Woodstock Officials Pitch Borrowing Funds

Valley News Staff Writer
Published: 4/11/2018 12:24:57 AM
Modified: 4/11/2018 12:25:03 AM

Woodstock — One month after a proposed municipal budget was defeated by Town Meeting voters, town officials have drafted a new budget that seeks to borrow the funds needed to address hundreds of thousands of dollars in capital improvements.

“In the last (Town) Meeting, we heard that voters didn’t want to save money to purchase things with cash,” Selectboard member Jill Davies said on Tuesday. “So this time, we’ve made a budget that allows us to take loans and leases, so that we buy the capital improvements and things we need with that.”

The strategic shift results in a $5.8 million fiscal year 2019 budget that, if passed by Woodstock residents next month, would result in a 3 percent municipal property tax increase for residents.

On March 3, Town Meeting voters rejected, on a 91-48 vote, a $6 million budget that would have resulted in a 10 percent municipal property tax increase.

The town has not relied heavily on squirreling away money in capital reserve funds in recent memory; last fall, Davies and other Selectboard members sought to shift toward a savings-heavy budget because, they said at the time, it would cut costs in the long run by eliminating interest payments on debt.

That way of thinking is in line with municipal planning advice from some experts, including the Land Use Education and Training Collaborative, a joint project by Vermont state agencies that published materials recommending six-year capital improvement plans that could anticipate and smooth out the spending peaks and valleys that large equipment purchases and capital improvement projects can create.

Such plans evolved “during the 1930s as municipalities, struggling with the impacts of the Great Depression, tried to get the most benefit from limited public dollars,” and became a staple of comprehensive municipal planning by the 1950s,” according to information on the Vermont Planning Information Center’s website.

The revised budget’s emphasis on borrowing can be seen in three changes. The first change is that rather than salt away $100,000 toward the purchase of a $500,000 firetruck, the new proposal calls for the allocation of $70,000, part of a $170,000 down payment on a five-year loan that would cost the town an estimated $70,000 per year to pay off, according to Municipal Manager Phil Swanson.

Davies said that after months of Selectboard meetings spent developing a budget without hearing a peep from the public, she welcomed the feedback she heard during Town Meeting.

She said she was happy to hear that the public supported the capital improvement projects, even as they disagreed over how to pay for it.

“The reason to (borrow rather than save) is that municipalities can get good interest rates, and then by the time you reckon on interest rates and inflation ... the costs are not too high,” Davies said. The logic is that the people who are using, for example, the firetruck, should be paying for the firetruck, so you pay over time while you’re using the asset, rather than saving up beforehand.”

The second big difference between the two budgets involves an energy efficiency project at the Town Hall, including the replacement of a set of 33-year-old oil-burning boilers with a newer propane-based system.

A $100,000 line item to fund that project has been removed from the budget; instead, it seeks $22,500 to put toward another five-year loan. A separate article on the warning asks voters for authorization to borrow the $100,000.

Davies said the town expects to see almost $14,000 in annual savings to the building’s $28,000 annual oil and electric bills; in addition to the boiler replacement, the project also would add insulation to the walls and windows.

The borrowing terms allow the town to avoid the bonding process and instead rely on Vermont statute that says “if the improvements or assets are to be financed for a term of five years or less, they shall be approved by the voters at an annual or special meeting duly warned for the purpose.”

In addition, the new budget backs off a plan to save $165,000 for highway equipment, slashing that figure to $67,000 instead.

“At Town Meeting, the voters expressed displeasure with our plan to pay cash for equipment,” Swanson said.

Under the new proposal, which includes $3.8 million to be raised by taxes, the municipal tax rate, currently 42 cents per $100 of assessed property value, would increase by a little more than a penny, resulting in an increase of about $31.50 on the tax bill of a home valued at $250,000.

Municipal budgets tend to have less of an impact on property tax rates than schools.

Area school district budgets approved by voters during Town Meeting are expected to make the education property tax rate in Woodstock decline from $1.73 to $1.69 per $100 of assessed property value.

Voters will be presented with the revised municipal budget proposal at a Special Town Meeting at 7 p.m. on May 15 at the Town Hall.

Matt Hongoltz-Hetling can be reached at mhonghet@vnews.com or 603-727-3211.

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