While unexpected revenues and some juggling brought the proposed town tax increase for 2014 to zero, some Town Councilors pressed for and won further cuts. The Town Council took its final vote on the 2014 budget at its May 14 meeting. The final bottom-line budget passed 4-3, with Councilors Brad Benson, Neil Wetherbee and Phyllis Katsakiores opposed. Katsakiores, who was having health problems, participated in the discussion by speaker phone.
Town Administrator John Anderson and Chief Financial Officer Frank Childs presented the budget and the proposed changes. The working budget after the May 2 public hearing was $37,093,858 for all town services, plus $6,425,869 for water, wastewater, cable and the TIF (Tax Increment Finance) district, which are self-funding. The total budget was $43,519,727.
Anderson and Childs wielded their red pencils to bring it down to $37,061,798 for town services, and a total of $43,487,667. Anderson and Childs explained the changes. The town’s assessed value has risen to $2,346,884, a $14,945,245 net increase over the 2012 valuation, Anderson said. That brought the projected tax rate to 7 cents per $1,000, down from the projected 9 cents per $1,000.
After its recent legal troubles, the Local Government Center was ordered to return funds to the towns it serves, and did so in the form of a “contribution holiday,” or temporary reduced rate, Anderson said. Derry will be able to retain $80,000 as revenue, slicing another 3 cents from the proposed tax rate. Cutting $17,060 from Information Technology also factored in, he said.
Anderson and Childs then looked at the “690 accounts,” a section of the budget reserved for capital items of $5,000 or more. They determined to use fund balance for those items, instead of raising the money by taxation.
The efforts by the two administrators brought the estimated town portion of the tax rate down to $10.39, a zero percent increase over 2013, Anderson said.
“Will this create problems down the road?” Benson asked of using the fund balance. Anderson said it would. “You will need $900,000 next year just to keep you even,” he said, noting that the town would be going into the 2015 budget process with a $400,000 hole.
The problem with the town’s tax cap, Anderson explained, is that “If we use the fund balance this year, we can’t use it next year.” “So next year we as a council would have to be more diligent, more particular?” Councilor Mark Osborne asked. “You would have to find $400,000,” Anderson responded.
Benson worried that the cuts would affect “goods and services” provided by the town, and noted that as union contracts cannot be changed, the town would have to start cutting personnel. “We are going to create problems for the next council,” Benson said. He also expressed concern about a proposal by community member Lynn Perkins to cut all household taxes by $1,800.
Some Council members pressed for further cuts and zeroed in on the Farmers Market and Economic Development. In earlier meetings, Police Chief Ed Garone had spoken to the need for replacing police cruisers, leasing 11 new cruisers at $117,000. Garone cited safety issues and noted that several cruisers have more than 100,000 miles on them.
Osborne asked, “Instead of 11 new cruisers, could you come up with a number for four?” Osborne, who had spoken against leasing new cruisers, said he was willing to amend his prior position.
“We could use the four new ones to replace the ones with the highest mileage,” he suggested.
Anderson said he didn’t have that number at hand. “I trust my department heads to run their own departments,” he said.
Garone took the microphone and said it wasn’t that easy. He didn’t have the trade-in value at hand for the four cars with the highest mileage, he said. A ballpark figure of $30,000 had been used for all 11 cars, “the good, the bad and the ugly,” he said, adding, “but here you’re just talking about the ugly.”
The concept of the lease policy was to level-fund the vehicle line and keep the town away from “spikes,” Garone pointed out. It was a progressive policy 15 years ago – “We were one of the first departments in the state to do this,” he said.
Because of the tax cap, funding only four cars would also create a hole for next year, Garone said.
Childs said, “If we don’t turn in those seven cruisers, we will have to look at how much we need to increase the maintenance line.”
Wetherbee and Benson chided Osborne for allegedly not preparing for the budget process. “With all due respect, you should have done your homework,” Wetherbee said. Benson added, “You should have talked to Frank.”
In view of Anderson’s and Childs’ work on further cuts, Osborne withdrew his motion on the police cruisers.
The Council voted 4-3 to accept the budget and voted 7-0-0 to accept the Capital Improvement Plan at $3,316,195.