Montpelier Officials Expect Budget Deficit to Shrink by 2027 Year End

Montpelier officials are looking at a fiscal gap on paper for the upcoming year, but local leaders do not expect the village’s bank accounts to take the full hit. During a budget meeting, Nikki Uribes, village director of finance, laid out a 2027 fiscal plan featuring $14.6 million in expected revenue against $18.2 million in budgeted expenses, creating a projected deficit of $3.6 million.

The General Fund and Historical Spending Patterns

That $3.6 million gap looks large at first glance, but finance officials point out that budgeted spending rarely matches actual outlays. The general fund, for instance, faces a projected shortfall of $619,986 in 2027, which would trim its balance by 11.48% down to $4.8 million.

That drop relies on a strict worst-case scenario. “That’s only if we spend every dollar,” Uribes said during the meeting. History suggests a different outcome. General fund balances climbed steadily each year from 2022 through 2025. Village manager Jason Rockey and finance staff plan for conservative outcomes precisely to maintain a cash cushion for emergencies.

When Mayor Steve Yagelski questioned whether potential income tax dips from layoffs at Powers and Sons might alter that math, Uribes confirmed those losses were left out of the baseline calculations. Income tax collections regularly outpace initial projections, softening the blow when individual sectors face local employment shifts.

Capital Funds and Fixed Obligations

Other major accounts face their own specific pressures. The tax capital improvement fund anticipates taking in $603,246 while shouldering $808,200 in expenses, leaving a $204,954 deficit that would drop that fund’s balance by 27.88%. Local taxes account for $578,200 of that revenue, with the remainder coming from miscellaneous streams and $1,100 in special assessments.

Unlike the general fund, capital improvement money tends to leave the bank because infrastructure projects move from blueprints to concrete. “To be honest, in this fund, we generally do spend money because we’re spending actual tax capital projects and these are things we generally will spend the money,” Uribes explained. If revenue falls short, the village will have to evaluate scaling back asphalt and street maintenance.

Meanwhile, the sewer capital improvement fund tells a different story. It currently expects revenues to outpace expenditures by $216,913, boosting its balance by 9.92% to an estimated $2.4 million by the end of 2027. That account receives a portion of the village’s 1.6% income tax, which was explicitly put in place to tackle combined sewer overflow projects. The village still carries a $2.06 million balance on three remaining CSO debt obligations.

With those tax revenues set to expire at the end of 2029, council members are already debating what comes next. Councilwoman Heather Freese suggested seeking a renewal at the ballot box, while Councilman Chris Kannel suggested letting that tax go away but replacing it with the same tax for a different project. Freese expressed hesitation, pointing to the recent, hard-fought campaign required to pass a separate safety tax.

Utility Funds and Intentional Drawdowns

The village’s three primary utility funds—water, light, and sewer—rely almost entirely on customer service charges. Rate studies are underway through Courtney and Associates to evaluate pricing structures, though final results remain pending.

Projections show water expenses exceeding revenue by $365,768, while sewer costs outpace incoming funds by $194,482. The light fund faces a projected deficit of $2.5 million, shrinking its reserve by 47.31% to $2.8 million.

That utility deficit was intentional. Councilman Nate Thompson noted that the light fund was the utility council didn’t increase a few years ago. “That’s correct, to spend down cash,” Rockey said.

As Montpelier moves toward 2027, the open question remains how closely actual expenditures will track these conservative budget estimates, and whether upcoming utility rate studies will reshape how services pay for themselves.