Featured, Local News

City surplus helps to offset municipal tax

By Brett Yates

Rutland City underspent its annual budget in Fiscal Year 2021 (FY21) by nearly $1 million. Rutland City’s fiscal calendar ends on June 30, according to City Treasurer Mary Markowski.

The city’s biggest savings came from the Dept. of Public Works, which declined to make use of a $500,000 allocation for paving contracts, and from the police department, which has struggled to recruit qualified officers for several years. Although Mayor David Allaire reduced the number of budgeted officers from 40 to 39 for FY21, police staffing fell short of that target.

Part of the surprising surplus owes to higher-than-expected revenues. Due to Covid, the city projected a significantly reduced yield from its Rooms, Meals, and Entertainment tax in FY21. But the treasurer’s fourth-quarter report reveals that, in the end, it collected $511,866 – only $5,556 less than FY20, and $118,116 more than the city had anticipated.

“This surplus came with a little bit of luck, a little bit of good accounting, and a mayor that said, ‘We need to make some cuts across the board,’” Alderman Devon Neary observed.

On July 19, after approving a pair of transfers to the city’s capital funds for bridges and sidewalks on the treasurer’s recommendation, the Board of Aldermen voted to apply the remainder of the FY21 surplus – $837,607 – to tax relief for FY22, which began on July 1. This infusion, however, will not be enough to bring municipal taxes below their FY21 rate of 1.7676%.

With their first bills due on Aug. 31, property owners in Rutland City will pay a municipal tax rate of 1.7705% in FY22, which means that, for a house worth $150,000, a homeowner will pay an extra $4.34 annually. In March, voters approved a municipal budget of $22,202,612, an increase of $148,604 over FY21.

A number of factors influenced the small rise in municipal taxes.

Before the Board of Aldermen set the rate last year, Mayor Allaire came to an agreement with department heads to cut $832,432 in spending that voters had approved just prior to the start of the pandemic, which reduced the amount needed to be raised by taxes. In FY22, the taxpayers’ bill will reflect the full amount approved for the city’s operational budget in March.

In addition to an increase of $67,000 in annual debt service reported by Markowski, another factor noted by the treasurer was a $5 million decline in the Grand List, the aggregate valuation of taxable property in the city ($1,032,184,146 as of 2020): when the total goes down, the tax rate must go up to cover the difference. By Markowski’s account, the Grand List suffered largely from a reduction of personal property in the city – that is, the movable assets of businesses.

“My hope is that as we break from Covid and get over this, the taxable property in these businesses begins to go up,” Alderman Tom DePoy said, “because that just means people are beginning to bring — whether it be manufacturing equipment or coffeemakers at a coffee shop — it’s all stuff that they’re bringing in to make money for themselves and make livings, and it’s all stuff that, in this world that we live in, is revenue for the city as well, and hopefully those numbers do go up and increase the Grand List.”

In an effort to reduce the tax rate in the meantime, DePoy offered a motion to lower the balance of the city’s unassigned fund, the cash reserve that it maintains in case of unexpected expenses, usually equivalent to 10% of the municipal budget. DePoy argued that a 9% safety net would be sufficient, but the mayor and all but one (Sam Gorruso) of DePoy’s fellow aldermen disagreed, citing the uncertainties posed by the lingering pandemic.

For several of the aldermen, their frustration at the modest rise in the municipal tax rate paled in comparison to their ire at the far more significant increase in the education tax rate, which they had no power to alter. In Rutland City, the homestead tax, which pays into the state’s education fund, will go up 8% in FY22.

The total residential tax rate in Rutland City — the sum of the homestead education rate and the municipal rate — will be 3.4107% in FY22. In FY21, it was 3.2823%.

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