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Feb 20, 2003 to Feb 6, 2013

Brattleboro Fiscal Policies


Of course I have been reading the latest opinion letters about Brattleboro finances and taxes. I agree there is a fair bit of sentiment being expressed about this issue, with most of it against higher property taxes.

There is, however, another side of the story. The major reason for tax increases coming over the next two years is that Representative Town Meeting approved the bonding of the Police & Fire Station improvements, which bonds may reach about $14.1 Million. The full weight of this bonding will be phased into our tax rates over two years' time, because of the Selectboard's decision to apply for the bonds in two stages: $5 Million initially to fund the planning phases of the project, and the rest the following year.

I'd like to point out that in voting at our special Representative Town Meeting session held a little over a year ago, we rejected the idea of a local-option sales tax by a 5-1 margin, and approved the Police-Fire bonding by fully a 3-1 vote. Given these overwhelmingly persuasive margins of approval by Brattleboro's democratically-elected local representatives, I do not think that if the same votes were held either today or at our next Representative Town Meeting in March, either of these results would be likely to be reversed.

But the question is academic, because those votes were held, those decisions were taken, and the Town government committed itself in doing so to proceeding with a project that stood to raise our tax base substantially.

I have served on Representative Town Meeting's Finance Committee since early 2011. Naturally we studied the Police-Fire proposals ad nauseam, and in the end I personally was persuaded that the Municipality had done due diligence, that the Police-Fire improvements were necessary, and that it was in the Town's best interest for the project to proceed, particularly on public safety grounds. This is why I strongly support the project, and believe that since these votes were taken, the best opportunity for local residents to influence the project's results and expenses is to attend meetings of the Project's oversight committee and argue for whatever economies can be realized. It is important that the Oversight committee's members understand that there is substantial public concern about expenses, and if they do, they will make sure that the Project proceeds in accordance with the best and most efficient possible management practices.

That said, I do believe that seeing the impact of this project on our tax base raises an important question; one that we on the Finance Committee, and in particular our Chair, Spoon Agave, have raised many times, and that is the necessity of budgeting for the longer term, and in particular for the rational and careful phasing-in of the Town's plans for major capital improvements, which usually must be bonded (financed over time). The best way to prevent major bumps-up in the tax rate is to try to even such expenses out over time, so that the public is not paying for too many expensive projects at once.

There is one more observation that can be inferred, but we cannot be sure that it is valid without evidence: the idea that all the departments of the Town are well-managed and economically efficient could be called into question when the Town's expenses have gradually but substantially grown over time. In a town with very little if any population growth, this steady increase in the funding of public services and education raises the question whether or not part of the increases in our Town budgets is due to mere 'momentum' or because our Town government's level of management efficiencies and/or best practices has failed to rein in costs.

It is more our observation in the Finance Committee that we are seeing these increases because certain cost increases are unavoidable: health insurance, fuels, electricity, etc. There's also the common-sense observation that with the larger economy hitting people's pocketbooks pretty hard 'across the board' these days, we're going to see some steady increases in the Town's budgets no matter what. Yet there are still questions that could be raised about the levels of staffing in the Town's departments and in the schools, and of the impact on local taxpayers. 

So I have proposed to the Finance Committee and the Interim Town Manager that we in Brattleboro commission an expert study or studies by one or more third parties, in the nature of Management and/or Performance Audits, which would let us have some new vantage points and perspectives to the effect that we, the taxpayers, are getting what we are paying for, and that our funds are not being used for unnecessary expenses or to underwrite any inefficiencies or faulty management or administration in the Town. I just think that possibility ought to be taken out of the equation, so that we can make the best and most rational budgetary decisions, and that this is an excellent time to do it because there is an 'inter-regnum' (time between administrations) and when we do hire a new Town Manager, that person has a presumptive right to start here with a 'clean slate'.

We in the Finance Committee have lots and lots of spreadsheets and numbers to look at, but our opportunity to evaulate or second-guess key management and administrative decisions is poor. We have to rely on Town Managers and department heads when they come to speak with us and tell us that everything is on the up-and-up, and money is only spent on what is absolutely necessary. For instance, we were all gratified to hear such representations by the most recent Town Manager, Barbara Sontag, who said she let each and every department head know her expectations by demanding from them such reassurances. Still, having management/performance evaluations by neutral third parties is a good idea once in awhile (the last one was at least a decade ago), and right now might bring some substantial results in budget reductions and/or prevent any unnecessary expenses or increases.

Thanks for reading this! Please let me know what you think. I'll be sharing these thoughts in today's Finance Committee meeting.

John Wilmerding, MBA

Member, Town of Brattleboro Finance Committee

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If we persist in this course , , ,

some of us may not be able to afford living here.

This, in my opinion is a potential train wreck, and is still avoidable, if those of us who are trying to urge caution, can be heard.

http://www.ibrattleboro.com/sections/oped/rethinking-policefire-faciliti...

 
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Link to Spoon Agave's Letter

Thanks for posting the link to Spoon's letter. As some readers know, I serve with him on the Town Finance Committee.

Even though I value his friendship and our working camaraderie deeply, I often don't agree with Spoon, and in particular don't agree with many of the points or ideas that Spoon voices in his letter. We have disagreed on a number of occasions, and I have also sometimes disagreed with other Finance Committee members ... on a few rare occasions I have even played the 'Twelfth Man' and disagreed with all of the other members.

In a nutshell, the main idea in Spoon's letter is unrealistic, because it proposes changes in the scale and the essential nature of the Police Fire project that, unlike the approved features, have not been vetted through the Town administration and management or through an integrative planning process. Spoon is taking a Town project which was approved by a wide margin and proposing that it be completely changed.

The Police/Fire project has been a major topic of discussion all through the time that he and I have served together on the Finance Committee. The time for up-front proposing the kinds of changes that he does now (in this letter) as part of the planning phase of the project per se is past.

That said, there is one venue that major changes can be proposed to, and that is the Project Oversight Committee. They have already made major changes that are intended to save on project costs, such as deciding to build an entirely new West Brattleboro fire station because it is apparently cheaper to do so than modify the existing one. I'd like to point out that some of their members, partly at my encouragement, joined that Committee with the expressed intention of saving costs.

Naturally, though, the Oversight Committee is a creature of the Selectboard, and any major changes to the scope and nature of the project will require their vetting and approval. This also means that you can bring your concerns and ideas to the Selectboard, however, they will most likely take note of them and redirect you to the Oversight Committee.

 
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This iBrattleboro OpEd Was Written SIX Years Ago

September 18, 2007: iBrattleboro.com: [Selectboard Meeting] “Carl Fowler, citizen...…….he continued with a lengthy discussion of fiscal restraint saying that the Finance Committee is a voice crying in the wilderness.”

Welcome to the club Mr. Fowler. In the past twenty years there have been many fiscally savvy individuals on the Town Finance Committee with viable solutions on how to restrain property taxes. Unfortunately, their time, efforts, and recommendations were totally ignored by the Selectboards and Town Meeting Representatives. As a result, Brattleboro now has the distinction of having highest property tax burden of any town or city in all of Vermont.

Who would have thought that the property tax burden to fund the town and school system would outgrow the ability of the grand list to adequately support it?

Who would have thought that property taxes would result in many homeowners having no remaining equity in their property?

Who would have thought that residents who can afford their property taxes would be paying the interest expense on borrowing for those residents who can not afford their taxes?

Who would have thought that the Legislature would transform home ownership into Vermont’s largest welfare program?

In 1984 the Town Finance Committee knew it. Unfortunately, town meeting reps chose to ignore the committee’s recommendations and property taxes in Brattleboro began doubling every five to seven years. The result has been twenty-three years of defensive budget cliché’s recited ad neausea during town meeting.

Is there a way to save Brattleboro from the property tax flood?

Yes, however, it has to derive internally from within the Municipal Center that will not reduce the current level of services or employment base with the ultimate goal of restoring relevancy to Representative Town Meeting.

The following recommendations to control the property tax flood are not “thinking outside the box”. For those who work in the private sector of the economy creating new jobs, boxes to think “in” or “out” of do not exist.

Recommendation #1:

A member of the Selectboard should be appointed to observe (but not participate in) contract negotiations between the school board and teacher union representatives. Likewise, a school board member should be appointed to observe (but not participate in) the contract negotiations between the town union reps and the Selectboard.

Why?

All property taxpayer funded unions in Brattleboro should be treated equally. For too many years the teacher’s union has blindsided town management with their contract settlements. Likewise, school board negotiators should witness restraint by the Selectboard.

The Selectboard is responsible for the entire town which includes the school system. It will be a very nasty turf fight, but one worth waging to equalize and reduce the overall dollar amount of unionized contract increases.

Recommendation #2:

Now that Brattleboro has a new accounting system with data integrity, the town should switch the fiscal year from twelve months to thirteen - four week accounting periods.

Why?

The number of days in each of the twelve months is unequal. By shifting the accounting system to a four week cycle, regardless of the month end date, will even out the cash inflow and outflow for comparison purposes and will significantly simplify the budgeting process.

This is a technique used by major corporations to bring uniformity to the accounting data for management analysis. It’s a proven system that works and has no impact on payroll liability tax returns that remains calendar sensitive.

Recommendation #3:

All budgets have transfers between their various line items to cover unexpected expenses paid for with unexpected savings. Budget transfers also occur between departments. If done correctly, at every month end each department head should know where they stand with respect to their remaining budget that will hopefully prevent unexpected (i.e. Utility Department) surprises.

For every line item budget transfer that is completed, regardless of the amount, an explanation is attached to the numerical line item (yup, computer software can do this) detailing why the transfer is being made.

During the budget discussions for the following year, all of the transfer explanations can then be sliced and diced within their own database. What emerges is an internal explanation of events and related costs that will be very useful in predicting future actions that may impact projected operating budgets.

Recommendation #4:

The Town of Brattleboro should change its current fiscal year of July 1st to June 30th to a new fiscal property tax year beginning on September 1st and ending August 31st. Representative Town Meeting would be moved from March to the last week of May.

Why?

It’s a timing issue. One of the most vexing problems at town meeting is comparing last years budget to next years proposed budget before the actual expenses for the current year are completed. The total expenses paid that appear are in fact on the budget approved two years previous which, for comparison purposes, has no relationship to the current budget.

Because the school year runs from September to June, Town Meeting in May will allow the town meeting reps to actually see just how close the total school expenses are in relation to the current end of the school year budget. What needs to end in the school system is their “spend it or lose it” budget strategy the school system exploits during the months of May and June.

Changing the fiscal year will also provide selectboard and school board members elected in March two months, instead of two weeks, to learn and meaningfully participate in the budget process.

More importantly, however, shifting the fiscal year to end in August will allow Town Meeting to deal with the Legislature’s nasty habit of enacting unfunded state mandates late in their session after local spending levels have been approved at March town meeting.

It will be a refreshing change at town meeting when reps understand what the financial impact of any new unfunded state mandates on the local tax rate will be before the town and school budgets are voted on.

That is how you shift the balance of power, along with tax savings, from the state back to the residents of Brattleboro. If this strategy works, do not be surprised if the Legislature enacts a new law prohibiting towns from setting their tax rate after the Legislature adjourns that will be a clear indication of their unbridled arrogance and state property tax funding stupidity.

Recommendation #5:

Every four weeks the Town Finance Officer will generate a long and short term liabilities report that is five columns in width. The first column is the total amount of the specific debt with the interest percentage. The second column is a description of why the debt was incurred. The third column is the total remaining principle and interest to be paid off. The fourth column is the total principle and interest on the loan at this same point in time one year ago. The fifth column is the year to date variance in the total loan payoff from the previous year.

The grand total on the bottom of the page reflects the total town debt load to determine if it is increasing or decreasing on a year-to-date basis in dollars and not percentages.

The report will include all town short and long term debt including the percentage of town debt from the new BUHS renovations. Also calculated (computers can do this) will be the cost of debt expressed in dollars and cents on either the current property tax rate or water and sewer rate which ever applies.

Why?

The last town employee to understand the actual cost of borrowing money and the ripple effect it has through the operating side of a budget was former Town Manager Corwin Elwell who rejected the current municipal philosophy of spend now and pay later because its only going to get more expensive if you wait.

It’s imperative that both the town administration and town meeting reps understand the financial impact of the total debt load on the tax rate, whether it is increasing or decreasing, and the percentage of the debt in relation to the grand list.

This is absolutely critical before the taxpayers in Brattleboro are asked to commit to a new twenty-one million dollar sewerage treatment plant.

Recommendation #6:

The town, town school, and BUHS budgets have to be totally redesigned from their current accounting audit trail redundancy into management decision making documents.

Why?

Brattleboro does not have a budget problem. What Brattleboro does have is a budget formatting dilemma that does not afford (pun intended) taxpayers the ability to see the overall picture of how their money is being spent.

To resolve this issue is not rocket science – it’s formatting data extraction for management analysis.

Question: Okay Mr. Smarty Pants, as a willing participant in the nasty corporate world of greed and exploitation, how would you make the town financial reports more relevant?

Answer: Property taxes are paid in dollars not percentages. Stop budgeting in terms of percentage increases and begin thinking in dollars to be spent.

Question: How do you accomplish that?

Answer: The first page of the newly redesigned town budget will consist of one line with three columns of numbers. The first column is the total town budget for the current fiscal year. The second column is the proposed total town budget for next year. The third column is the variance in dollars – not percentages.

The second page of the report follows the format of the first page but with more detail. Each town department, police, fire, administration, etc. total budget will be listed on one line for each department showing the current year total, proposed budget total and variance in dollars. The total variances for all departments will equal the total variance on the first page of the budget report.

For the first time in the history of town meeting, the reps will be able to see the total increase in the town budget in dollar comparison to each of the town departments. If, hypothetically, one department’s budget increase is larger than all the others, the subsequent pages in the report will detail all of the line item variances in that particular budget that specifically accounts for the increase.

This concept is called “drill down” that enables you to see the budget in its entirety and then focus your attention on those line items where the largest variances occur.

Congratulations! Town meeting now has the beginning of a relevant management document that will hopefully put an end to the current shoot from the hip decision making process.

Why is it imperative that these six recommendations be implemented?

Brattleboro has become a town addicted to borrowing which has a major impact not only on property taxes but also bill paying cash flow. Because property taxes are out-of-control, Brattleboro has become not only unaffordable for both homeowners and renters, but also unmanageable.

The local demographics are changing so quickly that within the next five years Brattleboro will be transformed into town of financial extremes in a minimum wage economy where middle class and affordability can no longer be quantitatively defined.

Another appointed committee of concerned citizens will not solve this impending crisis. Brattleboro’s property tax flood can be halted within the existing framework of the towns accounting system. The answers are hiding in little bits and bytes of data that needs to be extracted.

It’s just that simple.

 
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"The major reason for tax

"The major reason for tax increases coming over the next two years is that Representative Town Meeting approved the bonding of the Police & Fire Station improvements, which bonds may reach about $14.1 Million. The full weight of this bonding will be phased into our tax rates over two years' time, because of the Selectboard's decision to apply for the bonds in two stages: $5 Million initially to fund the planning phases of the project, and the rest the following year."

Pretty much sums up an immediate solution to drastic increases over the next few years. This project should be tabled, plain and simple. It's not impossible, read the link provided in the first comment. As for the public safety arguments, having seen facilities that fire and police employees make do with in much larger and busier cities, I find it probable that the argument is more that it would be nicer to have the new facilities than an issue of immediate danger.

I've on occasion made plans for improvements and when going over my budget realized that even if I borrow the money, I simply can't afford the payments. So I made do and forgo improvements I would like to see done.

I think Elkins comments about improving the way budgeting is done so there is more clarity to the bottom line are well written and well thought out.

But it appears from what John has posted here that there is an immediate solution to this impending storm, table the project and spend the time redoing the budget and rebooking at how this town is run. And find a way to get property taxes under control. It is insanity to operate with the assumption that those who own and can't afford the high taxes can get relief and the others shoulder the burden. While many are feeling a crunch, this town is unusual, most don't see a doubling of taxes every 5-6 years. This is not sustainable and it is an indication of a "beer" town trying to live on a "champagne" budget.

The last thing this town needs is another study. It's quite simple really, quit spending money. And then tighten up the budget.

I often wonder what happened to Yankee frugality and ingenuity. Must all be up north, sure haven't seen any sign of it in the way this town is run.

 
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Ideas that Deserve Discussion and Consideration

Pretty good discussion, and one that I don't recall reading before. Thanks very much for posting it!

You comment that Corky Elwell was sagacious enough to link borrowing with its depressive effects on the operating budget. Well they both go into the tax rate, so in a way that's a no-brainer. But it's true that the lay person in the Town may not connect them properly.

We on the Finance Committee tried to 'put a lid' on borrowing by proposing a Town policy of limiting the total borrowing to where payments would not exceed a bit over 8 percent of the total Town budget. The Selectboard graciously accepted our suggestion, changed the word 'policy' to 'guideline', and in approving the Police-Fire project as planned (or rather submitting it to the Representative Town Meeting for approval at the $14.1 Million figure), promptly raised the percentage to over 12%.

So yesterday I suggested to the Finance Committee that we could note in our report that borrowing costs and bond payments will exceed 12% of the operating budget once the Selectboard approves the second phase of borrowing for this project, which it will probably do before June of this year. We could then bow to the Selectboard's and Representative Town Meeting's binding decisions already made, and suggest that the actual and/or projected costs of Town borrowing not exceed 12.5% of the operating budget at any given time, and that this limit be gradually reduced to a lower level given the continuance of conservative or pessimistic projections or calculations of what the Town (read: taxpayers) can afford.

What do you think? If you want a practical way to commit the Town to borrowing less, this would be one way to do it. However, since it would require a binding policy, it's Representative Town Meeting that would have to try to 'make it so'.

 
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Wanting More

Not having a background in economics or municipal finance, I caught only a vague sense of the meaning of these recommendations and their potential impact. As a town meeting rep. I would like to know more. Would it be possible for you to flesh these out in a series of in-person sessions? Perhaps in collaboration with the finance committee?

 
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In Collaboration with the Finance Committee?

Town of Brattleboro (Representative Town Meeting) Finance Committee meetings are publicly warned and open to the public, and are usually convened on Friday afternoons at 4:30. Since during this season we are building our activities toward Representative Town Meeting in March, our meetings will be occurring most Fridays through that time, and probably about twice a month otherwise.

Please come to one or more Finance Committee meetings and participate in our discussions. Kindly consider joining our number. I personally would appreciate your support of our work. And if you want to meet with me individually to hear me flesh out my ideas more (and hear yours), I'd be very happy to do that with you.

If what you're suggesting is that we invite Town Meeting Representatives to our Committee meetings, please consider yourself invited. No one person is our official representative or speaker, though the Chair has been delegated some responsibilities for interfacing with the news media upon occasion.

 
 #

A budget that is not affordable, is much worse than unrealistic

It is possible, to kill a town economically. These bonds necessitate millions of dollars in interest payments. Spoon points out some ways the pain can be lessened.

I will share that we have been repeatedly reduced to paying our property taxed with a credit card. There is a strong possibility that people in the lower middle class, will be forced out of town. Sure, we can raise the rent on the unit in the duplex we live in, but only so far before it becomes unmarketable. It certainly would become un-affordable.

"Staying the course" will push some of us over the edge financially. I am not sure you are hearing that. Or maybe you understand that, but feel that is acceptable, or at the least, inevitable? In case you are unaware, I am taking this time to lay out that for some members of this community, this could be a disaster.

Making the safety upgrades to the stairs in the police station is essential. You can argue that going far beyond the minimum necessary upgrades to the police station is important, but where is the money to pay for all this new debt?

Without an answer to that question, I don't think there is a good, solid defense of continuing on this course of action.

 
 #

I agree totally with Rolf. I

I agree totally with Rolf. I have to assume that either those making these decisions are not in the same economic boat that most of us are and/or are not very well versed in economics or budgeting for a large organization. It's going to be very odd to have that bright new shiny police and fire station and half the houses in town sitting empty because the property taxes were unsustainable for the average Joe or Judy. Like I said, beer town on a champagne budget, who knew? Wish I had before I invested here. And I already know of more than one person who has opted to not reinvest here but move on because the taxes are so high and apparently as long as everyone keeps digging their heels in like John will just keep going up and up and up.

 
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On Affordability

I will share also that the property I am about to vacate (partly due to divorce but also for economic reasons thereto) has a property tax assessed value of about $180,000, which will go up to about $200,000 this coming April.

Our property tax burden (what we pay) is usually, at this time, around $5000 per year, and that has been the burden during the three years I have co-owned the house with my wife. I certainly took these matters into account and calculated how much more we would be paying on this property value for the Police-Fire project bond as a family (couple, really), and it amounted (my estimate at that time) to an additional $250 per year, or roughly 5% more per annum.

As a Finance Committee and responsible taxpayer, I shared this information with my fellow Committee members in one of our business sessions. My purpose in doing so was supporting our decision-making as a Committee. I don't recall if any of the others have done so. Not that I mind that; I realize that I personally regard my life as a more 'public' thing than most people do, and I am usually not afraid to share personal details and anecdotes that most people would not share publicly because of 'privacy' issues. But if you so wish, you can find the assessed value of any property in Town by visiting the Town Assessor's office and inquiring -- it is public information.

I personally do not regard a 5% increase in property taxes for an occasional new major bond issue as too burdensome to consider. And by income, I am what most people would consider to be poor. I will also share with you that I actually enjoy paying local taxes because of the wonderful things we do for one another as a community by doing so. I do realize that some of us have a hard time of it financially -- I am actually no exception, but fit right into that category historically.

When we pay our taxes they are lumped into our mortgage payment and add between $400-500 to that payment. This statement will soon be past-tense because after the end of this month I will no longer co-own the house with my soon-to-be ex-wife. But I can share, in response to your own sharing, 'Rolf', that we don't put those payments on a credit card. I have often had to put several hundred dollars a month on one for food, though, because of the general strain on our finances during our marriage. I suppose that counts, in a way.

 
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John, Do you remember what

John,
Do you remember what your tax burden was about 8 years ago, or when you purchased the house whenever that was. Elkins says they have doubled over the past 6 or so years which would mean that you would have been paying around $2500. Does that seem accurate? It does to me based on conversations with others.

While I also feel that local taxes benefit us all, I fear that there's been a continual looking at these increases as 5% here, 5% there and it's really added up to what for many will mean having to leave homes or really cutting corners. Or putting food bills on credit cards which is also not financially advisable but sometimes necessary.

Has the finance committee ever discussed the souring effect soaring local tax rates will have on the overall economic picture in town? And I do regard these rates as soaring, these 5% here 5% there increases combined with inflationary costs are really taking a toll. While one can say that taxes benefit us all, it really doesn't benefit anyone, renters or owners, if everyone is having to cut corners and economize to the point of not buying anything beyond basic necessities. Local businesses will and I believe, have, suffered tremendously. Which means fewer jobs. It's a downward spiral as far as I can see.

 

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