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Separation Yields Faster Tax Relief

Similar Amount of Tax Shift as Merger

9/28/20 Joint Board Meeting

by Ken Signorello

September 29, 2020

Finance Director Sarah Macy presented her much-anticipated "What would Separation cost?" analysis at the September 28th Joint Board Meeting.


Her report answered a late-July request for this data from 27 residents, including former Selectboard member Annie Cooper, who had fervently requested such a study, to help residents better understand merger and its alternatives.


In her systematic and thorough report, Sarah showed how she homogenized the Town and Village expense budgets — despite the interplay between them, different budgeting procedures, and a variety of revenue sources — so she could combine their costs. Then she separated each department into TOV and Village Tax shares. An impressive feat alone! 


Relatively few assumptions were needed to accomplish this. Knowing how much a service costs and who pays, it’s a matter of applying the grand list ratio (42% Village, 58% TOV) to those items paid for by the town.  (The grand list shows the valuation of taxable properties.  With more acreage in the TOV, it’s not surprising it would show a higher percentage of the total value.)


For example, the Essex Police Department is totally paid out of the Town Budget, so its cost gets split 42% Village, 58% TOV. That’s a simple one. The libraries are on the other end of the spectrum. There are two libraries. Sarah had to take into account the small stipend the Town pays to the Village to support the Brownell library ($15,000) and account for the amount that comes to Essex Free Library from Town taxpayers living in the Village.  This is not the only department with a similar situation. There are at least four.

For Merger it’s just a matter of taking the two adjusted amounts, adding them and splitting them by the Grand List ratio. Simple, right? Sarah did this for 31 budget segments. This is where the first set of assumptions comes into play.  She began with the FYE20 Budget, and assumed no changes. 


To figure out the situation if separated, grander assumptions are required. 23 of them to be exact. All laid out on two pages in the report. For example, if separated, how would the Village satisfy its needs for Police, as it would have none initially?  Would the Village need to hire its own Assessor, and would the Town Rec. Dept. need new space?  Many, many assumptions. 


Readers are encouraged to take some time to study this document and form your own conclusions.


Village Trustee George Tyler claimed that “If you imagine the Town of Essex by itself ... without the Village tax base, I don’t think … you’d quite have the extent of services that the Town has evolved."

Although the Town saw no tax increase this year and the Village did, Tyler asserted, “The Village, I think, has existed for many years living with a much tighter belt. ... And I think it would be some big adjustments for the Town. “


His boldest claim, in the face of data that showed how similar the costs of merger and separation could be: “I think Separation would be a kind of a catastrophic scenario for both sides. I think we would have to think long and hard before we took that step.”


Resident Tracey Delphia shared her thoughts: “For three years folks have been looking at merger. ... We just got the separation numbers, and I don’t think that anyone in good conscience should look at those numbers and say ‘no one wants this’ and not look at them again. You need to digest them, take a step back, really focus what that means, what those possibilities could be. … Ask yourself some hard questions and talk to your neighbors. You may be surprised.” 


The Bottom Line: Separation vs Merger

It all boils down to Sarah’s observation that: “This results in the same change in taxes for TOV and Village taxpayers as the merged scenario — about 20% each. 


The primary difference with a separation scenario is that change happens all in the first year, instead of spread over a negotiated time frame.” Again, based on many, many assumptions. 


Sarah also observed that many services may go unused by certain taxpayers, but they are still included in everyone’s taxes. The Fire Department is an example: you hope you don’t need it, but you pay to have it there. 

The separation numbers don’t tell the whole story for either part of town. While a merger causes the Village to forfeit its autonomy and control of its assets, separation would keep those intact and allow both parts of town to maintain local control of the departments they hold most dear: libraries, planning, fire, recreation and parks. 

Other Items

The two boards discussed the merger charter, noting two significant differences between the Village and Town versions: Selectboard Representation and Ordinance Approval Process. 


While the Selectboard has insisted on “3+3” — the fair representation charter change approved by voters townwide  in March — the Trustees prefer to maintain an uneven representation scheme (3+3+1).


The VT Legislature has adjourned their current session without considering 3+3. However Chairperson Haney indicated that Marybeth Redmond, if re-elected, has already committed to reintroduce 3+3 at the opening of the next legislative session in January. By our count, all 8-3 and 8-1 candidates have indicated willingness to re-introduce H.944 (3+3).


Another difference remaining is the ordinance approval process. The Village is moving forward, defaulting to state statute which requires no public hearings. The Town’s ordinance approval process currently requires two public hearings. The Selectboard would like one or more hearings in the merger charter.


The Selectboard moved and voted to approve the hire of an Assistant Town Manager, and the Village blessed it with a vote of their own.


Even though the ballots are already in your mailbox, Town voters will be relieved to know their Selectboard has now officially warned the budget-to-ballot question for November 3rd.

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