Town Council Wants Tax Rate Down $2 Per Thousand

The Derry Town Council will try to find ways to save an additional $2 per $1,000 from its tax rate, and has directed Town Administrator Galen Stearns to look at how that can be done.

At the Dec. 16 meeting, the Council took no action on a scenario Stearns had researched after they asked him to see what reducing the tax rate by $2.50 per $1,000 “looked like.”

Stearns reported back and told them that for a $2.50 reduction, they would have to look at cutting two Finance Department employees, nine Department of Public Works (DPW) employees, 16 police officers and 22 firefighters.

The Council took no action on the $2.50 per thousand scenario, but later voted unanimously to direct Stearns to look at a $2 per $1,000 reduction.

“I am working on that now,” Stearns said Monday. “I won’t know what it will look like until I get the final crunching of numbers.”

Stearns said he had asked the department heads to get back to him with recommendations on where to cut.

“This is the goal,” he said. “The Council would like me to present them with this as a budget.”

The 2014 tax rate set by the Department of Revenue Administration in October is $29.42 per $1,000, down from $31.49 per $1,000 in 2013. The breakdown is $9.72, town; $16.11, local school; $2.44, state school; and $1.15, county.

At the Dec. 2 meeting, Stearns had been directed to see what a $2.50 per $1,000 reduction would “look like.” To achieve a $2.50 per $1,000 cut equates to cutting roughly $6 million from the 2016 budget, or 49 positions.

Stearns based his calculations on the current approved budget, the 2015 budget. The FY 15 budget is $42,012,542, he said, with the addition of the Veterans Tax Credit of $48,850, which was voted in between budgets. The town portion of the tax rate is $9.70 per $1,000. With the reduction of $6,274,856, a cut of $6,274,856 is necessary, he said. It would reduce the town portion of the tax rate to $7.20 per $1,000.

Stearns did a ranking of Derry against 10 other Southern New Hampshire towns. Derry’s town tax rate is the highest in towns from Concord to Portsmouth, he said, and is higher than the average of the 10 towns, which is $8.43 per $1,000. In assessed valuation Derry is #8 on the list. In the area of “tax commitment” it is #5, at $72,625,418, but close to the average of the 10 towns, which is $71,247,523.

Derry is #8 on the chart in terms of tax commitment per person, with the Derry number at $2,194 and the average for the 10 towns $2,500.

An arbitrary cut of $2.50 will have further implications than residents fighting their own fires and solving their own crimes, according to Stearns. He reminded the Council of its tax cap, which does not allow the town budget to increase over the rate of the Consumer Price Index. That’s averaged out at 1.65 percent for the past six years, he said, adding, “It would take us a significant amount of time to get back to where we are today.

“If we want to restore services, we will be limited by the charter,” Stearns pointed out.

Stearns did not recommend the “drastic” cut of $2.50, suggesting instead that the Council look at other means of lowering taxes, such as increasing revenue and increasing the tax base.

When Chairman Mark Osborne asked for comments on Stearns’ research, the Councilors were silent. But speakers in the Public Forum had plenty to say.

Community member Richard Tripp said he had also been researching area towns. He pointed out that Londonderry’s burden of taxes on residential property is 62 percent compared to Derry’s 82 percent.

“This is why a lot of people are dead set against higher taxes,” Tripp said.

Tripp agreed with Stearns that it would be hard to come back from such a drastic cut, and suggested instead that the Council continue its current policy of trying to attract business and industry. “Exit 4-A will be a boon to that,” he said, noting that most of Derry’s potential industrial property is landlocked.

Bruce Brown, a retired teacher, agreed. Other towns have “something going for them,” he pointed out. “Merrimack has Anheuser-Busch, Salem had the racetrack and may have a casino, Concord has government, Londonderry is near the airport.”

Resident Marc Flattes agreed that a $2.50 cut was too deep. “What would $1 look like?” he asked Stearns.

Stearns said he could run a different scenario with less drastic reductions.

Resident Hal Schindlein is a retired municipal worker from another town and said the benefits offered today’s municipal employees are far greater than what he received. “I retired 10 years ago, and in the first seven of those years, we got no raises. In my last three years we got a 1 percent,” he said. “We got 15 sick days when I started, which was seven by the time I retired. I had 50 days left when I retired, and I got $10 a day for them.

“In these days and times, we have to cut back,” Schindlein said.

Resident and Realtor Steve Trefethen defended the proposed $2.50 cut, saying Councilor Dave Fischer, who proposed looking at it, was “spot on.”

“Dave was just responding to citizens’ requests,” Trefethen said. “We have to have a goal.”

Flattes argued for changing the Charter and taking the school budget under town auspices.

But resident and State Rep John O’Connor, R-Derry, said he had been on the last Charter Commission and it would be a “huge effort” to dissolve the Derry Cooperative School District.

“To solve the problem, you need more than one approach,” O’Connor said.

Stearns will look at further options for cuts.