April 29 2020

How COVID-19 Response Could Impact Town Budget

By: Rich Hosford

The COVID-19 pandemic and the subsequent response to it will have an impact on Burlington’s budget but the full extent of that impact is still unknown. 

 

On Monday night Town Accountant and Assistant Town Administrator John Danizio gave a presentation to the Board of Selectmen about some of the projections his office is making about what a lack of some normal incomes will mean for the town. 

 

“Given the uncertainty around this global pandemic and the economic downturn it has caused, the lengths and depths of which are still unknown, we do acknowledge that there is a high probability of a need to make cuts to services and programs, and even consider long term or permanent reductions,” Danizio said in a memo that accompanied the report. “However, we caution all to take the time needed for proper preparation and careful analysis of the effects of any reduction of services or the elimination of programs.” 

 

In the report, Danizio said they are expecting a downturn in local receipts, state aid and a decrease in property values. Local receipts include things like meals tax, hotel taxes, excise taxes, building permits, water payments and investments. He said they are expecting a zero percent increase over FY20 and for them to be 27 percent, of $4.5 million, below the FY19 actuals. 

 

He said they expect state aid to also have a zero percent increase over FY20 in FY21. 

 

“We are anticipating a significant reduction in free cash,” he wrote. “Our local receipts revenue is heavily reliant on hotel and meals taxes, building permits, water billings, and excise taxes, and we expect these revenues to take a major hit. Fortunately, we have only used free cash for one time items as is recommended as a best practice by the state. 

 

The plan right now, he said, is to mostly continue with the FY21 budget as it has been proposed because it is already in the process of going through Ways & Means and Town Meeting is in June. 

 

“We believe it is too far along to make substantial changes without having an adverse impact on program and service delivery,” the memo reads. “To that end, the Administration recommends that the FY21 operating budget move forward with the goal of meeting the existing guidelines set this past December, with contingencies in place.”

 

One measure that is being taken is that some capital projects in the warrant are being held until later in the fiscal year until either the September or January Town Meetings. Town Administrator Paul Sagarino said he is working with the different town departments and the School Department to assess which projects can be delayed and for how long. The memo also mentioned holding off on the annual Other-Post Employment Benefits (OPEB) payments. They also put a hold on non-essential hiring and spending. 

 

“The goal here would be to buy us more time to better understand and evaluate the economic outlook, and whether or not we should move forward or hold off on these expenditures,” the memo states. 

 

Members of the Board of Selectmen said they were appreciative of the report and did not push back against any of the actions taken. The only thing they raised objection to was one action that the memo alluded to as a possibility. That was that if the town did have a budget deficit caused by its COVID-19 response, legislation was passed to allow it to raise that deficit on the tax levy over a three year period. 

 

“I can take no comfort that a law has been passed to raise deficits through taxes over a 3-year time,” Selectman Mike Runyan said. “That is the last thing I want to do.”

 

“I agree the last thing we want to do is raise taxes,” Selectman Nick Priest added. “Lots of people are out of work or furloughed or have had to close their business. We have the talent in our town hall to see where we are and make evaluations and plans.” 

 

Finally, Danizio ended the memo with a positive assessment of how Burlington has, through careful planning, been preparing for a moment like this. 

 

“Years of conservative budgeting and careful financial planning have put us in the best possible position to weather this crisis, but it will still take time and cooperation to fully recover, and some difficult decisions will lie ahead,” he wrote. “The response to this event has shown what a truly fantastic team we have in this Town, and we expect that we will continue to work together in the coming months to get through this.”


 

 

 
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