The committee that oversees funding for the village’s costliest infrastructure projects says it needs to drum up more money to keep pace with anticipated spending within the next five fiscal years.
The capital program review committee is charged with maintaining a five-year capital reserve plan that charts future spending on projects such as water lines, sidewalks and so on. Village policy defines capital projects as any costing $10,000 or more.
To pay for such projects, the village maintains a capital reserve that relies heavily on state and federal grants in addition to a transfer of local taxes. That transfer increases by 7.5 percent annually, amounting in the last fiscal year to about $317,000, and will rise to more than $450,000 by FY24.
But the village’s expected capital spending over that same period will outpace projected local revenues, according to trustee Andrew Brown, chairman of the committee, who asked to double the annual percentage increase and suggested the committee consider additional funding options moving forward.
“You don’t want to intentionally budget to go into the negative,” Brown said. “It’s bad budget management. It’s bad money management.”
The committee agreed to up the annual increase to 15 percent for FY20 and plans to review it annually. The request will come before the trustees in the next several months during the budget process.
Brown explained the current transfer barely keeps pace with a 5 percent increase seen in construction costs each year. He understands residents never want additional taxes, but village officials who oversee capital projects say it’s important to finish these projects on a certain timeline, especially ones that require fixing existing infrastructure.
“If they don’t, we risk there being issues down the road,” Brown said.
Capital spending fluctuates year-to-year based on need and availability of grant funding. For example, the village has spent more than $6 million on capital projects in the last two fiscal years, nearly all of which came from outside sources; in FY18, local funds covered only $300,000 of the $4.2 million spent.
Upcoming spending shows a downtick, with a projected cost of $2.93 million over the next five years combined, but all of that spending, as of now, is slated for village-only funds. A draft of the FY20 capital plan includes nearly 20 future projects with that designation.
Brown acknowledged there’s a chance the village could secure some grant funding but said he’s only aware of grants that help municipalities pay for something new. Many of the existing projects, meanwhile, are maintenance-based, he said.
“No one is going to give us a grant to re-do Lamoille Street,” Brown said, referring to a water line replacement project there. And if the village does secure grants for some other planned-for projects, Brown said the committee would likely promote a lesser prioritized job.
While outward looking, the capital plan can only prioritize projects the committee knows about. The capital reserve fund also pays for unanticipated projects, like if a sinkhole suddenly appears on Main Street. That’s why Brown asked the committee to also consider diversifying its funding sources.
Among options discussed at last month’s meeting: a local option tax and a tax increment financing district.
Chittenden County is already at its allotted number of TIF districts, so the chances of the village securing one in the next five years is “slim to none,” Brown said.
A local option tax is more feasible, but it comes with some baggage: Residents shot down a 2009 proposal that would have placed a town-wide 1 percent tax on local sales. Officials said it would have raised about $850,000 annually, but media reports at the time noted IBM officials claimed the tax would have affected the facility’s ability to stay competitive.
Brown stressed the committee is not recommending a revival of the debate – at least not yet.
“It is purely something we’re doing some research [on],” he said, adding Essex Town should be involved in any decision, given the work to consolidate and the potential for a merger down the road.
Staff planned to research possible new taxes that could be applied to the capital budget and report its findings early next month.