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Selectboard discuss financing Police-Fire Project, consider new tax

BRATTLEBORO—The Selectboard discussed options for financing upgrades to the town’s police and fire stations at its meeting on Sept. 3.

The lengthy discussion concerned the financial and emotional practicalities of embarking on a large municipal project estimated to cost $14.3 million to complete in a down economy.

The board considered two financing routes for the project. The first path is issuing municipal bonds. The second route includes a combination of municipal bonds and money raised through a new sales tax called a 1-percent option tax.

Town Meeting Representatives approved $12 million for upgrades to Brattleboro’s police and fire facilities in 2001. The slow-moving project made strides over the past year, with engineers and architects presenting potential designs to bring the town’s police and fire stations into the 21st century.

Both emergency facilities face limitations because their buildings are outdated.

Police Chief Eugene Wrinn said in previous meetings that the police station, housed in the Municipal Center, has a narrow stairwell leading to the basement-level holding cells posing a safety risk to officers and suspects. The basement, where evidence is housed, is moldy, he said.

The town’s two fire stations also require upgrades, according to town officials. The bay doors at the Central Station on Elliot Street, built in the 1940s, are too small for today’s fire engines. The new engines also weigh more than the floor was built to hold.

Brattleboro’s Grand List, where the town generates its property tax, totals $3.3 million less than the project’s price tag.

According to Town Manager Barbra Sondag, the state has limited methods for towns to raise additional funds. Brattleboro has enacted two of the state’s three options, a 1-percent surtax on hotel rooms, and 1-percent meals/alcoholic drinks surtax in restaurants. The third option, a 1-percent option tax, is now on the table.

The 1-percent option tax is a sales tax on consumer items. It is not levied on “essential” items such as food, clothing, agricultural equipment, residential fuel, or computers.

According to a spreadsheet from Finance Director John O’Connor, Brattleboro generated $98,340,234 in taxable sales in the previous fiscal year. If Brattleboro had enacted the tax, based on these sales, the net return to the town (after the state took its administrative cut) would have been $663,797.

All three taxes are on top of the state’s 6 percent sales tax.

Bonds alone

According to O’Connor, a $14.1 million, 10-year bond alone, at 3.575 percent interest, would raise the property taxes $34.52 on a house appraised at $100,000 in year one of the bond. The property tax increase would peak in year two at $107.86, then decrease by one or two dollars each year to $95.85 in year 10.

A house assessed at $250,000 would start with a property tax increase of $86.30, peak at $269.64, and end at $239.62.

Funding the police-fire project with a combination of bonding and 1-percent option tax paints a different picture.

Using the two funding tools, the first year of paying for the project would not effect property owners at all. In year one, said O’Connor, the town only pays interest on the bond. The 1-percent sales tax would completely cover the bond’s interest, he said.

Property taxes on a $100,000 house would increase $49.25 in year two, a difference of $58.61 compared to the bond-only financing route. On a house valued at $250,000, the difference would be $146.52.

Board Vice-Chair David Gartenstein said he requested the option tax appear on the agenda. He thought it would “be a good idea” to get the discussion into the public arena.

“I’ve been a supporter of the 1-percent option sales tax for many a year,” said board Chair Dick DeGray, who said he supported the tax to pay for the police-fire project because it would save property owners money.

Without the 1-percent tax, he said, the project would have “significant impact” on property owners.

“I look at us as a tourist town,” he said. “They utilize the services [like police and fire] that this [tax] is going towards.”

Travelers, he said, go where they want and spend what they want. They don’t consider sales tax.

In DeGray’s opinion, the 1-percent surtax would not burden people. He said a person would have to spend $10,000 a year on consumer items to generate $100 in tax. How many people spend that much on “discretionary” items, he asked.

Instead, DeGray said people should consider the “totality of the town” and consider the benefit improved police and fire facilities would have for citizens.

Gartenstein said he understood the option tax posed a risk of spurring decreased retail sales. Still, he felt the project required other sources of revenue, besides putting the costs “on the backs of real estate tax payers.”

Brattleboro is the region’s “commercial hub,” he said. The town spends more on municipal services as a result. Why should homeowners finance the commercial hub’s existence, Gartenstein asked. The option tax would spread costs across more people.

Opposing view

Board member Dora Bouboulis disagreed with enacting another sales tax.

Bouboulis said Brattleboro exists within a regional economy. The town also borders New Hampshire, which does not have a sales tax.

She said the option tax comes with psychological implications. Most people will see only another sales tax. At what point will they stop coming to town and opt for New Hampshire?

After a hard 2011, with the Brooks House fire and Tropical Storm Irene, said Bouboulis, the business community could perceive the new sales tax “as a kick in the mouth.”

Board member Ken Schneck said he did see a possible negative PR situation with the 1-percent tax that other communities would take advantage of.

“I’m not going to leave town for a dollar if I bought a $100 item,” said DeGray. “People going to Keene [N.H.] are going there now.”

DeGray, Bouboulis, and member Chris Chapman then engaged in a heated debate.

Schneck said he wanted a “fuller context” before making a decision. How would a new tax affect business owners, he asked, adding that the town’s spreadsheet only reflected the effect on property owners.

He also expressed frustration with Windham County state Sens. Jeanette White and Peter Galbraith.

Schneck said he remembered asking the senators for help from the state to develop alternative methods for the town to raise revenue.

“But here we are stuck with this either/or,” he said. “The people we asked to help have not.”

Galbraith, reached in a separate phone interview, said, “Unfortunately we operate in a very difficult fiscal environment.”

He said it was “miraculous” that the state balanced its budget last year without raising broad-based taxes or making “severe cuts” in services.

He said Vermont towns did not have many options for raising revenues beyond the rooms, meals/alcohol, and local option taxes. For his part, Galbraith said he has tried to focus Montpelier’s attention on Windham County’s economic situation.

This spring, the Senate Economic Development, Housing, and General Affairs Committee, of which Galbraith is a member, held the second of two hearings in Brattleboro. The committee took testimony from local officials and business owners on what they needed to improve the county’s economic climate. The committee members helped bring “seed money,” said Galbraith, to the county.

Galbraith agreed that one problem facing Brattleboro is its small Grand List. The town needs more business.

“Bringing business to Brattleboro is Brattleboro’s job,” he said. “And Brattleboro is doing a good job at it. Attracting businesses will have to come from Brattleboro, because the state has limited resources.”

Sen. White did not respond to requests for comments by press time.

The 1-percent option tax requires approval by Brattleboro’s Representative Town Meeting members.

The board further discussed the police-fire project at a meeting on Sept. 11 at the Municipal Center.

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Originally published in The Commons issue #169 (Wednesday, September 12, 2012).

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