By Kolby LaMarche

Progressive Mayor Emma Mulvaney-Stanak warned the city yesterday that the city faces a $10 million to $12 million operating budget deficit for Fiscal Year 2027, the third consecutive year of multimillion-dollar shortfalls.

The announcement, delivered at the press conference Wednesday, marks the latest chapter in a financial challenge that began during the COVID-19 pandemic and has persisted despite repeated attempts to close the gap.

Fiscal Year 2027 begins July 1, 2026. The projected shortfall represents roughly 10–12 percent of the city’s annual general fund budget, which has hovered near $100 million in recent years.

City officials trace the structural imbalance to, again, the loss of one-time federal aid, rising employee healthcare and pension costs, inflation in operational expenses, and a property tax base weakened by the large share of tax-exempt land owned by the University of Vermont, Champlain College, and nonprofit medical and religious institutions.

The deficit first surfaced publicly in late 2023, when the administration of then-Mayor Miro Weinberger projected a $9 million gap for FY 2025. 

That figure grew to $13.8 million after city auditors discovered errors in projected personnel costs. A subsequent review added another $1.1 million, pushing the final FY 2025 shortfall closer to $14.1 million.

To close the FY 2025 gap, the city council in June 2024 approved a package that included:

• $3.7 million from the remaining American Rescue Plan Act (ARPA) funds
• A temporary doubling of the local option gross receipts tax and hotel tax from 2 percent to 4 percent, expected to raise $5.6 million
• $2.5 million in savings from leaving vacant positions unfilled
• $1.5 million in new or increased user fees, including charges for certain fire department responses and parks programs
• Various departmental cuts and efficiencies

Property taxes still rose nearly 18 percent across FY 2024 and FY 2025 combined, but the administration and council deliberately limited further increases to protect renters and homeowners on fixed incomes, according to estimates. 

When Fiscal Year 2026 budgeting began earlier this year, city finance staff identified a new $8 million gap even after the previous fixes. In response, the Mulvaney-Stanak administration eliminated 25 positions city positions, including five in the Community and Economic Development Office (CEDO) that focused on affordable housing and homelessness services. 

Additional savings came from reduced overtime, delayed equipment purchases, and contract renegotiations.

Despite those measures, the deficit has re-emerged for FY 2027 at a similar or larger scale.

Speaking Wednesday, Mayor Mulvaney-Stanak told the city that it can no longer rely on one-time revenue or temporary tax increases. She has instructed all departments to submit budgets that contain only existing programs and to identify potential cuts immediately.

The mayor also directed staff to explore “enhanced revenue options,” including adjustments to permitting and licensing fees, public-private partnerships, and economic development initiatives that could broaden the tax base. A citizen budget advisory committee formed in 2024 will continue meeting through the spring to collect public suggestions.

The city’s charter requires voter approval for any local option tax that exceeds statutory limits or for certain bond issues, a restriction that neighboring municipalities such as South Burlington and Colchester do not face to the same degree. 

That requirement has forced Burlington officials to pursue smaller, temporary tax-rate-neutral measures or to place larger tax questions on the ballot.

Housing advocates expressed alarm that continued cuts to CEDO could slow progress on the city’s goal of creating or preserving 1,000 affordable units by 2030. Burlington’s median rent for a two-bedroom apartment currently stands at $1,850, according to the latest figures from the Vermont Housing Finance Agency, and the city’s emergency shelter system remains over capacity.

Public safety spending has been partially shielded. Voters in March 2024 approved a dedicated property tax override that funds ten new police officers, library security upgrades, and mental health co-response teams. That revenue stream remains in place for FY 2027.

Commercial property growth, once a reliable source of new tax revenue, has slowed since 2020. Downtown office vacancy rates remain above 20 percent, and several large development projects have been delayed or scaled back.

The mayor’s full FY 2027 budget proposal is scheduled to be presented to the City Council on December 15th. Departmental hearings will follow in January and February, with a final vote required by late June 2026.

Burlington Daily News will follow this story.