Montpelier City Council reviews budget challenges and implements local option sales tax plan

The Montpelier City Council meeting on May 28, 2025, focused on critical financial updates and future planning for the city. Key discussions included the city's financial status, the introduction of a new local option sales tax, and the ongoing challenges related to water and sewer infrastructure.

Finance Director Sarah LaCroix provided a detailed overview of the city's financial situation, revealing a projected deficit of $500,000 to $600,000 by the end of the fiscal year. LaCroix highlighted several factors contributing to this deficit, including inflationary pressures, increased costs from an unusually harsh winter, and significant staff-related expenses. She emphasized the importance of maintaining cash flow and liquidity, especially as the city prepares for a constrained budget in fiscal year 2026.

The council also discussed the implementation of a new 1% local option sales tax, approved by voters in March. This tax will increase the total sales tax in Montpelier to 7% and is expected to generate approximately $500,000 to $600,000 annually. LaCroix recommended a cautious approach to spending this new revenue, suggesting that funds should not be allocated until at least $150,000 has been collected. This strategy aims to ensure financial stability and allow for community input on how the funds should be utilized.

In addition to financial matters, the council addressed ongoing water and sewer infrastructure needs. Public Works Director Kurt Monica presented the water and sewer master plan, which outlines necessary improvements and funding strategies. The plan includes annual rate increases tied to the Consumer Price Index (CPI) to support infrastructure upgrades. The council acknowledged the challenges posed by aging infrastructure and the need for ongoing investment to prevent costly emergency repairs.

Overall, the meeting underscored the city's commitment to transparency and community engagement as it navigates financial uncertainties and infrastructure challenges. The council plans to revisit the allocation of local option tax revenue in March 2026, ensuring that community priorities are considered in future spending decisions.