Income down in several categories

By Tom Gresham
Observer staff

A municipality’s future revenue can often prove difficult to forecast. In contrast to expenditures, revenues are not easily controlled by town officials. The current fiscal year, which ends July 1, offers some examples.

Such categories as document-recording revenue, planning fees and police traffic fines are not producing as much money as expected, while income from passport licenses and police false alarm is well over budget. Each represents the kind of unpredictable behavior that is difficult for municipal officials to grasp when compiling a budget.

“All revenues are fairly hard to predict,” said Finance Manager Susan Lamb. “They are just not as consistent as expenditures unfortunately.”

Whereas town officials can typically limit spending to keep within budget, revenue is largely outside of their control.

Document-recording revenue is one obvious example. Through April, revenue in the town clerk’s office for the recording of documents had fallen below budget by more than $40,000. Lamb said in a May 19 memo that she expected that source of revenue to ultimately be $25,000 below budget for the fiscal year.

Lamb said the town had set its budget based on the past two years of “extraordinary volume” of citizens recording documents at Williston Town Hall. She speculates the variation can be traced to the change in interest rates. For the previous two years, low interest rates led to a number of people refinancing homes or buying new ones. Both mean heavy document copying at the town clerk’s office.

“We had two years in a row of astounding amounts when interest rates first fell,” Lamb said. “Everyone was refinancing.”

But interest rates have since risen, Lamb said, and house purchases and refinancing have cooled in Williston.

Another prominent underperforming revenue source this year has been traffic fines issued by Williston police. According to Lamb, the average monthly revenue has decreased from $4,500 in 2003, to $3,300 in 2004 to $1,650 in 2005. For the fiscal year, police court fines were short of budget by over $40,000 through April.

The largest reason for the decreasing traffic revenue is staffing issues in the department, according to Williston Chief Ozzie Glidden. The department has been unable to keep a full roster of officers and has had to spend a large amount of time training new officers over the past year. Consequently, Williston’s officers are carrying much higher caseloads than their peers in other communities, like Essex Junction and South Burlington, and have little time for setting speed traps.

“Traffic enforcement is an issue, but officers’ investigations take precedence over guys going out and running radar,” Glidden said.

Overall, Lamb projects that departmental revenues will be under budget by approximately $70,000 at the end of the fiscal year. However, taxpayers will not need to worry about paying higher property taxes to make up the shortfall because the town’s local option taxes serve as a sort of safety net. Revenue from sales and rooms and meals taxes are running about $400,000 over budget.

The town has consistently underestimated revenue from option taxes since Williston voters approved the 1 percent sales tax in July 2002.

“Every year we predict sales tax revenues and every year it’s more than we expected,” Lamb said.

Town Manager Rick McGuire said the local option taxes have proven volatile “on the upside” in their short history so far, but the town will still be careful not to overestimate the revenue. He notes a downturn in the economy could significantly reduce income from local option taxes.

“For the most part, you generally want to be conservative in the estimations you make for the budget, especially for large revenue sources, because they can cause huge problems if they go under,” McGuire said.

The Selectboard might choose to use the increased funds from the local option taxes to lower the municipal property tax rate from the 12 cents that was projected in March. In the past, the board has used the excess revenue and its subsequent swelling of the town’s reserves to lower the tax rate. The board is scheduled to set the property tax rate for the 2005-06 fiscal year on June 27.