Mulvaney-Stanak Outlines Steps to Close Burlington's Budget Gap

Burlington officials have a plan for closing the city's $13.1 million budget shortfall.

Mayor Emma Mulvaney-Stanak's proposal would use tax hikes and one-time funds to balance a $107.8 million city budget. Under the plan, the city would not have to lay off staff, but it would leave nearly two dozen vacant positions open.

The plan, which the mayor outlined in a press conference on Tuesday, is the first budget update since late April, when officials announced that the city's anticipated $9 million shortfall had grown by another $4 million. The discrepancy was largely due to a clerical error in which staff forgot to include the cost of employee benefits when calculating budget increases. Health insurance costs were also higher than expected.

Mulvaney-Stanak thanked department heads, city employee union members and budget advisers for helping "generate creative solutions" to the city's fiscal woes.

"I am deeply grateful to everyone in the city who offered ideas that not only helped us balance the budget but will inform our budget planning for future fiscal years," she said.
Mulvaney-Stanak's plan calls for raising $5.6 million in new taxes, with about $1.3 million of that generated from a higher public safety tax. Voters approved a 3-cent increase to that tax rate on Town Meeting Day, but officials are only proposing a 2-cent increase in an effort to reduce the burden on residents.

To make up the additional revenue, the city would raise the gross receipts tax from 2 to 2.5 percent on meals and alcohol sales, a bump that would sunset after a year. The same tax on hotel stays would double, from 2 to 4 percent. Together, the rate hikes would generate an estimated $1.7 million.

Increasing various city fees, such as parking fines and the cost of summer camps, could raise another $1.5 million. Using the remainder of the city's federal coronavirus aid would net $3.2 million. Another $500,000 could be found in part by negotiating higher fees on entities that are exempt from paying property taxes, such as the University of Vermont. Mulvaney-Stanak is also considering hiking the fines paid by owners of vacant buildings.
Officials also found $2.5 million in savings, a process the mayor called "right-sizing" the city budget. That includes saving $1.4 million by leaving 22 vacant positions open and another $700,000 by scaling back spending on various city programs, though not cutting any completely. The city will also consider offering early retirement to long-tenured employees.

A forthcoming efficiency study was to identify more savings, but Mulvaney-Stanak said the draft version she's seen was focused on "rather large structural changes" that couldn't be implemented before July 1, when the new fiscal year begins.

At Monday night's Board of Finance meeting, some city councilors expressed concern about the budget's reliance on one-time funds — the use of which helped create the shortfall in the first place — and that upping the gross receipts tax would dissuade visitors from dining out downtown.
On Tuesday, Mulvaney-Stanak committed to weaning off one-time money in future budgets. And she downplayed the effect on restaurant-goers, saying the impact would be minimal: Tacking an extra half percent on a $100 bill would increase it by just 50 cents.

"I highly doubt that that's worth the gas, frankly, to drive out to another community," Mulvaney-Stanak said, adding that she favored this "consumption tax" over a higher public safety tax, which would affect every resident.

"To me, this is a much fairer approach to spread the obligation to make sure we have revenue to do what we need to do in the city," she said.

Despite the budget crunch, Mulvaney-Stanak's spending plan would also invest in public safety. Her proposal would pay to hire 10 more police officers, fund the fire department's overdose response team and address safety concerns at Fletcher Free Library, which has seen increased drug use and more aggressive behavior from some patrons.

Councilors will continue to discuss the budget over several meetings this month. Mulvaney-Stanak will present her final proposal by June 15.