Updated at 10:42 p.m.
Burlington officials have found a $1.8 million error in their budget proposal for next fiscal year after a miscommunication between two city departments resulted in double-counting in tax revenue.
The accounting error, announced in a memo on Friday, comes during a tough budget season in which officials have already worked to close an $8 million budget gap through a mixture of cuts and new revenues. Mayor Emma Mulvaney-Stanak has proposed various ways to close this latest hole, including tax hikes and pay cuts for both the mayor and city department heads.
City councilors were scheduled to discuss the matter at their meeting on Monday night.
City Council President Ben Traverse (D-Ward 5) said he understands how the error happened but that the timing is unfortunate. The council is slated to vote on a final budget next week, before the new fiscal year starts on July 1.
“It places even further budget pressures on the city and our ability to come up with a budget that addresses all of our priorities,” he said.
The error is the third budgeting snafu in Mulvaney-Stanak’s short tenure. Just months after the mayor took office last spring, officials discovered that they’d forgotten to include the cost of increased employee benefits in their calculations, ballooning an expected $9 million gap to $13.1 million. A subsequent error related to the city’s tax increment financing districts bumped the total to $14.2 million. Mulvaney-Stanak closed that gap by cutting vacant positions, raising fees and using one-time money.
Officials discovered the latest error earlier this month. For years, Burlington has taxed commercial properties at 120 percent of their assessed values. The city clerk’s office calculates the extra charge based on the grand list, which it receives from the assessor’s office, then records the total as revenue for the coming year’s budget.
But this year, the assessor’s office included the inflated values in the grand list before sending it to the clerk’s office. Not realizing the error, chief administrative officer Katherine Schad then added in the tax, effectively double-counting $1.8 million in revenue.
The two departments “did not effectively communicate about the City’s past practice,” the mayor’s memo says.
Joe Magee, Mulvaney-Stanak’s deputy chief of staff, didn’t immediately return a request for comment.
Mulvaney-Stanak’s memo presents a plan to create nearly $2.5 million in savings and new revenue, more than covering the latest gap. The city would generate $831,000 by increasing the parks and highways taxes on homeowners, levies that make up the city tax rate. About $250,000 would come from new development permits, and $200,000 could be raised with gross receipts taxes on new hotel rooms that are expected to open this summer. Increased enforcement of housing code violations would net about $10,000.
To save a total of $41,000, the mayor would forgo her annual raise, and department heads would have to wait six months to get their planned 3 percent cost of living increase. Mulvaney-Stanak would also delay hiring both a deputy city attorney and a senior adviser on housing, the latter a new position proposed as part of a planned merger of two city departments. Those moves would save a combined $135,322.
A potentially controversial solution involves police staffing. The original budget proposal included money to hire 10 additional officers, but the new version cuts that number to eight. Both numbers are highly aspirational, as the city has not been able to hire cops at that pace in recent years.
Council President Traverse thinks that trend could change this year. The department has new leadership in interim Police Chief Shawn Burke, who is expected to bring a fresh perspective on recruitment. And the city is negotiating a new police union contract that Traverse hopes will attract officers from other departments.
“I think we should be aspiring to the 10 that were presented in the original budget,” he said.
Councilor Carter Neubieser (P-Ward 1), meantime, thinks the mayor’s proposed trim makes sense. “This is about allocating budgeting in a way that is realistic and actually reflects where we can spend the money,” he said.
Neubieser would prefer to see a different cut, namely zeroing out department head raises altogether. He thinks that would only be fair given that the city had to lay off 18 workers to close the original budget gap. Neubieser was also the only member of the council’s Board of Finance who, in April, voted against giving raises to two public works officials, including Mulvaney-Stanak’s wife, water division director Megan Moir. At the time, Neubieser said he was concerned about city spending.
Moir’s raise was for about $16,000, while a city engineer received a bump of about $22,500.
“Any year we RIF employees, we ought to be asking those who are helping lead the city to show that solidarity and make that financial sacrifice as well,” he told Seven Days on Monday, adding that he will bring up the point with the mayor.
“We’ll see how discussions go,” he said.
On Monday night, Councilor Becca Brown McKnight (D-Ward 6) spoke in favor of the raises, saying city officials deserve to be compensated for their work.
“I’d love to keep talking about that and hopefully find another source to plug that gap,” she said.
Discussion was otherwise relatively limited at the meeting, with councilors mostly asking clarifying questions about how the error happened. Some expressed optimism that operational changes proposed by Mulvaney-Stanak could prevent similar errors in the future. One such change would move the assessor, city clerk and other departments into one Department of Finance and Administration.
The budget numbers could shift before next week’s council vote. Democrats plan to request a handful of changes, Traverse said, including trimming back money that’s budgeted for consultants. As currently written, Mulvaney-Stanak’s budget would cost the owner of a home valued at $500,000 an additional $100 per year in property taxes. Even so, when figuring in education taxes, officials say the same taxpayer could see an overall decrease in their tax bill this year.
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