Mayor Miro Weinberger’s plan to restore Burlington’s long-term fiscal stability rests on the passage of a $9 million bond vote this November designed to improve liquidity, reduce the use of short-term financing and eliminate the city’s deficit balance.
At a press conference Monday, Weinberger compared the plan to “refinancing a large amount of credit card debt into a stable mortgage” and lock in a low interest rate.
He also discussed plans to request separate ballot votes for the use of up to $7.1 million in tax incremental financing (TIF) bonds on waterfront-related infrastructure projects, as well as a half cent tax for improvement and maintenance of the bike path. The TIF bonds would be repaid through new tax revenues generated by waterfront development.
The City Council held a work session Monday night to look over the proposals. If they approve in September, the $9 million “fiscal stability bond” will require support by two-thirds of the voters in November to pass. Weinberger called the idea “our best option to break the financial paralysis” caused largely by $16.9 million that was loaned to Burlington Telecom by the city during the previous administration.
The proposed “fiscal stability bond” would address the main concerns of auditors and the recent downgrading of the city’s credit rating to what Weinberger called “the edge of junk bond status.” Repayment would be spread over 15 years and cost the average homeowner about $60 annually in additional taxes.
As described by Weinberger and Chief Administration Officer Paul Sisson, the decision to loan city funds to Burlington Telecom reduced the city’s liquidity and created a deficit of almost $9 million. The solution, until now, has been short-term borrowing. But this is inherently risky, they say, because the interest rate could double if the city’s credit rating slips any further.
The $9 million bond would eliminate the deficit balance and reduce future borrowing. No proceeds would be spent on Burlington Telecom and any funds recovered in the future would be used to reduce bond payments.
“I ran for mayor on the promise that my first priority would be to get our city’s finances in order, and this plan is the first major step toward reaching that goal,” Weinberger announced.
The mayor acknowledged that his proposal “does not address all our problems,” including the city’s large pension fund liability and short-term borrowing for the Burlington International Airport. However, he stressed that it does deal with the top concern raised by the city’s auditor.
A memorandum sent to the City Council warns that, if the $9 million bond isn’t approved, “the Administration will have no choice but to consider options that include significant tax increases and municipal services cuts.” This would prolong exposure to financial risk and have a larger impact on both taxes and services, the administration argues.
Approval of TIF bonding authorization would be used for waterfront improvements, including moving utilities underground, brownfield remediation, sidewalk and street improvements, new parking areas, storm water treatment and pedestrian amenities. Work on the bike path would focus on rebuilding the heavily used section between Perkins Pier and the northern end of the Urban Reserve.
Weinberger’s third ballot proposal, a half cent tax dedicated to the bike path, is part of an overall improvement and maintenance plan. It falls short of the $11.6 million in financing that has been proposed by the Bike Path Task Force, but $2.5 million in TIF money would be available. Another $1 million in private donations is also anticipated.
Together, the dedicated tax and TIF financing should make it possible to design “the entire new path and actually rebuild the most over-crowded section” over a two-year period.
