Finance Director Sarah LaCroix presented an overview of the city’s fiscal status May 21, reporting projected pressures that could leave Montpelier with a material FY25 deficit and a diminished fund balance.

LaCroix said revenues are performing favorably in some lines — including higher-than-expected pilot payments and stronger than-budgeted meals-and-rooms receipts — but those gains are likely insufficient to offset multiple expenditure pressures. The city has incurred unusually high overtime, workers’ compensation absences and rising fleet-maintenance costs due in part to aging equipment and a colder winter. LaCroix also said she expects roughly $238,000 in unbudgeted costs related to a separation agreement and about $91,000 in payouts tied to budget reductions.

Of particular concern is the delinquent tax list. LaCroix reported the current delinquent balance at about $635,000, compared with roughly $300,000 in the same period last year; a single large taxpayer accounts for a material share of the increase. Under governmental accounting rules, the city may recognize billed but uncollected revenues only if collected within 60 days after fiscal year end. If delinquent taxes are not collected by August 31, certain amounts will need to be deferred and the FY25 recognized revenue reduced, worsening the deficit.

LaCroix said the city’s unassigned fund balance on June 30, 2024, was about $1.2 million (6.99% of budget); the city’s reserve policy calls for 15% of budgeted expenditures. A $500,000 FY25 loss would lower the unassigned fund balance to roughly 4% — far below the policy target and below a practical cash buffer.

The finance director said the city has a $6 million line of credit but has avoided drawing on it because of interest costs. She said the city has obtained reimbursements from FEMA and other sources (about $1.2–$1.3 million to date), but many flood-related costs remain outstanding and reimbursements continue to be slow to arrive. LaCroix recommended that the council continue restricting nonessential spending and treat any one-time revenues cautiously so the city can rebuild its fund balance.

Councilors asked clarifying questions about delinquency collection options and the timeline; LaCroix said she will pursue aggressive collection steps, including initiating tax-sale procedures if large delinquencies are not resolved by mid-August.