Taxes & Fees
Key Elements of the Budget
Taxable properties, tax exemptions and local expenses are key elements of local budgets and tax rates. All of these impact the tax rate but they are not the biggest part of the story. The major factors behind Montpelier’s budgets and tax rates are service delivery and service population. And with Act 60 and Act 68 leveling the field for school taxes, the focus must be on municipal services.
Interesting Parallels
If we look at communities around the state with high tax rates we start seeing some interesting parallels. There’s our Central Vermont counterpart, Barre City claiming the top municipal (non-school) tax rate in Vermont. We also find Springfield, Rutland City, Middlebury, Windsor, Newport City, Rockingham/Bellows Falls, and Brattleboro. The similarities are strikingly obvious. All are older communities who serve as regional centers for other towns near them.
Unlike a Burlington or South Burlington, they have neither the population base nor the “grand list” base to spread the costs of service delivery very widely. As a result, they all provide many direct services and maintain older infrastructure for use by people from an entire region but only paid for by residents. Many of these (Montpelier, Barre, Rutland, Middlebury, Windsor, Newport) were historically part of larger municipalities but were split off (i.e. Barre City and Barre Town). This resulted in greatly reduced land areas compared to most Vermont towns.
Expanded Service Needs
This notion of expanded service needs and delivery can be most visibly illustrated by the provision of Fire service. There are only 12 full time or “paid” fire departments in all of Vermont, the 220+ others are all run by volunteers. Out of these 9 top tax communities, however, 7 have paid departments - only Middlebury and Newport still use volunteers. And the other 5 communities in the state with paid departments fit the mold as well. Burlington of course has the largest population base in the state.
Hartford and South Burlington maintain lower municipal rates through a property base which is 1.5 to 2 times more per resident than Montpelier. The remaining 2, St. Albans City and St. Johnsbury, have the highest municipal tax rates in Franklin and Caledonia counties respectively but their relatively low school rates keep them out of the very highest total tax rates. All other towns and cities in Vermont have volunteer Fire Departments.
Obviously Fire Departments are not the only service being delivered in these communities and are not the only costs driving local budgets. The jump to a paid department, however, represents a major policy and cost shift for any town and is only made if the local people believe the need is justified. The presence of a paid Fire Department is almost always indicative of expanded overall local service needs - often to handle demands created by non residents.
Service Phenomenon
Montpelier is really the “poster child” for this service phenomenon. Our daytime population of approximately 20,000 represents jobs, customers and economic activity. But those individuals also get into accidents, use parking spaces, speed, get injured or sick, commit crimes and cause wear and tear on roads and facilities. Under the very limited revenue raising options available to Vermont’s towns and cities, virtually all of these costs fall to the 8,000 or so local property tax payers. For example, the city handles over 18,000 to 20,000 police incidents (large and small) annually. At more than 2 calls for service per capita, this is the highest police activity rates in Vermont except for Barre City. By comparison, Burlington - even with the colleges and being the center of the metro area - only handles about 1 police incident per capita.
One contributing factor to this situation is the steady population growth in our neighboring, more rural, towns. The most recent census showed a combined increase of 915 residents (+11.5%) in Berlin, Calais, East Montpelier and Middlesex. At the same time, Montpelier’s population dropped by 349 residents (-4.1%). This is something of a “chicken and egg” situation since many people will say that they moved to Berlin, Middlesex, or East Montpelier to avoid Montpelier’s taxes yet have handy access to our downtown, community facilities and, yes, local services. Once again, their presence in our community is felt positively through business, the arts and civic efforts but the cost of services falls on Montpelier residents alone.
2005 Tax Rate Comparison
Let’s compare 2005 tax rates and local services within our immediate region. Tax information is taken from the 2006 Annual Report of the Vermont Department of Taxes. An Effective Tax Rate is determined once the property values in various communities have been “equalized”, that is taking into account the different overall community assessment ratios. The Actual Tax Rate is the rate that residents saw on their bills and is applied to their non-equalized tax bills. When comparing communities, it is much more accurate to look at the Effective rates rather than the Actual rates.
Taxable properties, tax exemptions and local expenses are key elements of local budgets and tax rates. All of these impact the tax rate but they are not the biggest part of the story. The major factors behind Montpelier’s budgets and tax rates are service delivery and service population. And with Act 60 and Act 68 leveling the field for school taxes, the focus must be on municipal services.
Interesting Parallels
If we look at communities around the state with high tax rates we start seeing some interesting parallels. There’s our Central Vermont counterpart, Barre City claiming the top municipal (non-school) tax rate in Vermont. We also find Springfield, Rutland City, Middlebury, Windsor, Newport City, Rockingham/Bellows Falls, and Brattleboro. The similarities are strikingly obvious. All are older communities who serve as regional centers for other towns near them.
Unlike a Burlington or South Burlington, they have neither the population base nor the “grand list” base to spread the costs of service delivery very widely. As a result, they all provide many direct services and maintain older infrastructure for use by people from an entire region but only paid for by residents. Many of these (Montpelier, Barre, Rutland, Middlebury, Windsor, Newport) were historically part of larger municipalities but were split off (i.e. Barre City and Barre Town). This resulted in greatly reduced land areas compared to most Vermont towns.
Expanded Service Needs
This notion of expanded service needs and delivery can be most visibly illustrated by the provision of Fire service. There are only 12 full time or “paid” fire departments in all of Vermont, the 220+ others are all run by volunteers. Out of these 9 top tax communities, however, 7 have paid departments - only Middlebury and Newport still use volunteers. And the other 5 communities in the state with paid departments fit the mold as well. Burlington of course has the largest population base in the state.
Hartford and South Burlington maintain lower municipal rates through a property base which is 1.5 to 2 times more per resident than Montpelier. The remaining 2, St. Albans City and St. Johnsbury, have the highest municipal tax rates in Franklin and Caledonia counties respectively but their relatively low school rates keep them out of the very highest total tax rates. All other towns and cities in Vermont have volunteer Fire Departments.
Obviously Fire Departments are not the only service being delivered in these communities and are not the only costs driving local budgets. The jump to a paid department, however, represents a major policy and cost shift for any town and is only made if the local people believe the need is justified. The presence of a paid Fire Department is almost always indicative of expanded overall local service needs - often to handle demands created by non residents.
Service Phenomenon
Montpelier is really the “poster child” for this service phenomenon. Our daytime population of approximately 20,000 represents jobs, customers and economic activity. But those individuals also get into accidents, use parking spaces, speed, get injured or sick, commit crimes and cause wear and tear on roads and facilities. Under the very limited revenue raising options available to Vermont’s towns and cities, virtually all of these costs fall to the 8,000 or so local property tax payers. For example, the city handles over 18,000 to 20,000 police incidents (large and small) annually. At more than 2 calls for service per capita, this is the highest police activity rates in Vermont except for Barre City. By comparison, Burlington - even with the colleges and being the center of the metro area - only handles about 1 police incident per capita.
One contributing factor to this situation is the steady population growth in our neighboring, more rural, towns. The most recent census showed a combined increase of 915 residents (+11.5%) in Berlin, Calais, East Montpelier and Middlesex. At the same time, Montpelier’s population dropped by 349 residents (-4.1%). This is something of a “chicken and egg” situation since many people will say that they moved to Berlin, Middlesex, or East Montpelier to avoid Montpelier’s taxes yet have handy access to our downtown, community facilities and, yes, local services. Once again, their presence in our community is felt positively through business, the arts and civic efforts but the cost of services falls on Montpelier residents alone.
2005 Tax Rate Comparison
Let’s compare 2005 tax rates and local services within our immediate region. Tax information is taken from the 2006 Annual Report of the Vermont Department of Taxes. An Effective Tax Rate is determined once the property values in various communities have been “equalized”, that is taking into account the different overall community assessment ratios. The Actual Tax Rate is the rate that residents saw on their bills and is applied to their non-equalized tax bills. When comparing communities, it is much more accurate to look at the Effective rates rather than the Actual rates.
Notable Observations
The most notable observation, of course, is that the average effective residential tax rate for the 8,877 residents in the surrounding 4 towns was 27.7% less than the Montpelier resident rate. Note that the total effective tax rate for Barre City, however, is exactly the same as Montpelier and services are similar. What services do Montpelier residents receive for this extra tax burden that people don’t get in the other Towns?
Montpelier Benefits
There are also many great things that Montpelier residents support that neighboring residents can also benefit from at no cost or greatly disproportional cost. Hubbard Park and North Branch Park are 2 prime examples. Others include the Kellogg-Hubbard Library, sidewalks and bike/pedestrian paths, street sweeping, fire prevention efforts, the Montpelier Arts Fund, downtown enhancement initiatives - not to mention Design Review and Planning efforts which are occasionally causes of controversy but which regularly help keep the city looking as wonderful as it does for all to enjoy. And everyone enjoys events like Independence Day, First Night, and other celebrations.
The most notable observation, of course, is that the average effective residential tax rate for the 8,877 residents in the surrounding 4 towns was 27.7% less than the Montpelier resident rate. Note that the total effective tax rate for Barre City, however, is exactly the same as Montpelier and services are similar. What services do Montpelier residents receive for this extra tax burden that people don’t get in the other Towns?
- Full time Fire and Ambulance service based in downtown Montpelier. Volunteer Fire and Ambulance departments do excellent jobs but they can’t match the response time or training level of full time staff people. Dispatch records show an average ambulance response time of 4 minutes locally compared to 11.5 minutes in the combined towns. This difference may not seem like much but sit and watch the clock sometime thinking you’re waiting for someone to provide emergency medical assistance to you or a family member. The Full time Fire Department is actively involved with fire prevention efforts as well as emergency response, is active in development review and has advocated for safety and prevention initiatives such as sprinklers and increased building inspection.
- Full Time police service based in downtown Montpelier. A 9-1-1 emergency call gets a local police officer at your door within minutes. Officers are on patrol 24 hours per day, 7 days per week. One officer is involved with the school system full time. In communities served by State Police, 1 Trooper may be on duty covering many towns.
- Full Time dispatching service - That same 9-1-1 call is answered in the Montpelier police station by people familiar with the community. In almost all other towns and cities in the region, emergency calls are answered by a centralized state dispatcher in Williston and then relayed to local emergency providers.
- Paved and quickly plowed roads. 97% of Montpelier’s roads are paved compared with 20% in neighboring towns. Gravel roads mean more dust, “dings” on vehicles and difficult access during certain seasons (mud) and weather conditions. When you’re in a business rush or personal emergency, can you rely on being able to pass over your road year round? Neighboring road crews do a fine job but with an average of 1 person per 17.5 miles of road, 1 cannot expect the same service as Montpelier who staffs 1 person per 3.5 miles of road. And the neighboring crews don’t have any responsibilities for snow bank removal in downtown, sidewalk plowing/ maintenance, street lights or traffic signals.
- Public Information. Montpelier residents have many more opportunities to stay in touch with their local government than their neighbors do. Virtually all municipal and school meetings are broadcast on local Cable TV. Both the City and School maintain comprehensive websites for on-line access. The City’s Annual Report has won awards for public presentation the last 2 years. Both the School and the City contribute regular features in the Bridge newspaper. This year the city is developing a new initiative to create a wireless internet environment in the downtown area and, eventually, throughout the community.
Montpelier Benefits
There are also many great things that Montpelier residents support that neighboring residents can also benefit from at no cost or greatly disproportional cost. Hubbard Park and North Branch Park are 2 prime examples. Others include the Kellogg-Hubbard Library, sidewalks and bike/pedestrian paths, street sweeping, fire prevention efforts, the Montpelier Arts Fund, downtown enhancement initiatives - not to mention Design Review and Planning efforts which are occasionally causes of controversy but which regularly help keep the city looking as wonderful as it does for all to enjoy. And everyone enjoys events like Independence Day, First Night, and other celebrations.