondered how the bankruptcies of Linens ‘n Things and Circuit City would impact local sales tax revenue and thus the overall budget. Revenue from the 1 percent local sales tax funds about a third of the municipal budget.
Town Manager Rick McGuire said he could only guess how the downturn might affect revenue because the release of relevant sales tax data is still months away.
“It’s like parenting,” said board member Ted Kenney. “We make the best decision on what we have for the future based on what we know right now.”
McGuire originally proposed a $7.8 million budget in early December that would have boosted spending by 3 percent and increased the property tax rate by 2 cents.
The board then began to pare spending, making small cuts in numerous areas, particularly for the Fire and Rescue Department, which was originally slated for an 11 percent increase, the largest of any department. Under the approved budget, that increase is downsized to 6 percent.
Notably absent from budget talks was any proposal to freeze or reduce pay for town employees, a cost-cutting measure taken by state government and many private companies in recent months. The budget includes funding for a 3 percent across-the-board pay raise for non-union employees, as well as merit increases of 1 or 2 percent, according to McGuire.
He said in an interview that pay levels have to be adequate to attract top-notch employees. He added that police officers and full-time firefighters are unionized, so their pay is set by multi-year contracts. Reducing pay for non-union employees, McGuire said, might raise fairness issues and prompt them to join unions, too.
Expenditures for pay raises and funding increases for public safety were offset by dipping into reserves and making reductions in other areas.
Funding for capital expenditures was cut by 36 percent, delaying or putting on hold projects such as reverse 911 service and work on a trailhead at Brownell Mountain. Also sliced was funding for a new administrative aide for McGuire.
The town is using $500,000 of its $1.3 million budget reserve. The board has in each of the last few years also dipped into that pool of money, called fund balance, to keep taxes down, but this year’s withdrawal is the largest to date.
Finance Director Susan Lamb said fund balance will now total just 10 percent of the operating budget, the lowest amount allowed under Selectboard policy.
Basically, McGuire said, the town has taken all the slack out of the budget. Residents will see little or no change in services when the new fiscal year starts on July 1, he said, but the spending plan leaves the town vulnerable should the economy further deteriorate. If so, the Selectboard will have little choice but to raise taxes or cut services next year.
“If it continues to go the other way, next year will be far more difficult,” McGuire said.