 Good evening and welcome to Montpellier Civic Forum as we're on the road to town meeting 2020. And this has been an interesting year because it's been an unusual one. We have contested races in one district. District three where we have one candidate running for the term of Ashley Hill who resigned and we have three candidates running for Glen Seat who decided he wasn't going to run again. And in district two and district one the incumbents are running unchallenged and that's Connor Casey and Donna Bate and we have them together on a show which was so long that we broke it into two parts but it's a great show. If you want to see a trend Anne Watson is running for mayor again on a post so we have a lot of incumbents running and Anne's show was really good. Another one of those hour long shows where Anne will walk us around the town in different projects as she presents the state of the city. On the other side of the fence we have Jim Murphy the school board president who's running again and we have three other people who are running unopposed for school board. They're all great shows. We have Libby coming in on the school budget and tonight we have Bill Fraser an ill Bill Fraser yes sitting next to me who's going to talk about the city budget. And it's an interesting budget because it was thrown a real curve ball that he'll explain that that caused your tax rate to go up. Bill what are the assumptions behind the budget. Every year we start first thanks for having me and I appreciate the opportunity to talk to the residents of Montpelier about the budget what they'll be voting on and how their money gets spent. Every year we start with a few guiding principles we have a strategic plan that the council adopts in the spring and we need to make sure that our budget adheres to that. We need to make sure it is financially responsible. We have targets for capital spending and equipment spending. We need to make sure that it meets those. And lastly we want to make sure that what people pay for other services and it's easy to forget sometimes all the policy things but we really need to make sure that police fire public works all the basic services rec everything we provide is covered. So those are our those are that's what we push for. One question what's difference in equipment and capital. So capital spending I'm sorry that's I guess we're using some inside baseball terms capital spending would be our project. So that might be repaving a road building a fixing a bridge a long term improvement repair that would last a long time equipment is you know a new dump truck or a load or you know a piece of equipment or perhaps maybe equipment within a building some kind of air conditioning unit or that kind of thing. So we really look at them together but they've they fall in different categories. There's another couple of categories sewer and water. Yes. How are those changing in this budget there. Well they're changing only that we are continuing. We have long term plans for capital projects in water and sewer and those are continuing to be adjusted for. There's no real changes in terms of personnel and those kind of things. The rates will be adjusting. We haven't we don't do the water and sewer rates till later in the spring and but we do anticipate there's a slight increase to cover that. Those capital projects as you're aware we have a lot of old water and sewer lines in the city and we've we are trying to get at them and replace them obviously the most critical first. It's interesting though. It takes a lot of planning to do these projects because if we know we're going to pave a road or have to rebuild the sidewalk but we also know that the utilities underground need to be done. We have to really time those together in the various budgets. So sometimes people will say to us you haven't fixed such and such street. It's in terrible condition and they're right and maybe we'll patch it or try to do something to make it possible. But the reason we haven't necessarily rebuilt it or resurfaced it is because we know that it's got a major water and or sewer line improvement underneath that costs far more than the actual roadwork. So we don't want to do a roadwork that have to dig it up to do the underground and come back and do the roadwork all over again. So it's a very carefully planned strategy years to plan out. We plan with water and sewers it's as much as 50 with the roads and those kind of things is 10 a good a properly paved road should have about a 20 year life cycle. So we're actually trying to get on a cycle where we basically do every mile of road every 22 years so that basically everything's being redone so there will always be some roads in good shape and some not because now we budgeted for that and set aside extra money a few years. How many years ago was that? We've been doing a steady increase over a number of years probably about seven years ago and this past well in the budget that we are just completed we put the final installation in that needed to hit the target that had been set and that was done. And so now we will obviously reevaluate that as you know the inflationary costs and everything else but we use that in concert with our capital plan has the annual funds for budgeting for excuse me for projects as well as any debt payments for bonded projects. So it includes you know projects from years ago that were paying off and as those debt payments decline we have more to use on an annual basis or if we do a new bond project then that would fill in those gaps as well. So it's all managed together. Now I know the answer to this but I know that there's people who are watching this. We're there to be a parking garage how would that affect our bonding. It would well so it would affect our total bonding because anything we bond goes into our total calculus however the payment for the bonds for the garage are going to be paid by what's called the TIF district tax increment finance district. So we pay for taking all the new taxes from the new hotel and allocating them to pay for the garage as well as the user fees themselves before the parking. The people that park there is you know permits and regulations. So the combination of those two things will pay the debt service for the garage so it won't be added to general taxation. I'm getting ahead of myself but we'll stay in capital. So we're there to be a new rec center. Would that be an expiring bond. Yes that would be intent. I mean yes that that would be the general plan. It would be about three hundred thousand dollars a year which would which would create how much in terms of the constructed rec center. There would take okay let's let's let's take this one from the beginning to the end. The city has been looking at the rec center on 55 Berry Street and also considering various alternatives. You may recall we had some discussions about new brand new facility with new pools and all those kinds of things. We had a consultant look at the feasibility of that and did determine the cost to be about 14 million dollars for a modern center. There was no clear location preferred location so that didn't include land out 14 million would be the construction of it wouldn't be the operation. And then they did look at the staffing and operational needs and also looked at the capacity in the community for private partners donors and was there enough population to provide the revenues needed. And the conclusion was probably not and at the same time it was going to be about five million dollars to renovate 55 Berry Street in its place and bring it to that fully usable space. People probably aren't aware that the basement is basically unusable because as asbestos lead it was a shooting range. It was a shooting range. And so for building that large almost half of its or probably a third of its usable space is not usable and it's not handicapped accessible. So we can't run full public programs there. So anyway council is focusing on that option. They decided to wait till November to present it to the voters so that people would have time to study the options and have a public conversation and also to get there are a few questions they want to narrow down. So I think it's likely we'll see a bond vote in November that bond be covering expiring bonds or would that be indebtedness on top of correct. Well that in theory would go within the cap that we have for the capital plan so we wouldn't have to raise taxes to pay for. And I say that not to make it sound like we're playing a shell game. But we do play a shell game kind of. But it would mean that it would mean that that's money that isn't going to other projects. So it's still you know you're still paying for it in your taxes. You're either paying for it because we raise the tax rate to pay for it or we're not able to pave as many roads let's say because we've opted for this. So it's still it's still a resource choice that we're making. But there's a possibility that it will stay revenue neutral so that we don't have additional taxes or the taxes are minimal. Well yes I think that's the council's goal. I mean again we're we're talking about a November item and we haven't even got the past March yet. So we'll we'll see what the council and you mentioned there'll be a couple new members. We'll see what this group decides as the year goes forward. And in terms of capital expenditure how many let's do roads. How many roads are we able to repair roughly. How many miles of road just in terms of patching not not the deep underground. So there are there are multiple so we have about 44 miles of road. And so as I mentioned we try to our goals to try to do two miles a year so that every 22 years we've cycled through everybody. Having said that there are many different ways that roads are dealt with. There's just a simple resurfacing. There's one where you kind of you go down and you dig a little deeper and rebuild and then there's a complete rebuild where you have to go all the way down all new drainage all new sub drains. As you can imagine there's there's huge difference in costs. And it's it's some of it's a timing game. It's better actually to do this. If you can do this less expensive one sooner you can save a road and get more useful life out of it. So again sometimes people will say why are you fixing that road? It's a better shape than this other one. Well this other one needs a whole reconstruction. And so we're waiting till we have the million dollars or whatever that's going to take to do that road whereas we can do this one for 100,000 and get 15 more years useful life out of it. So it's trying to be smart with the money. How do we determine sidewalks new sidewalks versus sidewalk repair? It's really based on need and location. If there's been a demand in the past, if we've noticed that there's a lack of sidewalks, typically we will seek to put new sidewalks in where there are none as opposed to where there's already one on one side of the road. We occasionally have places where there are sidewalks and then there's a middle section that doesn't have a sidewalk. So we'll try to connect the dots. It depends on the foot traffic in a particular neighborhood. We also learn however that even in high traffic neighborhoods when we've put sidewalks in because it becomes safer people start using them more. And we want people to have all the options for getting around. What are we getting this year in terms of equipment? Gosh, I don't remember. It's you know, we have a cycle of equipment. I think there's some dump trucks. There's maybe a sidewalk plow. Nothing, nothing major. Crews or no, there's nothing new and fancy next year. It brings something major. The helicopter, police helicopter. Is there a gun now? I think there's a fire truck. Yes, within the next two years, we're going to need to replace our ladder truck. It's it's 20 plus years old. It's it's still hanging on for the people on our wear. Those types of vehicles have to be certified for to use the ladder and the tower. And we keep passing our certification, but we're concerned that we won't be able to. And of course, if not, then we will be at a disadvantage in public safety. So we will be that this last one was was passed with a 20 year bond was financed with a 20 year bond. And the anticipation is that this one would as well. This would come out of the. What's the guesstimate on how much that would be? Million dollars, maybe slightly under. When we do the traffic calming on Main Street. If and I think the council wanted to do time lights and the like. Is that coming out of equipment because there are lights or is that coming out of capital? That would probably come out of capital will be considered a capital project for the downtown. Again, we look at the total funding. So it's not that big a deal. It's just for us to keep track of it. Haven't thought that far ahead. But yes, that would be a capital project, particularly since it may involve or likely to involve a roundabout at School Street. And that certainly is a capital project. And sometimes it depends, you know, what grants are available to assist. I was going to say those are those are state highways. So there might be state. There may be. Yes, there may be. Although typically with the class two state highways, within certain districts of towns, you know, the state will do all the major work. Like if you have to rebuild the road, they'll do that repave like with the downtown paving project. That was all state done. But management of those roads falls to the local government. Now the downtown mass, the downtown master plan. Is that what it's called downtown master plan that people have been watching that process. That's not going to happen soon, right? Don't think so. We just saw a presentation, preliminary presentation by the group at the last city council meeting. And I think it was well received. People liked some of the concepts. They'll be back on March 11 to present to the council with the idea that they'll- To present the new council. Yes. Although there'll really only be one new member. Right. Because the anyway. And the idea is being that they would seek an actual official approval. The boards and the information is now up in the hallways and city halls so people can come in and look at them. And it's on the city hall website. It's on the city hall website. And so people on voting day will be able to come in and take a look. I'd urge people to look at this. There's a lot of interesting ideas and a vision for our downtown. Both to be more environmentally friendly, to be walkable pedestrian, but still serve our businesses and deal with our traffic in an efficient way. I'd say that it was made clear by the consultants that this is definitely contingent on the hotel and parking garage project going through because some of the choices they make really aren't feasible without that additional parking structure. And I should add at this point that that session that Bill was just speaking of is sitting on Orca. On the Orca online now in Yahoo. So I just wanted to point that out that all of the city hall sessions of city council are online now. And that plan was developed through a fairly extensive series of meetings with community members and stakeholders, business people, residents, different groups. With a lot of feedback, there was a survey component of which we got responses and the consultants took those into council and provided all those responses. And like I said, they came into the council meeting last week, I think to just say, here's our draft and they got some feedback from the city council and we expect to see the final version in March. Now, when we head into the personnel and the operating budget of the city. Can I just finish one last point on that because it actually goes back to the initial question you asked, you said, will it be done anytime soon? What will happen with a plan like this is that we will adopt it and that will become the blueprint for our downtown. The most important piece of that has to do with the reconstruction of the Rialto Bridge on State Street. That's what actually started this project. We know we have to do that and we know that's gonna be happening in some number of years. So the idea was that that will be a major- Disruptor? Disruptor, yeah, in the downtown. So our thought was, if we're going to make changes to streetscape, lighting, sidewalks, anything designed in that area, we should do that while the bridge is closed so that we don't disrupt twice. So that when it's done, it's put back together, it's all a brand new way. And so that was what started this project and then we felt, well, if we're gonna be doing this, let's take a look at the whole downtown. So the idea is, as we make incremental improvements or as grant funds become available or as we take on new projects, we would have a guide as to how those projects would be done and the pacing and timing of the actual work is really dependent on priorities and budgets so there is a possibility that a traffic light at Berry Street will appear with that. That could be maybe one of the first things that gets done. Although I think we would want to do, I think it was important that it be done with the timed lights throughout, but then perhaps the roundabout could come a little bit later and there were some talks about redesigning some of the sidewalks, scapes and stuff. And those, like I said, we can lay those out over time and say, here's how fast we wanna go or we can say, no, we wanna bundle this all up and do it really quickly, but there's a lot of factors. There's disruption to the downtown, there's where's the money coming from, there's what's more important than, and then something that we don't know yet is gonna happen, right? There's gonna be something that distracts us from this and says this needs immediate attention and the new streetscape downtown will have to wait. And we took 20 minutes before we got to the actual operating budget. That's okay. I think in some regards, these are things people are really interested in. Well, they should be interested in capital spending. It's the hidden side of the budget. Budgets have two sides. Money in, money out. Let's talk about money in. How is our grand list holding? Our grand list is doing okay. I mean, it's holding fine. We haven't seen a lot of growth of some new properties. You know, obviously we have the Caledonia spirits property is new and the new housing on. Is that in a TIF, Caledonia? No. Is that in a future TIF? No. Okay. And so we're seeing some development, it's steady. We are seeing a rise in property values, but that doesn't, we don't reassess those. So in fact, the sale of homes is really outpacing what we're having them assess that and this common level of appraisal, which you're familiar with the school, is starting to. It's down to about 85%, 86%. And it's supposed to be, what, at 90? It's supposed to be at 100. That's the optimal. When you do, it should be as close to 100 as possible. When you get to 85, you get forced to reappraisal. If I'm saying this incorrectly, please stop me. That level that things are appraised at is supposed to be the realistic level that your house is worth when it's sold. Correct. So that districts are not able to job the state school tax. Correct. And shared state school tax. Correct. And so when we talk about our appraisal level being at 85%, it's basically saying that on average, properties in Montpelier are listed in our grand list at 85% of what they're really worth. So I mean, obviously some are more, some are less, but as a statistical computation, we're at 85%. And that means we're right at the limit where we're gonna be ordered to do reappraisal. We could be looking at that in the next two or three years, which is also something that gets people excited. Yeah, absolutely. We've talked about this in about three different shows, including Libby's show. Pilot. What is pilot? Did pilot increase this year? So pilot is payment lieu of taxes, that is monies to the state. Pays the city because the state is a tax exempt entity. And we in Vermont, and in Montpelier, in particular, have a pretty robust pilot system. I have to say, while we would love the state to pay, 100% of its taxes, no questions asked. Now these are taxes in theory that they would be paying, that they're not paying because they're government. So the way pilot works now in state government is the state appropriates $184,000 to the city of Montpelier, basically for being the capital city. It's a statutory payment just to us. And they get fire and they get paid. And just the recognition that things happen here that don't happen in any other town or city, the protests, the demonstrations, the type of activity that goes on. And obviously they do get fire and police. Then any town that has a local options tax, I mean local sales, most of the rooms- What is a local options tax? So there are, essentially cities and towns can choose to assess 1% sales tax, rooms, meals, or alcohol tax. Sometimes can do it automatically. Some have to go through a charter change process, but it's got to the point now where pretty much anybody wants to do it can do it. And we did it how long ago? We did it about two or three years ago for rooms, meals, and alcohol. We don't do local sales yet. So all that money is collected by the state because that who collects those state taxes anyway. They remit 70% of what is collected in our community back to us. They keep 5% for the administration of the program. And the remaining 25% goes into the state pilot fund. So any town in the city, in the state that has this local option tax, that 25% of that goes to the pilot fund and then redistributed back to the communities that have state properties in them on a pro-rata basis of the insured value of those properties. So we get, between everything, we get about $900,000 a year in state payment lieu of taxes for our general fund. Now on the school side, of course- And what is our general, that's roughly what percent of our total general fund, roughly? Just under 10, 9% maybe. What about not-for-profits? Not-for-profits don't participate in this, the housing- And they also don't pay taxes. The housing authority gives us a voluntary payment lieu of taxes. And I will say about not-for-profits, they are in theory, and we could argue on any specific one perhaps, but generally they are providing services for people in the community that neither the city nor state government have been able to do or do, and they often get government funding. And so the thinking is that because they're doing this community good, they're not in it to make money. And collectively they're employers. And collectively they're employers that they are, that that is the rationale for the tax exemption. That's the policy now, we can argue with, that's a good policy about it. That is, so the state has exempted nonprofits from property taxation, not just in Montpellier, but everywhere. So revenues in increased this year from last year? Yeah, so we get, our revenues come from, mostly from property tax, about two-thirds of our revenues come from property tax. We also, obviously things like payment lieu taxes, our local options tax, fees for services, some grant revenues, various investment, you know, we're not making huge on our investments these days, but you know, those types of things. So there's a whole list of other revenues and people can look in the budget for detail about that. And those have grown a little bit, so that plus the grant list, plus of course the increase in the property taxation is what balances the budget. Now, before you started this budget, first of all, people have to understand that budgets are incremental, which basically means you're gonna, the police department we've had last year is largely gonna be the police department we have this year, fire, all of these things. We're talking, when we talk about budget, we're talking on the margin. We're talking about a lot of small changes when the core budget will remain the same. And in terms of that core budget, before you actually even started this, you got thrown the healthcare curve ball. Would you talk about that? Yeah, we sure did. I mean, healthcare is a huge expense and obviously a national issue. And for the last couple of years, we'd had really good success. We have a plan that our employees have helped design and participated in a high deductible plan. And so last year, for instance, we had really no change in our health insurance costs in the budget, but this year, we got a 25% increase that was almost $300,000 or was $300,000. When did you become aware that this might be a possibility? Novemberish, and that's right when we're doing the budget. That's when we get our rates for the subsequent year. And so that pretty much aid up what would normally be what you might think of as the, the rollover cost of the core budget that you described, whether it's pay or other leases or costs. Or also the flexibility to experiment with new projects on the side. Exactly. And so we went into this budget knowing that, the council knew it. And so I think their expectations were, let's do what we do. We'll take a look at some new things around the edges, but really, this is not the year to come in for new expanded programming or new asks. On the other hand, I think the council was clear they didn't want us cutting back on the services that our people depend upon. Now the increase is approximately what percent and how does that translate for our house? So the tax increase is about 4.7% or 5. What was it last year, if you can remember? It was last. It was three something. And what percent of that, we're back on the margin again, what percent of that difference on the margin would be healthcare? About half of that, 4.7%. Yeah, about 2.5% of that. So the rest of the budget was in the couple percent range. So about 5.3 cents on the tax rate, that's about $100 on a $200,000 value home. Maybe $101, roughly if you think of five cents. Are we stuck with this every year? Is there any chance of hope that next year we'll not carry a sizable on top of this healthcare increase? Medicare for all. Kidding. You know, one of the interesting things with healthcare is it's all about claims and it's all about the size of your pool. Can we join with other towns? So I'm gonna give you a brief history of the world of Medicare, so medical insurance from municipalities. About up until about five or six years ago, the Vermont League of Cities and Towns had a health insurance pool which basically covered all the towns and cities in the state. And they managed that. We all purchased our insurance through the league and so claims were spread out amongst all... An insurance policy. Right, right, through all 200 and some odd towns. And still, obviously if you had higher experience you maybe got a higher bump than somebody else but still there was a temporary effect. The, as the market got tighter a few years ago the league put their insurance out to bid and switched from their long-term providers which had been Blue Cross and went to Cigna. And in response to that, Blue Cross being entrepreneurial reached out to some of the larger communities and those that had the best claims history and basically pitched them lower rates than the league's rate and said come with us we'll ensure your community. And because people have an obligation to get the best deal for their taxpayers. It shrank the pool. Right, not only shrank the pool but it took some of the bigger players out and some of the healthier players out. So then the pool became riskier and so therefore that walk away temptation became greater for other people. So eventually the pool collapsed. There is no more health insurance pool. What has happened in the interim time, in the intervening time, is that the state created the health exchange, the health insurance exchange which you could go in as an employer if you have 100 or less employees. So the vast majority of municipal governments now are in the health exchange. How many do we have? We have 117. So we've got to cut 18. That's one way to look at it. The other way to look at it is what we've asked and our legislative delegation has proposed which is why not allow all municipalities to be in the exchange. It's tax funded health insurance. There are only I think six or seven that are over 100 employees. We're not talking about a huge amount of people. They're a government entity which are political subdivisions of the state and I would think it would be in the exchange's interest to expand its pool. Are they getting any attraction? So I'm not sure where it stands this year but that is what we would like to see happen and then we would simply be in the state exchange like many of our residents and like all of our towns and cities only instead of being in a pool with just towns and cities we'd be in a pool with people from all over the world. And you'd have stability. We'd have I think more stability. Absent that happening you know there aren't many health insurance players in Vermont so shopping your rates. We did look at other providers and they quoted us rates higher than the Blue Cross rates we had. So when you're only covering 117 people in their families all it takes is one or two cancers or something like that which God forbid and we certainly don't begrudge anybody who had to use the health insurance that's there for but it's a huge cost in a small pool and basically our insurer took a loss on us last year and they're seeking to recover that loss.