Essex Junction council advances FY26 budget discussion; staff recommends stormwater utility with phased capital start

Essex Junction City Council members held a public hearing Feb. 12 on the proposed FY26 general fund and capital budgets and discussed a staff proposal to shift the city’s stormwater program into a dedicated stormwater utility.

Regina, a city staff member presenting the budget, said the draft FY26 general fund shows a roughly $400,000 increase over FY25 (about a 3% rise) that translates to a 2.5% change in the tax rate and would add about $69 in property tax for a $280,000 home. Regina said utility bills and other changes together translate to an approximate 8.6% increase (about $250) for a typical household.

The nut graf: city staff told the council that stormwater compliance and long-term fairness argue for an enterprise fund that bills parcels by impervious surface rather than property value, while also offering credits for on-site mitigation. The council discussed phasing capital spending to soften a steep first-year increase for large parcels.

Staff said three-quarters of general fund revenue comes from residential property taxes, 11% from business property taxes, 8% from miscellaneous fees and 6% from GlobalFoundries property taxes. Regina walked the council through expense categories and said public safety (police, fire and rescue) remains the largest piece of the general fund, at about 30% of expenditures.

On stormwater, Chelsea, a city public-works/stormwater staff member, summarized the proposal: “At this stage of the game, our thinking is that we just very cleanly end the general fund funding of the stormwater program at the end of FY25. The general fund zeroes out for the stormwater budget in FY26, and we move completely to the utility. And that program amount would be $448,000 for FY '26.” Chelsea said the utility would begin billing in October and appear three times per year on utility bills.

Chelsea said staff no longer recommend exempting GlobalFoundries from the utility after legal review and research. “Further research and legal review over the course of this year found that there are no exemptions from stormwater utility except for agriculture due to a bill enacted by the state of Vermont legislator,” she said. Staff also described a credit system for properties that implement best management practices; those credits would reduce a parcel’s charge but not remove the parcel from the system.

Staff estimated the utility’s baseline equivalent residential unit (ERU) would be about $84. Chelsea told council members GlobalFoundries’ bill would be roughly $108,000 under the $448,000 program level; without the proposed $125,000 capital component in the first year the company’s first-year bill would be about $78,000. Chelsea and finance staff said the $125,000 in the FY26 figure represents capital funding that could be delayed one year to soften the first-year rate impacts.

Council members asked for more scenario modeling for large properties, credit take-up rates and the effect on typical homeowner bills if multiple large parcels earn credits. Marcus, a council member, noted that credits reduce the revenue base and shift more cost to homeowners if many credits are granted. Amber, a council member, said she favored keeping the program as an enterprise fund because it ties cost to impact and regulatory obligations.

Resident Harlan Smith asked about general-fund transfers to capital and the proposed unassigned fund balance increase. Regina confirmed a proposed $110,000 transfer into the general fund’s unassigned balance and an $84,000 increase to the routine capital transfer; she directed speakers to the transfers tab (packet page 72) for line-item detail.

Council members did not take a formal roll-call vote on establishing the utility at the Feb. 12 meeting. Several council members expressed support for proceeding as a utility and for returning with more detailed options on credits, exact ERU calculations, and phasing scenarios at the Feb. 26 meeting.

The meeting packet included other FY26 highlights: a 17% increase in the city’s health-insurance costs for calendar year 2025; a streets program budget of $1.5 million; shifts of some program costs (for example cleaning at Park Street School) into program funds; $27,500 (proposed) for a rebranding effort from the lot fund (staff recommended $40,000 but said the council could decide); and a note that county tax estimates rose materially after the packet was published (the county tax line grew to $73,911, an increase of about $15,000 over prior budget assumptions).

What’s next: staff said they will bring the full stormwater utility package back on Feb. 26 with detailed ERU calculations, credit rules, and billing scenarios. The council may finalize the FY26 budget on Feb. 26 and decide which items advance to the April 8 ballot.