On May 24, 2017

Obligations may eat up Rutland’s $1 million budget surplus

By Alan J. Keays, VTDigger

RUTLAND — The Board of Aldermen is expected to be looking at a $1 million surplus when it sets the tax rate in July. However, it appears all of that surplus may already be accounted for.

The city anticipates a $3 million unassigned fund balance at the end of the fiscal year. The city rolls over $2 million of that — or about 10 percent of the city’s budget — each year as a reserve and to manage cash flow through the year.

“That’s our working capital. We don’t want to be short on funds,” city Treasurer Wendy Wilton told the Finance Committee at a meeting Thursday night, May 18.

That leaves about $1 million in estimated surplus for the board to consider when setting the tax rate in July, the treasurer said. That money includes about $475,000 that had been budgeted for a legal fight the city never  used.

The Board of Aldermen, in adopting the city budget earlier this year, committed to setting aside about $200,000 for two additional police officers and roughly $200,000 to fund two firefighter positions.

That leaves $600,000 — $50,000 shy of the $650,000 the board included in the city budget as part of its annual plan to pay down cost overruns with a now-closed city pension fund. If the board uses the $600,000 to reduce the tax rate, it would nearly offset that $650,000 pension payment, Wilton said.

Sharon Davis, president of the Board of Aldermen, said not all of the roughly $400,000 for the police and fire departments may be needed, depending where the police and fire chiefs are in the hiring process.

Wilton cautioned at the meeting that if the board does decide to commit all the expected $1 million surplus for the next fiscal year, it will start the following fiscal year with no cushion to help offset the roughly $650,000 annual payment to pay down the pension fund cost overrun.

She added that with health care insurance rates and other costs rising, finding savings when the budget process starts for that following fiscal year will be difficult.

“It depends on how David builds his budget as well,” Davis replied, referring to Mayor David Allaire, who ousted former Mayor Christopher Louras after the Town Meeting vote in March. “There’s a new sheriff in town.”

The Board of Aldermen, at a meeting Monday night, May 15, agreed to explore the possibility of establishing a 1 percent local option sales tax as a funding mechanism to help offset those annual payments for pension liabilities. Members voted 6-5 to send the proposal to the board’s Finance Committee for review.

Ultimately, that proposal would need a change to the city charter, requiring voter approval in March and the endorsement of the Legislature.

Also at the Finance Committee meeting Thursday, the panel heard from Randall Northrop, of the firm Corrette and Associates of St. Johnsbury, who performed the annual audit of the city’s financial books for the year ending in June 2016.

The city received an unqualified, or “clean audit,” opinion for the fifth year in a row. The auditor found no “material weakness.”

The city achieved the first unqualified opinion with the fiscal year 2011 report after more than 30 years of adverse audit opinions.

Photo by Andrew Kutches, VTDigger
Rutland City Treasurer Wendy L. Wilton in City Hall.

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