Burlington Mayor Miro Weinberger today announced that he will not seek a property tax increase to balance the FY2013 budget. As an alternative to a tax increase, Weinberger presented a combination of increased revenue forecasts (including gross receipts taxes) and spending reductions (including departmental cost-cutting) that closes the prior Administrationâ s $1.2 million budget gap.
â During the campaign, I committed to working hard to avoid a property tax increase for the FY2013 budget,’said Weinberger. â In the 30 days since taking office, I have been focused on the imperative that we must not balance the budget at the expense of our community members, whose incomes have been flat since the beginning of the 2008 recession. While we have balanced the FY2013 budget, there is much more work to do in the months and years ahead to address Burlingtonâ s long-term financial challenges and restore the Cityâ s credit ratings.â
As mayor, Weinberger is charged by the City Charter with presenting to the City Council a balanced budget with sufficient time for the Council to consider and vote on the budget, with budget passage occurring no later than June 30, 2012.
City of Burlington 5.3.2012
Letter from Paul R. Sisson, Interim Chief Administrative Officer to Burlington Board of Finance
"May 3, 2012
To: Board of Finance
City Council
From: Paul R. Sisson, Interim Chief Administrative Officer
Re: 2013 General Fund Budget Status
When the Weinberger administration took office on April 2nd, the prior administration had
already announced that there was an approximately $750,000 budget deficit, and had requested
City Council approval for a two cent increase in the General City property tax rate. The City
Council at that time did not support a tax rate increase and, accordingly, there was no proposal
on the March ballot for such an increase. Since that time, the budget deficit projected by the
prior administration has been increased by approximately $425,000 as a result of the interim
settlement between the City and Citibank in March 2012 relating to Burlington Telecom that
requires that the amounts previously designated as interest payable to the General Fund be placed
in escrow. Accordingly, the Weinberger administration was actually faced with a deficit
projection of nearly $1.2 million when it took office.
Since taking office, the Weinberger administration has worked to eliminate the deficit by a
combination of spending reductions and increased revenue forecasts. What follows is a
description of the changes made to the FY13 budget to eliminate the forecast deficit of $1.2
million:
· The interim settlement agreement related to BT resulting in a decrease in forecast interest
income to the general fund in the amount of $425,000 (more fully described above).
· In the original forecasted deficit, the City had assumed the cost of living adjustment
(â COLAâ ) for its employees would be 3.5%. With the passage of time, the actual rate of
the increase in the cost of living (as measured by the Consumer Price Index) has become
known. The actual rate computed based on the labor contracts was 2.9% for all
employees other than Fire Department. For the Fire Department, the rate is based on a
February to February measurement of the CPI and is 2.7% for FY13. Decreasing the
COLA in the calculation of personnel costs in addition to an internal audit resulted in
decreased expenditures by $350,000.
· During our detailed review of the Police Department, we learned that the City is
obligated for payments of $200,000 per year for the next three years under its lease for
the One North Avenue building. Because of the Cityâ s current cash position and capacity
within the FY13 budget, the lease will be prepaid before August 31, 2012. Accordingly,
the Police Department lease expense budget has been reduced by $200,000 for FY13.
· The DPW budget will be improved approximately $300,000 over initial projections. The
Departmentâ s building permit fee anticipated revenues have risen as a result of increased
construction activity, and other revenue and expense adjustments are being finalized.
These adjustments will be finalized for Board of Finance presentation in the coming
weeks.
· The City had planned to finance certain capital projects, namely Waterfront North, some
DPW equipment and an HVAC unit at the airport, with a capital lease with Jules &
Associates. Given the voter approved increase in capital bonding, the City Administration
has re$evaluated the financing of these projects. Strategically, it is prudent to secure
repayment of these project expenses through the bond. Accordingly, because financing
will be by bond, the budgeted expenditures for interest totaling $105,000 related the Jules
leases have been removed from budgeted expenditures for FY13.
· The City currently self$insures for workers’compensation claims. Historically, the costs
of workers’compensation have been allocated to departments based on categorical wages
as if the City used insurance to fund its workers’compensation. Historically, the highest
incidence rates have been at DPW and BED. As a result, other departments are
essentially subsidizing the claims costs for DPW and BED because of the allocation
methodology previously in use. Since a portion of DPW is a general fund department,
allocating additional costs to DPW does not impact the general fund budget. However,
because BED is an enterprise fund, the allocation of true workers’compensation costs to
BED would result in less cost to the general fund. Furthermore, BED is expected to
recover the additional costs in the ratemaking process. Accordingly, the workersâ
compensation expenditures in the general fund have been reduced by $60,000,
representing the estimated cost of claims in excess of amounts previously allocated on a
categorical wages basis to BED.
· The Clerk/Treasurerâ s office had already eliminated one part$time position in the
proposed FY13 budget, but had included $130,000 in the original FY13 budget for
temporary help The Clerk/Treasurerâ s office has since reduced the budgeted temporary
help for FY13 by $30,000 based on an updated assessment of how much assistance from
temporary employees is needed.
· The gross receipts taxes forecast for FY13 was increased to reflect the known trend in
FY12 of increasing gross receipts tax revenue. Accordingly, the forecast FY13 gross
receipts tax revenue was increased by $50,000.
· CEDO, which is a special revenue fund, has historically received most of its funding
from grants. Its largest source of grants in the past has been Community Development
Block Grants, a grant program that the US government has been reducing funding. This
reduced funding has resulting in the general fund transferring up to $300,000 to the
CEDO fund over the past several years. We have reduced the request of general fund
subsidy to CEDO by $50,000 to accurately reflect rent expense for the Criminal Justice
Center, and to eliminate the requested funding for graffiti removal, alternative funding for
which is currently being explored .
· There will be restrictions on travel and other costs will be held to 2012 budget amounts or
less. These measures are expected to reduce expenditures by $30,000.
The attached schedule summarizes all of the changes that have been made to the FY13 budget as
discussed above. As you will note on the schedule, we have now achieved a balanced budget for
FY13.
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I am available to answer any questions you may have, and can be reached at 233$0246 if there is
something you would like to discuss before the Board of Finance meeting on May 3rd.
Otherwise I look forward to a discussion of the FY13 budget status at our 5:30pm meeting."