As Town Administrator Galen Stearns presented his proposed FY 16 budget to the Town Council and a crammed meeting room, the Council had almost as many questions about Stearns’ process as they did about the budget itself.
After efforts to craft a budget based on a $2.50 cut per $1,000 to the town portion of the tax rate and then a $2 cut, Stearns presented a budget Tuesday night, April 21, that calls for a $1 cut to the tax rate and leaves many components of Derry life untouched.
Stearns’s first effort, shown on PowerPoint slides, presented a proposed cut of $2,435,005.70 to the tax rate. This would leave Derry with a town tax rate of $8.71 per $1,000, as opposed to the current town tax rate of $9.72. It would result in a $1.01 cut to the tax rate. Components of the proposed budget are as follows:
• Leaving unfilled four vacant firefighter positions, a savings of $384,424.70;
• Cutting back on police overtime, a savings of $25,000;
• Eliminating the public health insurance buy-out, saving $9,417;
• Delaying the hiring of an assessor to replace retiring David Gomez, saving $30,000;
• Reducing hours for Financial Internal Auditor, saving $25,120;
• Eliminating a new employee for the Transfer Station, saving $12,231;
• Reducing Department of Public Works overtime, saving $5,000;
• Shifting the hydrant rental fee from all taxpayers to town water users only, saving $414,013; and
• Using the Undesignated Fund Balance to fund overlays, the new Veterans Exemption, and to offset taxes, saving $1,694,800.
Stearns’ budget includes the addition of $50,000 to assess the town’s utility use and $115,000 to hire an Economic Development Director.
After concerns raised by the Council and townspeople, Stearns showed what the budget would look like with the hydrant rental charges added back in. The town would be looking at a tax rate of $8.88 as opposed to the $8.71 with the hydrant rental removed.
How did we get here?
Town Councilor David Fischer began his questioning of Stearns by delving into the process used to come up with the budget. “I would like to know the frequency with which you met with department heads,” he said.
Stearns said the process began with Finance Director Susan Hickey asking the departments for their budget proposals. “She met with senior staff and went over their needs,” he said. “They were aware of the Council goals.”
In subsequent meetings Stearns learned that the department heads wanted a level-funded budget. But following the directive of the Council, he said he knew he had to come up with a budget that would reduce the tax rate and at the same time not impact services.
“I established the $1 goal and we worked on it,” Stearns said.
Fischer asked, “Did you ask the department heads to meet with members of their departments and come up with cost-saving strategies?”
“Not in so many words,” Stearns said. He did discuss other savings with the senior staff, such as solar panels and LED lights, he said. Having the utilities reappraised will also save the town money, he said, as they won’t be going strictly on the appraisal by the Department of Revenue Administration (DRA).
“We discussed a number of initiatives,” Stearns said.
“How often did you meet with the department heads?” Fischer asked.
Stearns said, “Eight to 12 times.”
Fischer asked if Stearns had met with the department heads and answered questions, and Stearns said he did.
“Did you consult with any people outside the town, such as financial experts?” Fischer wanted to know.
Stearns said he did not.
Councilor Mark Osborne took the microphone to ask, “When you went to the department heads to indicate that cutting the tax rate was a goal, did they tell you the goal should be level-funding?”
“The department heads advocated for their departments,” Stearns said. “They did come forward with some long-term savings ideas but none of these were immediate.”
“Their first reaction was, ‘No, level-fund this?’” Osborne asked.
Stearns said yes.
“And despite the Council goal, this was met with polite resistance?” Osborne pressed.
“They were looking for the best interests for their departments,” Stearns said.
The Council also grilled Stearns about raises for staff members, with Osborne asking if step increases were built into the budget and Stearns saying they were. He said that with the exception of senior staff, the town provides step increases to staff members until they reach the top of the step. The town also provides cost-of-living raises, which employees on the top step still receive, he said.
“The raise is Cost-of-Living, the step is their progress in the wage scale,” he said.
Overtime (OT) also came under the Council’s microscope more than once. Osborne asked about the total OT budget planned for 2016.
Osborne also asked about “proficiency pay” and Stearns said that was contractual and gave people a stipend when they reached various levels of education or certification. Both police and fire have proficiency pay, he said.
Chairman Tom Cardon said to Stearns, “It was my understanding that if no contract is in place, there won’t be step raises. Is that correct?”
Stearns said the town was not “legally obligated” to give the step raises but had done so in the past.
Five employee groups are currently working on expired contracts.
Consolidation of Services
Osborne also asked if “consolidation of services” had been discussed and Stearns said it had, but warned that it isn’t a quick fix.
“Could we consolidate maintenance services for town departments, or consolidate dispatch with the region?” Osborne asked.
“We have started reaching out to other communities,” he said. “But this is a long-term goal.”
“Are you optimistic that it might happen in 2017?” Osborne asked.
Stearns said that consolidating dispatch would be a multi-year effort involving surrounding towns, creating a separate board to oversee it and building a facility.
“Were the department heads asked to look at this option?” Osborne asked.
“I broached the subject. It did not take off,” Stearns responded.
There were no cuts to the road budget, Stearns said. In the earlier iterations up to $1 million in public works funding had been cut.
The board also had questions for Stearns about the proposed Economic Development position. Osborne said, “My understanding when we began this process was that that position would not be funded. What changed?”
Stearns said he had been going to a number of meetings with Chambers of Commerce, businesses and surrounding towns. His take-away was, “We need to sell our town. We need to have someone to sell it.”
Stearns said the town has multiple groups, such as the Chamber, the downtown business association and the Downtown Committee, but each was responsible for its own piece.
“We need a better Web site and a person to champion this,” he said.
“Would the person be hired with community and Council input?” Osborne asked. Stearns said he or she would.
Nobody wins, at least this round
Town Councilor Phyllis Katsakiores thanked Stearns for his work and said in her opinion, even the $1 cut was “too much.”
Osborne also asked Stearns, “Is if fair to say that the charities have been restored?” An earlier budget proposal suggested cutting funding to The Upper Room, CART (Cooperative Alliance for Regional Transportation) and other nonprofits
It has been restored,” Stearns said.
“Did anybody on this board ask you to cut that?” Osborne asked.
“They did not,” Stearns responded.
“Is Taylor Library back in the budget?” Osborne asked. The East Derry-based library had seen threats to its funding in the past two budget cycles.
“It is in the budget,” Stearns said.
“Were you ever asked to cut Taylor Library?” he asked.
“I was not,” Stearns said.
Councilor Al Dimmock said, “As this budget stands, I have at no point agreed with it. We need to make cuts. I haven’t heard any cuts proposed by department heads.”
He told department heads, “You need to step up to the plate. I want to see cuts. Don’t tell me you can’t do it. If you can’t, you’re not doing your job.
“I am not happy with anyone in this town,” Dimmock added.
The public hearing on the budget is May 5, after which it will be voted on by the Council.