Burlington is looking to close an $11 million budget gap without any layoffs in the upcoming fiscal year amid multiple financial challenges.
Progressive Mayor Emma Mulvaney-Stanak this week laid out for the City Council the expenses and cost savings in her proposal for a $112 million balanced budget for the 2026-27 fiscal year that starts July 1, up $5 million over last year’s budget.
She attributed the increase to the growth of the city government in the past decade, along with its cost obligations, redundancy in staffing and a number of programs that she continues to scrutinize in an effort to “right size” government and put Burlington on “a more sustainable path forward.”
The financial pressures include health insurance costs that have doubled since 2017, the sluggish growth of taxable properties in the city and contractually required cost-of-living raises for city employees.
“This has been another hard budget cycle,” Mulvaney-Stanak said at Monday’s City Council meeting, where she and her staff presented the proposed budget. The council has until June 30 to pass a balanced budget, with a vote expected June 15, according to Katherine Schad, the city’s chief administrative officer.
Mulvaney-Stanak’s plan includes saving $2 million by cutting or delaying filling 27 vacant positions and raising $3 million through a voter-approved 5-cent increase to the police and fire tax. She also proposes internal belt-tightening to reduce spending across departments in Vermont’s most populous city, which is home to about 44,000 residents and has about 700 city employees.
“This budget is balanced, it is fair, and it provides several solutions for not only closing that $11 million budget gap but moving us forward as a city,” she said.
More than half the city’s general fund, or $52.9 million, comes from property taxes. The proposal includes a 6% increase in the municipal tax rate, which is more than the 3% increase implemented last year. That translates to an average annual increase of about $191 on a property valued at $353,000, the median value of a city home. (One-third of a city residential tax bill is municipal taxes, and two-thirds education taxes.)
According to the budget presentation, other revenue drivers include a program, called PILOT, that collects payments in lieu of taxes from community institutions, expected to bring in $11.6 million. The budget also relies on:
- The so-called gross receipts tax on meals, alcohol, admissions, amusements and hotels, which is expected to generate $7 million. The tax rate is 2.5% for all but hotels, which face a 4% tax.
- The local option tax, expected to bring in $3.5 million.
- Franchise fees from utilities using city streets, anticipated to net $2.9 million.
Last June the City Council approved a $107.1 million budget for the current fiscal year, closing a nearly $10 million gap by cutting 18 positions and increasing the municipal tax rate.
Challenges, solutions
An $11 million gap is “a very sizable challenge,” the mayor said, particularly when it persists three years in a row in a city government that has grown and needs investments in certain priorities, such as public safety, housing and climate change response.
A major challenge is the gap between what the city brings in from the grand list — all of the assets that are subject to property taxes — and the increases in compensation costs for city employees.
Schad, the chief administrative officer, told council members that the city’s property tax base is growing at only 1% annually while personnel costs are growing 3%. “That’s already causing some strain on the budget,” she said during the budget presentation Monday.
“We are currently bargaining with the city’s largest union, so we don’t know the exact cost-of-living adjustment for next year. And of course, we are continuing to live with uncertainty regarding Canadian tourism and the future of federal grants, which also play into our budget,” she added.
Councilor Melo Grant, P-Central, said she appreciates the mayor streamlining city services, beginning budget deliberations earlier every year, and having an inclusive process so that department heads, city employees and city councilors can weigh in early in the process.
Mulvaney-Stanak’s strategic effort to streamline government over the last two years has led to an increase in the city’s credit rating that Grant said is remarkable, given the challenges.
City Council President Ben Traverse, D-Ward 5, said that although he is glad the cuts this year are not leading to layoffs, as they did last year, he is concerned about the continued budget increases and the tendency to cut positions and arts funding.
“I do think that if we are really going to address these very high structural increases that are happening year to year, then we have to find a way to more meaningfully cut the size of our budget,” he said.
The streamlining means there is less to put toward addressing issues such as homelessness, Traverse said. He wondered if the city could lean into partnering with third-party organizations to provide support — like the social services partnership between Howard Center and the Fletcher Free Library — so the city can cut back on its own delivery of such services.
Traverse is critical of the mayor wanting to permanently implement the gross receipts tax on meals, alcohol, admissions, amusements and hotels, which was meant to be a one-time fix that the council agreed to continue last year.
“My sense is that there’s a number of folks in our business community that feel like this is a broken promise of sorts, that we told them that we needed this temporary increase in order to fill a budget gap as we work to address some of the structural issues,” he said. “And now saying that we want to make that temporary increase permanent I think is walking back on a promise and a commitment that we’ve made to our small businesses here in Burlington.”
Grant, who supports the proposal, said it is a fair consumption tax that raises bills by a few cents for residents and visitors alike and helps support the city.
“I personally believe that this is very straightforward, and I also think that it’s an issue of fairness. You cannot be putting everything on the backs of property owners,” she said.
Increasing the police and fire tax by 5 cents, as approved by voters on Town Meeting Day, will bring in $3 million; collecting overdue payments can raise $1 million; and the city has about $1.1 million from various sources in one-time monies such as unused federal funds and can book another $2.5 million by controlling estimated expenses, Schad said.
Eliminating 13 unfilled positions and freezing hiring for 14 others at least until fiscal year 2028, along with budget cuts across multiple departments, translates to $3 million in savings and is the biggest consideration in reducing government expenses this year.
The city is also looking to implement a voluntary furlough program via which employees could take unpaid time off, for about $200,000 in savings; to sell some city property; and to renegotiate agreements with tax-free entities such as the University of Vermont to net more money.
The mayor announced some strategic and staggered investments throughout the year that include adding two firefighters, five police cruisers, an ambulance and three maintenance vehicles to the city fleet, as well as HVAC upgrades to the police station. Several city councilors expressed approval for those moves.
Despite some cuts to Burlington City Arts, the city is working on adding programming, including bringing back summer concerts at the waterfront park, expanding the downtown holiday lights program and creating new collaborations to celebrate World Cup soccer.
“I’m proud that this budget includes a lot of key investments,” the mayor said, “because budgets should be a reflection of the values of the community, and as much as what we need to invest in, as much as what we need to perhaps pare back to make it sustainable.”
Correction: This article originally mischaracterized an established revenue stream in the city and misstated the savings expected through the furlough program.
