When the dust settled, there was still plenty of dust. In its special meeting May 12, the Derry Town Council gave the public an insight into members’ thought processes on the proposed 2016 budget. In front of a mostly respectful crowd, the seven members talked about what they could and couldn’t tolerate in the areas of cuts, shifting of costs and tapping the Undesignated Fund Balance (UFB). By the end of the session, several Councilors admitted they still didn’t know how they were going to vote.
Chairman Thomas Cardon opened the session with an unveiled reference to previous meetings, in which he made frequent use of his gavel to quiet unhappy residents. “The last meeting did not end well,” Cardon said. “This has been a common theme. I am asking people for respect. I don’t want to hear any clapping or cheering – if I do, I will ask you to leave.” There was no public comment, but the Councilors had plenty to say.
Richard Tripp, the newest Councilor, said he’s been thinking about the budget for five months, including the three months before he was elected in March. “I have had a hard time understanding what the Council is attempting to do,” Tripp admitted.
Tripp reminded the board and residents that in December, Councilor David Fischer had asked for a cut of $2.50 to the town tax rate. The then-Council reviewed the idea and decided it was too sharp a cut, and directed Town Administrator Galen Stearns to craft a budget based on a $2 cut to the town tax rate. At 20 percent, that was still a “significant cut,” Tripp observed.
On March 2, Stearns did an initial presentation of what a $2 cut would look like. “With a goal of not reducing services, that budget would still result in 47 full-time and seven part-time people being let go,” Tripp said. “And for a tax cut of this magnitude, to maintain what services we did have, we would still have to go into the UFB.”
On April 7, when the Administrator’s budget was due, Stearns surprised everyone by not presenting the $2 cut and instead presenting a budget with a tax cut of $1, which was later reduced to 84 cents when hydrant rental fees were added back.
Stearns’ budget didn’t have any layoffs, but did not fill four vacant fire positions. His proposal originally included transferring hydrant rental fees from the general taxpayer to the water users, a cost that was later added back. One controversial issue is Stearns’ proposal to use $1,694,800 from the Undesignated Fund Balance to make ends meet.
Derry taxes are high, Tripp observed. He agreed with a study Fischer presented in December, studying five area towns. The average town tax rate in those towns was $5.80, $3.92 less than Derry’s rate. But Tripp challenged the belief that Derry taxes have grown significantly over 10 years. In 2005 the total for town and school was approximately $27 per $1,000; in 2015 it was $29 per $1,000. “That is a 10 percent increase,” Tripp said.
It all comes back to valuation, Tripp said. Derry’s town taxes are highest among six communities – Bedford, Derry, Hudson, Londonderry, Merrimack and Salem – and the valuation is lowest. “A high valuation equals a lower tax rate,” Tripp said. “Do we have a spending problem or a valuation problem?” Tripp asked.
Tripp said he agreed with Fischer that the top priority should be reducing taxes. He did not think the Council should not be allowed to talk directly to department heads, and said economic development should be more of a priority. He noted that it was only on the agenda three times in the past year and a half.
“Indifference,” he said, “will result in a lack of action.” Cutting services is not the answer because of Derry’s high population, Tripp said. He outlined four possible solutions:
• Doing nothing, which he said “the Council has done for years.”
• Reducing the tax rate.
• Increasing business and thus increasing valuation.
• Identifying where cuts can be made, but not doing a “wholesale” $2 cut.
Regarding Stearns’ budget, Tripp said he is going to accept it “with exceptions.” He made the following caveats: “We should not use the UFB. That is kicking the can down the road. I hope by next year we can have an analysis of services instead, and identify what could be cut.”
For Economic Development, Tripp proposes the Council establish a committee, see what works, and submit a plan to the full Council. There should be oversight, he said. “And I agree with Dave,” Tripp said, “in that we should run the town as a business.”
Councilor David Fischer began by reviewing last year’s budget process, when he became concerned about the “line by line” process. “It’s important to have an open line of communication,” he said. “But people don’t understand some of the lines they’re voting on.”
Last year’s process raised the question of starting earlier, Fischer said.
“What I wanted to know,” he said, “was what are some cost-effective strategies to control expenses.” Fischer said he never suggested that “no one be stopped from communicating.”
Fischer said his concept was that the Administrator and department heads develop the budget, coming up with practical ideas to reduce costs.
“In December I shared some data and tried to choose towns that are comparable to Derry in population,” he said. Fischer said his research revealed that the average town tax rate in those towns was $6.40, with Derry’s $9.72, resulting in a $3.32 difference. He thought a $3.32 cut to be too drastic, so initially proposed the $2.50 cut. After feedback from the Administrator, they agreed to look at $2, Fischer said.
Fischer said he is looking for cuts that are data-driven, not based on emotion, and supported by outside experts so the town can “reduce taxes and retain essential services.” In regard to Stearns’ working budget, Fischer said that like Tripp, he’s not in favor of raiding the UFB. “I have not heard one person say it’s a good idea,” Fischer said.
He’s not in favor of shifting the hydrant rental fees. While residents were critical of the $2 cut, which would have trimmed 49 positions, Fischer observed that the $1 iteration “adds a position. Which was a surprise to the Council.” The working budget calls for the establishment of an Economic Development Director at $115,000, salary and benefits, and Fischer said there was no plan accompanying the position.
Regarding the 49 possible cuts, Fischer said, “I would not support that. It’s ridiculous.”
But he was critical of Stearns and department heads for allegedly not coming up with “practical cost-savings ideas and suggestions. “We need to talk about serious, effective ways to get cost savings,” Fischer said. “Without serious suggestions, we are going to be compelled to do things we don’t want to do.”
Fischer also objected to what he called the “push-back” of department heads, who told Stearns the budget needed to be level-funded. Fischer summarized that he is not in favor of tapping the UFB, not in favor of shifting hydrant rental fees, and not in favor of the Economic Development position without a plan. “We need to change the way we do things,” Fischer said.
Councilor Mark Osborne had even more concerns about the process. Osborne reviewed the town charter and its organizational structure, which has the people at the top of the pyramid, the Council below them, the Town Administrator next, and the department heads and senior staff below that.
“Town government,” he said, “is as close to pure democracy as you can get.” Osborne said he was concerned about statements Stearns had made about taking the Council goals to the department heads and senior staff. “He was rejected and beaten back,” Osborne said of the staff leaders’ alleged refusal to accept the $1 cut. “He was told, ‘No, you have to level-fund this.'”
In a democracy, the Town Administrator should never be “beaten back by a group of white-shirted people in a back room,” Osborne said. Because of their alleged refusal to cooperate, “He had every right to ask for their resignations,” Osborne said. “I was offended to hear that had happened.”
A Council goal being usurped is not acceptable, according to Osborne. He was told the department heads were “advocating for their departments,” to which he responded, “They should be advocating for the town.” “Are you okay?” Cardon asked a visibly emotional Osborne at one point. “No,” Osborne said.
In response to accusations of lack of transparency, Osborne said the Council had been talking budgets for more than a year. And they have the same goal, though they have markedly different ideas for achieving it. “Every single Councilor wants to see the tax rate go down,” Osborne asserted.
To that end, he criticized the “brass gall” of $78,000 worth of raises built in to the working budget. “We are trying to save jobs, trying to avoid layoffs,” Osborne said. He expressed concern about employees who are “trying to get back to the bargaining table” and yet have these raises built in.
Osborne said he will not support the hydrant fee shift or taking money from the UFB. As for the rest of it, he said, “I’m not sure how I’ll vote. I’ll do the best I can.”
Councilor Phyllis Katsakiores thanked the department heads for their efforts. “They do what they can to protect us and our community,” she said. “They are conscientious about how they spend taxpayer money, and they are the experts on how it should be used.”
Katsakiores said it was clear to her that Derry residents do not support drastic cuts. “They don’t want to lay off people in police and fire, they don’t want to curtail our ability to maintain roads, they don’t want to close a fire station, they don’t want to cripple social services,” she said.
“I cannot support a tax cut,” Katsakiores said. “The residents have said that they moved here for the level of services. They were aware of the tax rate when they moved here.”
The increase on taxes in the average home has been $150 over 10 years, according to Katsakiores.
She said, “I support level-funding to ensure the level of services we are accustomed to,” and she urged the other Councilors to do likewise.”Listen to these voices,” she said. ‘They are saying, ‘Please don’t destroy our town.'”
Councilor Al Dimmock chastised community members for second-guessing him and other Councilors. “If you’re a mind-reader, what am I thinking now?” he challenged audience members. With public comment forbidden, nobody responded.
Dimmock said, “We’re not ‘going after’ the Fund Balance. We’re not ‘going after’ The Upper Room and other nonprofits. I am not looking to ‘cut’ anybody. I am looking to cut taxes.”
Like Osborne, he questioned the $178,000 in raises in a tight budget year. But, he said, “level-funding will not do the job of cutting taxes.”
Councilor Joshua Bourdon said he couldn’t support “hypothetical revenues.” The transfer of hydrant rental fees is a shell game, Bourdon said, shifting costs from one part of the population to another. He suggested the expense be shifted to the Water Department budget.
Bourdon said he had met with Human Services Director Jill Jamro and found her department was run efficiently. Jamro had $15,000 left in this year’s budget, from a discontinued pharmacy program, which Bourdon suggested be put back in the general fund.
Bourdon came out strongly for economic development and the marketing of Derry. “Recruiting businesses is one piece, marketing existing businesses another piece,” he said. The town needs both.
Bourdon, the youngest Councilor, spoke strongly in favor of social media, noting it is the way to reach today’s business person. “We need a better Web site,” he said. “We need to advertise our events, have fund-raisers, promote our landmarks. We need to make Derry the true ‘place to be.'”
While he isn’t opposed to hiring an economic development director, Bourdon wanted more accountability. He suggested a more modest salary than the proposed $115,000, a modest marketing budget, established benchmarks, and bonuses when the benchmarks are met. He proposed a hiring committee of two Councilors, Human Resources Director Larry Budreau, Stearns, and two Economic Development Directors from neighboring towns.
Bourdon said he also wants to see $65,000 earmarked for updating the Web site. Bourdon’s other ideas include: fully funding the installation of LED lighting on town property; possible charging for the “splash pad” at Don Ball Park, recently rated one of the top 10 attractions in New Hampshire; and getting the unions back to the table.
Bourdon said he can’t support raises for people without contracts, noting, “An employee is making $90,000 and gets a raise of $2,000. So when he gets to the collective bargaining table, his starting point is $92,000.”
Cardon observed that this year has been a difficult process. “One of the things we need to do,” he said, “is write a list of what was good about this past budget season – admittedly, not much – and what was not good, so we can avoid the pitfalls next year.”
In Cardon’s opinion the department heads and senior staff should be coming up with savings ideas, and he didn’t see a lot of that come out of Stearns’ talks with the staff. Cardon agreed that after looking at the scenarios, “$2.50 was way too much and $2 was unreasonable.” But the current working figure of an 84-cent cut is not enough, he said.
Cardon likes the idea of an Economic Development department, but not yet. Instead, he’d like to see a committee to study it and come up with four or five “solid ideas.” “I’d like to see a committee report back to us by Sept. 1,” Cardon said.
From the original $2.50 and $2 scenarios, he said he is firmly against cutting $1 million from the paving budget and firmly against cutting funding to social services. He’s also not crazy about the hydrant rentals, noting, “That’s just moving money from one taxpayer to another.”
Cardon said he may support taking funds from the UFB, but nowhere near $1.7 million. “That is not realistic,” he said. Cardon thanked the crowd for their deportment, noting, “This is the first meeting in weeks that I have not had to use the gavel.” The Council was scheduled to vote on a 2016 budget Tuesday, May 19, after Nutfield News press time.
