Financial Management

This is an update to an article that was previously printed in the August-September 2018 edition of the VLCT News.

There are nine situations in which a legislative body (selectboard, city council, or village trustees) may borrow funds without voter approval. Outside of these situations, there must be specific voter approval at an annual or special town meeting. 24 V.S.A. § 1786a(b). Voter approval to borrow is not required in the following instances:

1. Borrowing to pay current expenses so long as the term is one year or less. 24 V.S.A. § 1786. There is no statutory definition or explanation of a “current expense.” Our rule of thumb is that a current expense is one that will be paid for in a year or less. A current expense could arise from provision of a service or from the acquisition of a public improvement or asset. In our opinion, simply because something is an asset or a public improvement does not mean that it cannot be considered a current expense under 24 V.S.A. § 1786. We view the term of the note (one year or less/more than one year) as the defining characteristic.  

2. Borrowing in anticipation of taxes so long as the term is one year or less and the amount borrowed does not exceed 90 percent of the municipal taxes assessed for that year. 24 V.S.A. § 1786.  

3. Borrowing in anticipation of the sale of bonds as long as the term is one year or less. 24 § V.S.A. § 1773(a).   

4. Borrowing in anticipation of grants as long as the term is one year or less. 24 V.S.A. § 1773(c).  

5. Borrowing for the purchase of tools, equipment, and materials necessary for the construction, maintenance, or repair of highways and bridges, as long as the term is five years or less. 19 V.S.A. § 304(a)(3); 24 V.S.A. § 1786a(b).  

6. Borrowing from the State Municipal Equipment Loan Fund for the purchase of construction, fire, emergency, or heavy equipment or vehicles, as long as the term is five years or less. 19 V.S.A. § 304(a)(3); 24 V.S.A. § 1786a(b); 29 V.S.A. § 1601.  

7. Alternative financing of personal property, fixtures, technology, and intellectual property. 24 V.S.A. § 1789. The selectboard may enter into leases, lease-purchase agreements, installment sales agreements, and similar agreements to acquire assets for the municipality either singly or as a participant in an interlocal contract. Such agreements, however, must contain a “nonappropriation clause” that states that the annual payments by the municipality must be approved by the voters.  

8. Borrowing to retire a deficit with “refunding bonds.” The selectboard may opt to convert a deficit into debt by issuing municipal refunding bonds for an amount equal to the deficit. 24 V.S.A. § 1771. This bond acts by creating a replacement debt which will be paid off over a period of years. 

9. Borrowing for the preparation of engineering studies or plans for public water/wastewater supply systems/ facilities, provided such debt is included in any subsequent public authorization of municipal indebtedness to construct the project for which the planning loans were used. 24 V.S.A. § 4756(e). 

If the municipal borrowing does not fit into any of the above nine categories, there must be specific voter approval at a regular or special town meeting. “The voters of a municipality may authorize specific public improvements and the acquisition of capital assets and finance the same, temporarily or permanently, through debt instruments other than bonds for a term not to exceed the reasonably anticipated useful life of the improvements or assets as provided in this section.” 24 V.S.A. § 1786a. If the improvements or assets are to be financed for a term of five years or less, the borrowing is approved at a regular or special town meeting. If the financing is for a term of more than five years, the municipality must go through the traditional bond authorization process, even if the final form of the borrowing is not a bond. 24 V.S.A. §§ 1755, 1756, and 1786a(c).  

Garrett Baxter, Senior Staff Attorney
VLCT Municipal Assistance Center

It’s that time when we are all preparing budgets and ballot items for Town Meeting Day. Perhaps you have a bond vote planned or a question about a community investment, such as a new piece of equipment or a park. Because the COVID-19 pandemic has alerted the public to the increase in costs this year, it will be more important than ever to carefully explain your proposed budget or project to your community.

From the many hours that you and your staff work to bring forward a reasonable budget proposal or capital project, you are deeply aware of the details. However, your community is not*. This is where a well-crafted communication plan can help you get the word out.

Depending on the budget or project, the communications plan may be simple or complex and may use multiple channels and phases. Let’s walk through preparing for town meeting and informing your community about the proposed budget.

Step 1: Create a communication campaign fact sheet. Who has time to create and then recreate material for every incoming request or outlet for information on your budget? None of us! However, a communication fact sheet will help you easily produce the outreach materials you need for each information channel. As you craft the materials, you will find that you can often copy and paste sections of this fact sheet, adding a photo or a point of emphasis.

Your fact sheet should include the key points that voters should know about the budget, including the total budget amount, the tax rate, the increase over the prior year, and the major items that are affecting the rate (such as paving costs, special projects, increased healthcare costs for employees, etc.). Be sure to include the date, times, and location(s) for the meeting and voting.

Step 2: Determine how information flows. In order to ensure that you create a great campaign, you need to understand how your community gets its information. Is it from the local newspaper, Front Porch Forum, a Twitter feed or Facebook group, or posters in the grocery store? (Don’t forget word of mouth!) Do a quick assessment and create a list of the sources your voters use.

Step 3: Build your plan using your resources. Next, build your plan using your list of sources. Let’s talk about some of them.

Website (FREE). Your website is your flagship source for dispensing accurate information to the public. In addition to providing access to meeting minutes and agendas, zoning information, and annual reports, your website can highlight current information on projects or ballot items. Carve out a space on the front page for an image or teaser that links to a full page about your budget.

Then, build a page that features the information that you need the community to know. Create sections on the page that organize the information logically. For a budget proposal, it might include the budget adoption process, capital improvement program, or general fund budget. Use bullets where possible to make it easy for the reader to skim the details. For example, under general fund budget, you could break down the information into proposed areas such as revenue and expenses, and include a bullet for the school district information.

Remember, your web-based information can be easily and continually updated at no cost!

Social Media (FREE). Keeping multiple social media channels updated can become time-consuming. Therefore, choose one channel to start and post to it regularly. For example, create a Facebook page for your town or city and plan to post to it twice each week in the months leading up to Town Meeting Day.

What do you post? You can share required information such as when and where the vote will take place. Highlight any new projects or items in the budget. Include a picture of regular work that is part of the budget – like paving or grading roads, fire fighters headed to a call, or a family using a park – and note in your text that the budget provides these resources. Be sure to always include a link to your website to access more information.

Front Porch Forum (limited posts). Front Porch Forum (FPF) is a widely used resource throughout our state and can be highly effective as it lands directly in a resident’s email box. There are limitations on how many times you can post each month, so be sure to use each one. If you are allowed two posts per month, plan to include a succinct overview of the key points of the budget and refer readers to your website for more details.

Print Media ($). You know you need to provide notice of the vote/annual meeting in your paper of record, but you can also use the newspaper to provide an easy-to-read advertisement. A well-designed ad should include the critical points that are affecting your budget this year along with a recap of the important services that are provided in the budget. Plan to publish it once or twice. Always refer readers to your website for more information.

You can also create printed materials, such as a flyer that can be hung in your library, grocery store, or other community facility. Many times, the flyer is handy for your city council or town selectboard to use when they are speaking with constituents. It can also be inserted into your local newspaper.

Using these communication channels, you can circulate your information widely, which in turn can help get your budget passed.

Coralee Holm
Director of Community Engagement & Innovation
City of South Burlington

Note: Regarding the legal context for “campaigns,” please see Do Towns Need to Fill Out Campaign Finance Reports? and Vermont’s improper influence law.