Chester considers July to June budgeting, tax year Current Jan-Dec fiscal year presents a series of problems

By Shawn Cunningham
© 2026 Telegraph Publishing LLC

At its July 15 meeting, the Chester Select Board continued to look at the costs of the services the town provides, including recreation and planning/zoning/assessment. But it was the recommendations of the town’s auditors –including transitioning to a fiscal year from the current calendar year budget — that prompted a lengthy discussion that is likely to continue through the rest of this year, the same way the local options tax did in 2025.

At an earlier meeting, the auditors, RHR Smith of Buxton, Maine, told the board that one way to make budgeting and handling payments to the school system easier and less problematic would be to change from a calendar year budget to the same July-June fiscal year used by school systems and other government agencies. According to the Vermont League of Cities and Towns, about two-thirds of Vermont towns have gone from calendar year — January to December — to July to June budget cycles.

The town could also institute quarterly property tax collection rather than making it all due nine months into the year. Currently, the town takes out a loan (called a tax anticipation note or TAN) to bridge the gap between Jan. 1 and the property tax deadline day of Sept. 15. This would save upward of $84,000 per year in interest paid on TANs that the town takes out. Quarterly payments such as Sept. 1, Dec. 1, March 1 and June 1 would give the town the cash flow to keep a positive general fund balance and avoid borrowing.

Among the advantages the VLCT cites for operating on the July-June FY is that the town would not begin operating on a budget in January that would not be voted on until Town Meeting day in March. VLCT also notes that auditing of the previous year could be finished in time for Town Meeting. The change would also put winter road maintenance into a single year in which – with quarterly tax payments – there is sufficient cash flow to cover that expense without borrowing.

One large disadvantage of moving to a July-June fiscal year is that the transition year will be 18 months long to get from Jan. 1 (when the town’s year normally starts) to July 1 for the next fiscal year. This will mean collecting 18 months of municipal property taxes to bridge the extra six months. Municipal taxes are roughly one-third of most tax bills. The education property tax would not be affected by the change. In its discussions, the Select Board acknowledged that the public will need much more information.

Getting there from here

The Select board cannot make the change to on its own. It must be approved by voters in-person at either a  special meeting or during the annual Town Meeting. The next Town Meeting is Tuesday, March 2, 2027.  Once approved, however, the 18-month bridge budget cannot be voted on until the following year. The timetable looks like this:

• 2026-27: Planning, public outreach and policy development.
• March 2027: Voters approve fiscal-year conversion.
• March 2028: Voters approve 18-month bridge budget.
• Jan. 1, 2028 – June 30, 2029: 18-month bridge budget in effect.
• March 2029: Adoption of first July-June fiscal budget.
• July 1, 2029 – June 30, 2030: First July 1-June 30 fiscal year budget.

Changing how the budget is voted?

Board member Peter Hudkins introduced the idea of moving the annual municipal budget vote to the Tuesday Australian balloting, which attracts more of the town’s voting population. Chester traditionally votes on budgets and other public questions from the floor at the in-person Monday evening meeting, while electing officials and voting on bonds occurs on Tuesday by secret ballot.

Hudkins then suggested that the town could hold an information meeting on the budget before the Australian ballot.

Board chair Lee Gustafson said he is in favor of that idea because of the greater voter participation but said the downside is “that you have the uninformed voter who just sees a number and says  ‘I don’t like that number and I’m going to vote against it.’ ”

Gustafson wondered how they would balance the two.

“You will lose your Town Meeting,” said Town Manager Julie Hance. “Towns that have everything voted Australian ballot have nobody show up at their Town Meeting. That’s why I said to have good discussion before you go down this way. Just talk about what you are losing and whether you are gaining good participation from people who understand what they are voting on.”

“The other way to do it,” said Hudkins, “is by using a paper ballot at [in-person] Town Meeting.” He added that if the local option sales tax had been voted by voice, some of those present would have been intimidated and not voted against it.

“If that had been a voice vote, it might have passed,” said Hudkins.

Deb Epler, Chester’s finance chief, said that in losing the in-person meeting, the town loses the opportunity to hear what people don’t like about the budget. “With the Australian ballot it’s either yes or no. So you could have just spent six months putting a budget together … and you have no idea what was the thing” that taxpayers objected to.

“This can stay on agenda items in the future,” said Hance.