Town staff are hoping to nix a tax in the upcoming fiscal year that impacts only town-outside-the-village residents.
The town highway tax is a decades-old toll on Essex Town residents that was used to effectively offset what some village residents pay in town taxes. Once as high as 8 cents on the tax rate, it’s shrunk in the last several years to just over a penny, raising about $165,000 in fiscal year 2019 for a legal entity – the town-outside-the-village – that doesn’t exist. The money was instead traditionally lumped into the town’s highway budget, according to unified finance director Lauren Morrisseau, who called it a “strange tax.”
She said town officials have suggested removing it for years and described the proposed solution as a “way to get rid of it without it causing a lot of problems.”
The proposal is mostly symbolic, a housekeeping item that shuffles money between the town and village budget with negligible tax impacts – less than a $2 swing for the average homeowner. But it will require the selectboard to greenlight several waivers to the current public works agreement with the village.
Morrisseau said revenue from the highway tax nears how much the village transfers annually into its rolling stuck fund – used to purchase highway and fire department equipment – so staff propose moving the transfer into the village street department budget. That would, in effect, spread the payment across all taxpayers because the town pays for the village street department budget, per consolidation agreements.
The swap would raise the village highway budget by about 15 percent in FY20, well beyond the 6 percent cap prescribed by the public works agreement with the town. And using that money for the village’s rolling stock fund would violate the agreement’s stipulation that all village capital project paving or equipment replacement remain a separate village expense.
“It’s pretty innocuous,” Morrisseau said of the changes, describing the overall impact as a wash. The selectboard received a memo outlining the changes at Monday night’s meeting. Members will have a chance to submit questions before tackling the issue during the upcoming budget process later this month.
The tax itself earned airtime earlier this year when the selectboard set its FY19 tax rate. Selectman Andy Watts dissented from the vote in part because he felt the town should cut the highway tax then and there. The board eventually decided to hold off until this budget cycle.