Report of the Montpelier City Council's Citizen Budget Review ...

2. INTRODUCTIONa. History and Background InformationMontpelier’s municipal property taxes are relatively high compared to otherVermont cities and towns, and have been for many years. As shown in AppendixA to this report, Montpelier’s median R1 2 residential municipal tax bill is thehighest among comparable communities in the state, and our municipal effectivetax rate is near the top statewide (by contrast, our effective 3 school tax rate isright at the state average).Some Montpelier homeowners – those with household incomes of $47,000 orless – get tax relief on the municipal portion of the property tax bill, but not nearlyas many as qualify for school property tax adjustments, which are available in fullfor those with household incomes up to $90,000. Therefore, a greater proportionof Montpelier homeowners pay the entire municipal property tax than pay the fullschool property tax.Property tax levels – and whether the services we receive provide for them are agood value – are a concern of at least some Montpelier residents. In the 2009National Citizen Survey of Montpelier residents, less than half of respondents feltthat the value of services for taxes paid was “excellent” or “good.” The greatestnumber of answers in an open-ended question in the survey asking what themost important issue Montpelier will face over the next five years was in thecategory of “Taxes/Property Taxes Too High.”Many reasons have been cited to explain why Montpelier’s municipal taxes arehigher than average. We are a small city with public safety services and miles ofpaved roads and sidewalks not found in rural towns. Much of our prime realestate – which otherwise might be developed and subject to taxation – is ownedby the state, by churches, or by other nonprofit entities that do not pay taxes butdo require services. According to both the current and former police chief, thefact we have a larger percentage of low-income rental units and group homesthan nearby towns leads to more demands on the police. Our status as aregional center and state capital with an influx of daytime workers and othervisitors increases demands on city services. And over the years, Montpelier haschosen to offer a broad range of optional municipal services, among them ourpopular parks and recreation facilities.The city’s budget and spending choices also play an important role in our levelsof taxation. This study was designed to compare Montpelier’s municipal spendinglevels and its approach to municipal government with those of other comparableVermont communities to see if there is anything to learn that might help the cityincrease efficiencies and/or relieve budgetary pressures. In the end, of course,final budget and spending decisions are made by the City Council and by the23An “R1” Property is defined a residence on less than 6 acres of landThe “effective tax rate” is the calculated rate if all of the valuations for all properties on every grand list in the Statewere at the fair market value (100% of Market Value).Page 19 of 88