By Alan J. Keays, VTDigger
RUTLAND — The Board of Aldermen made a move that turned a small tax increase into a slight decrease.
The board voted unanimously Tuesday night, July 18, to reduce the amount of money the city sets aside for working capital that helps manage cash flow throughout the year.
However, while the full board endorsed the action, City Treasurer Wendy Wilton opposed it. She urged the board to stick with a policy set in 2010 regarding the amount of working capital the city keeps on hand.
As a result of the board’s cut, a home valued at $150,000 saw a swing of $30 in its tax bill, from a projected $24 increase to a $6 decrease.
Alderman William Notte proposed cutting the working capital fund to 9 percent of municipal revenues, a reduction from 10 percent. That takes it from a little more than $2 million to about $1.8 million.
“I want to do what we can to give them the biggest savings possible,” Notte said of taxpayers.
The $30 drop on a tax bill for a home in the city valued at $150,000 may seem small, he said, but it sends the message the board is doing all it can to keep taxes in check.
Alderman Christopher Ettori agreed. He said that rather than the city holding onto another $200,000 to protect against a “potential issue” with cash flow throughout the year, it puts the money into the pockets of taxpayers.
Alderman Tom DePoy added, “I’m going to look at this as $200,000 we’re putting back into the economy of Rutland City.”
Wilton told the board she didn’t think such a cut was wise. She said in 2010 the Board of Aldermen made a policy decision to keep the amount set aside as working capital at least equal to 10 percent of municipal revenues.
The purpose of keeping that working capital on hand, the city treasurer said, is to hedge against running into cash flow problems that may develop through the year and result in the city having to borrow to meet expenses.
She talked about unforeseen circumstances that can arise, from catastrophic storms to municipal system failures. And, she added, with several big infrastructure projects in the offing for the coming year, having that money available to pay the bills as they come in makes sense since grants and other revenues to pay those expenses often lag.
“All of those kind of projects take cash,” Wilton said. “We can borrow, but that also adds interest cost.”
She reminded the board that the policy regarding working capital was put in place to prevent deficits piling up that had occurred in the past.
Some board members questioned whether it would be worth the risk of cutting the money set aside for working capital in exchange for providing such a slight benefit of $30 savings on a $150,000 home.
Eventually, the full board agreed to the move of cutting the amount of working capital.
Other board members spoke of the symbolic message sent. “It’s very significant because it goes from having our tax rate going up to our tax rate going down,” Ettori said.
The board approved setting a municipal tax rate for fiscal year 2018 of $1.59 per $100 of assessed value, an increase of about 8 cents from the previous year’s rate.
However, that increase on the municipal side was offset on the education portion of the tax rate.
The education homestead tax rate will be about $1.48 per $100 of assessed value, a decrease of about 8 cents from the prior year’s rate of $1.56.
The non-homestead education tax rate was set at about $1.56 per $100 of assessed value, a decrease of about 6 cents from the previous year’s rate of $1.62.
As a result, according to projections provided to the Board of Aldermen, for a home valued at $150,000 the total tax payment would be $4,610, a drop from the past year’s $4,616 tax bill.