Norwich
Town Manager Herb Durfee has proposed a $4.56 million budget for the coming year, which amounts to a roughly 1.3 percent increase over current spending.
But property owners could be in for a much steeper hike, as the portion of the budget for spending to be raised through taxes could grow by as much as 8.5 percent, to $3.7 million from $3.4 million, including outside articles such as library funding.
“That’s the area that voters that understand the budget process would panic (over) a little bit,” Durfee said on Thursday.
Durfee said the proposed increase can be attributed to a drawdown from Norwich’s unassigned fund balance, or its surplus account.
Every year, the Selectboard takes money from the surplus and uses it to pay off a portion of the next year’s budget, essentially buying down residents’ tax burden. But that isn’t likely to happen this time around, Durfee said.
Norwich had about $1.2 million in the fund in June 2017, but about $320,000 of that pool was used to pay for a fiscal 2018 budget deficit, Durfee said.
The Selectboard then decided to use another $240,000 to pay for cost overruns with the highway garage, and another $260,000 to pay down the 2018 tax rate.
That leaves about $400,000 in surplus money, which Durfee said he hopes to hold onto in case another emergency befalls the town. He said it’s good practice to save enough to cover 10 percent of the town’s overall budget.
As a result, Durfee said, officials are looking to reduce some spending requests, with some Selectboard members proposing a cut to Norwich’s paving budget.
The town contributed $275,000 annually to paving operations, but that payment might be suspended next year, Durfee said.
Not paying into the paving budget in the upcoming year would increase the amount raised in property taxes by just 0.45 percent, Durfee said.
If the Selectboard wants to keep the paving contribution, Durfee predicted that layoffs would be needed to lessen the potential tax increase.
Emails requesting comment from Selectboard Chairman John Pepper were not returned on Thursday. However, he read a statement regarding the budget during a Dec. 19 Selectboard meeting.
“The board is definitely looking closely at areas that can be cut, but, as presented, the department heads have shown that the only way to cut their line item budget amounts is to reduce personnel or services, something that’s not likely to happen,” Pepper said in a CATV recording of the meeting. “Therefore, we’re looking closely at the relationships between designated funds, the undesignated fund and items that are budgeted as their own line items, which are actually confusing to many. They just are.”
Once a budget is adopted by the Selectboard, it must still be approved by voters at Town Meeting.
The budget discussions don’t include about $427,000 that will be requested as separate articles from nonprofits and the Norwich Public Library on the town warning. That spending is up about $60,300, or 16 percent, over the current fiscal year.
Durfee also pointed out that the town’s financial problems have nothing to do with repairs from a July 2017 storm that flooded roadways and cost Upper Valley communities millions in cleanup costs.
Norwich has so far spent $3.06 million to recover from the storm, and additional bills are expected to add to that total, the town reported earlier this month on its blog.
While the Federal Emergency Management Agency is supposed to pay 75 percent of those costs, it won’t reimburse anything until a review of the town’s expenses is complete. Norwich took out a $4 million line of credit with Mascoma Savings Bank to deal with the delay and has borrowed $900,000, according to the post.
The lack of repayment from FEMA is partially reflected in the town audit, which shows a nearly $3 million deficit in the surplus fund as of June 30.
Barre, Vt.-based auditor Bonnie Batchelder last week told the Selectboard that the fund should again show a surplus when the federal and state governments finish making contributions. Vermont is expected to pay 12.5 percent of Norwich’s repair costs from the 2017 storm damage.
The Selectboard is scheduled to continue discussing the budget during its next meeting at 6:30 p.m. on Wednesday, Jan. 9, in the multipurpose room of Tracy Hall.
Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.