The Derry Town Council has begun talking about the town’s 2017 budget, through hard-won lessons of this past year.
The Council discussed the upcoming budget process at its Dec. 15 meeting. While the talks were informal, they are pointing toward both more direction to town staff and more analysis of Derry and surrounding towns. Though no decision was made, a 15-cent tax reduction was mentioned as a possible goal.
Unexpended Fund Balance
The Council, acting as representatives of the town, took $695,000 out of the Unexpended Fund Balance (UFB) to make last year’s budget work. The town has a tax cap, and according to RSA 32:5-b, the estimated amount of local taxes to be raised for the fiscal year cannot exceed the local taxes raised for the prior year. However, there is a provision that if the local taxes for the previous year were reduced by fund balance, that amount can be added back into the following year’s working budget.
Councilor Richard Tripp referenced the statute and asked, “Is that a ‘get out of jail free’ card for us?”
Not necessarily, according to Interim Town Administrator Susan Hickey. She reminded the Council that the amount taken from the UFB was specifically allocated to cover the increase to the Veterans Tax Credit and overlay. “According to the DRA (Department of Revenue Administration), we don’t qualify because we withdrew the funds to cover a specific purpose,” Hickey said. She has been working with town counsel to come up with a solution.
Comparative Analysis
Councilor David Fischer, a member of the newly-formed Budget Advisory Committee, said the committee is looking at data comparing Derry to surrounding towns of similar size. “We are looking at the proportionate cost, especially with some of our larger departments,” Fischer said.
Fischer passed out a chart of similar-sized towns and their tax rates. “Of the seven communities, Derry does have the largest tax rate,” Fischer said.
“But our municipal portion of the tax rate is not the highest,” he added.
Fischer’s data included the following:
- Derry, population 32,960, tax rate $29.23, town portion $9.16;
- Concord, population 42,478, tax rate $27.34, city portion $9.60;
- Dover, population 30,597, tax rate $26.61, city portion $10.47;
- Merrimack, population 25,408, tax rate $24.72, town portion $5.49;
- Salem, population 28,611, tax rate $21.39, town portion $10.65;
- Hudson, population 24,688, tax rate $21.25, town portion $6.33; and
- Londonderry, population 24,305, tax rate $21.02, town portion $4.94.
Present, past and future
The 2016 budget, which included cuts to fire, police and public works personnel and overtime along with the closing of a fire station, brought resistance and divided the community. The Council first directed former Town Administrator Galen Stearns to create a budget reducing the tax rate by $2.50. When even the Council found this unworkable, they asked Stearns for a reduction of $2. The eventual reduction, with the cuts, was $1.21 on the tax rate, but the May 19 vote was overturned in a special election Oct. 13, and the reduction to the tax rate ended up at 19 cents.
Fischer referenced that when he said, “We have had a tremendous amount of input and discussion since then.”
The feedback received was valuable, Fischer said, and showed how much residents value town services such as police and fire. But the other message was, “We still need to reduce the tax rate.”
“We need to give direction to the Interim Town Administrator and the departments,” Fischer said. “We need to come up with something we all think is reasonable.”
He suggested a goal of reducing the tax rate by 15 cents and the Council agreed to discuss that in its January meeting.
There was a small silver lining, with Hickey saying she had negotiated for a rate reduction with Primex, the town’s insurer for workers’ compensation and liability. Employees went through a certification program and that resulted in a $56,000 cut to the town’s premiums, with half being applied to workers’ comp and half to liability.