BRATTLEBORO—The Selectboard will present a budget of $18.4 million, a 2.1-percent increase, to Town Meeting members at Annual Representative Town Meeting on Saturday, March 21.
This budget, for fiscal year 2021, represents a property-tax increase of $37.70 for each $100,000 of assessed property value in property taxes.
While the budget’s line items are as meaty as ever, the multi-month process that went into creating the budget was lower in intensity than the process in previous years.
According to Town Manager Peter Elwell, this sense of stability comes from the town’s long-term planning, which has helped the town change some of the ways it does business — for example, saving for future expenses and paying for large equipment with cash rather than incurring debt.
According to a memo from Elwell posted to the town’s website, the budget was prepared within a broader planning process. This includes the Comprehensive Review of Town Operations — updated every spring — and the Long-Term Financial Plan (LTFP) — updated in the summer. The budget-building process begins for town staff in the fall.
This year, the proposed budget has property tax increases that were lower than predicted in the LTFP due to additional non-property-tax revenue and insurance savings.
According to Elwell, “both the total revenues and the expenditures are higher than what were predicted in the LTFP, but we were able to identify some increase in some sources in revenue other than taxes.”
These other sources means less of an increase in property taxes than predicted as well.
“So the Long-Term Financial Plan predicted a 3.5 percent increase in property taxes or 4.4-cent increase,” he said. “And what we were actually able to do was reduce that to 2.1 percent and to a 3.77-cent increase.”
Elwell credits the town’s investment in its planning that resulted in Brattleboro’s Long-Term Financial Plan, Comprehensive Review of Town Operations, and 25-year equipment replacement plan.
“It’s very satisfying to see the impact of broader best practices we’ve been trying to bring to our financial operations and how that is positively impacting the budget,” Elwell said.
Two examples: workers’ compensation insurance and capital planning.
“We still have major challenges ahead of us in terms of aging infrastructure,” Elwell said, noting that this will be the first year that the town’s efforts to switch to purchasing equipment with cash will be realized.
“It’s taken investment of additional tax dollars to get here, and it’s taken the self-discipline not to borrow for the replacement of vehicles in order to get off that debt cycle,” he said.
“But we’ve accomplished both of those things and we have a long-term plan in place, and now keeping our rolling stock and our major equipment in good operating condition going forward is going to be a much more manageable task with very little impact on future tax increases,” Elwell added.
A deep review of wages and benefits
The line for employee salaries saw the most increases, Elwell said, noting that all four of the town’s latest union contracts, renegotiated last year, will go into effect.
Town staff and the Selectboard also completed an extensive compensation review of all non-union employees. As a result, almost every town department saw some increase in its salary line.
The salary and benefits review considered a variety of factors: How much responsibility does a position require? How significant would a mistake be for the community if an employee makes a mistake? How many people does an employee supervise?
“So, in every case, there was some adjustment that reflected not only an increase in the cost of living but also structural, in our pay systems, to be more equitable internally but also in comparison to other governments and other employers more broadly,” Elwell said.
Overall, in the proposed budget, salaries are proposed to increase 5.9 percent compared to the current fiscal year, and employee benefits will also increase at a faster rate than the overall 2.1 percent budget increase.
But, Elwell added, there’s a really good story behind the numbers as they relate to workers’ comp insurance.
Making improvements to insurance premiums
The town has received good news about increases in its health insurance premiums for employee benefits. According to Elwell, municipalities are experiencing double-digit increases in such expenses.
For Brattleboro in FY21, the increase in health insurance costs will be lower than the national average at 2.7 percent.
Another bit of good news is that the town’s workers’ compensation and property liability insurance will remain unchanged compared to FY20.
According to Elwell, the town’s workers compensation insurance rate had historically been high “and increasing rapidly.”
The insurance rate and costs reflect injuries on the job — and as a result, staff safety was identified as an area in need of improvement when Elwell reviewed town departments and issues soon after taking the post of Town Manager approximately five years ago.
“We needed to work on employee safety...but also, for the cost to the taxpayers, we needed to reduce the cost of the premiums and the claims that we pay,” Elwell said.
The town instituted some systematic changes and best practices to help keep workers safer, and it also changed some of its policies around when employees can return to work, even for light duty.
“We try to make sure that the time out is as brief as possible, because there’s a lot of data that shows that [returning to work quickly] is not only less expensive for the employer, but is much better for the long-term health of the employee,” he said.
This is the first year the town has realized a financial benefit from what has been a multi-year effort.
Elwell explained that the changes the town has implemented have lowered its level of risk in the eyes of the insurance industry.
In fact, this past year, the town was considered 6 percent better than similar municipalities when its rates were determined. In the past, the town’s risk level had been 20 percent worse than the average risk level, he said.
“We think our workers comp procedures are in place and that we have an effective program for getting people back to work promptly,” Elwell said. “But we’re trying to have fewer claims by having a safer work environment overall.”
A debt reduction
This year’s budget also reflects savings due to a reduction of debt to the tune of approximately $185,000 as the town implements its 25-year equipment replacement plan. The town has been setting aside cash to build a reserve that it can use to fund purchase of large equipment or vehicles needing replacement.
This shift from borrowing money, to mapping out future equipment purchases, to proactively setting aside funds, has taken the municipality a few years.
Elwell acknowledged that arguing for setting aside money that might have gone to lowering taxes is tough. But, he said, the practice will save the town money in the long run because it will reduce its debt load.
“Which in some years [means] setting aside some extra funds so that we’re earning interest on that money so we will be able to take our own money plus that interest and buy equipment, rather than buying equipment and having to pay back that principal and pay someone else interest,” he said.
This year, the town is proposing to buy a fire truck to replace a 1994 engine.
Elwell said this means the municipality will not add to its equipment reserve this year. Instead, if authorized by Representative Town Meeting, the town will spend “real time cash” and use a portion of the fund balance.
This vehicle will be the last the department plans to buy for several years. The town has upgraded its fleet over the past few years, replacing a number of elderly vehicles.
Other increases of note that the Selectboard approved during the budget-building process included a bump of just under $5,000 requested by the Representative Town Meeting’s Human Services Review Committee.
The Downtown Brattleboro Alliance also requested an increase for the Community Marketing Initiative.
The Police Department requested $16,000 to help fund Project CARE to help compensate peer-recovery coaches and reimburse them for transporting people involved in the initiative to address the complexities of the opioid epidemic.
For two years in a row, RTM members have increased the recommended budget with an emphasis on spending that supported sustainability efforts and human services. In prior years, RTM members have voted to lower budgets that they declined to adopt as presented.
Last year, Town Meeting members authorized the implementation of the 1-percent local-option sales tax. According to Elwell’s budget message, in FY20, proceeds reduced the amount needed to be raised through property taxes from 86 percent to 82 percent of total revenues.
For the proposed FY21 budget, the amount needed to be raised by property taxes after factoring in the projected local-option tax revenues will be 82.6 percent of total revenues.
The Selectboard will review the town’s other fee-based enterprise budgets — the utility fund and parking fund — as well as the solid waste budget in the spring.
Looking ahead, the board might also consider creating a stormwater utility fund. According to Elwell, the state has introduced more regulations around stormwater runoff, infrastructure, and road maintenance.
Elwell noted in his budget address that other municipalities have created stormwater utilities that collect fees based on the area of a property owner’s land that is covered with impervious surfaces, compromising municipal water quality and contributing significantly to damage from flooding.
If the town were to create a similar fund with similar parameters, then the state would be the largest ratepayer because of the “large amount of impervious surfaces on I-91 and other state-maintained sections of highway,” Elwell said.
In most cases, the state does not pay property taxes on the buildings it owns in Brattleboro.