OPINION: Why a Charter?
This commentary is written by Charlie Hancock, Chairman of the Montgomery Selectboard.
Voters in Montgomery will see a question on the ballot this year pertaining to the adoption of a Municipal Governance Charter. Why a charter? Municipalities receive their legal authority from the Vermont Legislature though: 1) those granted in express words; 2) those necessarily or fairly implied in the powers expressly granted; and 3) those essential to the declared objects and purposes of the town. Therefore, if a town wants to exercise authority beyond what is already granted by state law (number 3), it must obtain permission from the Legislature through the approval of a Governance Charter. Governance Charters are, in effect, a constitution for the municipality that provides a framework for self-rule. They can be exhaustive documents covering all facets of local government, or they can be directed at a single issue. The Charter before the voters this year is the latter, dealing expressly with the creation of a Local Option Tax.
Back in 2020, the Town voted to approve the borrowing authority for the full amount of a municipal wastewater project for our village centers, identified as a priority area by the community. Since then, the Town has used no-risk capital to advance the engineering work on the project while we determined how to cover payments on the proposed loan resulting from construction. Two measures were put forward last year to assist with financing the debt service: The first was a 1% Local Option Tax on Sales, Meals, Rooms, and Alcohol. The second was an additional $0.06 on the tax rate as a means of broad-based community support to the project. While the first measure passed, the second measure was defeated.
Since then, the Board has worked with partners at the state DEC and the office of Governor Scott, as well as our Congressional delegation, to develop a capital stack to finance the construction of the project and facilitate debt service on the loan in a manner which would result in no impact to the municipal tax rate while keeping user rates at an affordable level. We now have the financing set. A full list of sources and amounts can be found in the town report. This financing plan results in a user fee of $378/yr., and reflects a rate of 94% state and federal funds towards the project. No other municipal wastewater project in the state has seen a rate of outside funds this high. With the loan repayment funds coming from the proposed Local Option Tax, this financing framework means that Montgomery can see the system constructed with no impact on the Municipal Tax Rate to assist with debt service on the system.
Last year, the Town passed this Local Option Tax measure in principle. Now our community needs to adopt a Charter that formally allows for it. For this reason, it’s back before the voters (albeit in a different form) this year. For perspective, this tax would mean an additional $0.05 on your average pint of beer, $0.15 on a burger, or an additional $1.25-$2.00 on a room at one of our Inns or B&Bs. So, that’s why we’re addressing the issue this year. A copy of the proposed charter can be found on the town website, and copies will be available in each voting booth. Please take some time before March 1st to check it out.
