Spending decisions in city manager's budget dependent on savings through recycling

LACONIA — In large measure, the 2013-2014 budget that City Manager Scott Myers presented this week hinges on the success of efforts to reduce the cost of collecting, transporting and incinerating solid waste by nearly doubling the volume of recycled trash.
The prospect of trimming the solid waste budget by more than $200,000 enabled Myers to overcome stagnant revenues and rising expenses to fashion a city budget that complies with the limits of the property tax cap without diminishing municipal services or capital investment. Next month the City Council will decide whether to introduce a Pay-As-You-Throw or a mandatory recycling program to achieve the savings the budget requires.
The tax cap limits the annual increase in the total amount raised by property taxes to the rate of inflation, measured by the Consumer Price Index — Urban (CPIU), for the prior calendar year, plus an additional amount derived from the assessed value of new construction, which is calculated by multiplying the value of building permits less the value of demolition permits issued between April 1 and March 31 by the prior year's property tax rate.
In 2012, the CPIU was 2.1-percent, which represents an increase in the tax commitment of $804,974. Myers estimated the value of new construction at $17-million, generating $357,000 of additional property tax revenue. The total of $1,161,974 is allotted to the city, school district and county according to their respective shares of the prior year's tax commitment. This year the city is capped at $498,662, the school district at $581,680 and the county at $81,632.
Rising expenses stretched the limits of the tax cap. Above all, since the state no longer contributes to municipal employers' contributions to the New Hampshire Retirement System, the city's cost jumped by$350,826, or 70-percent of the increase in the tax commitment permitted by the tax cap. While health insurance premiums are expected to rise 7.3-percent, the employees, whose share is set to rise from 12-percent to 15-percent on July 1, will bear half the increase.
Meanwhile, Myers projected revenues from sources other than property taxes, to remain virtually flat, increasing by just $8,698 to $6,565,695, which includes $835,000 — $100,000 less than a year ago —from the fund balance or accrued surplus. In other words, any increase in expenditures must be funded by property taxes and bound by the tax cap.
With rising expenses and flat revenues, Myers cut expenses by $292,800.
The projected decrease in the solid waste budget of $219,523, represents three-quarters of the total reduction with the balance of $73,277 spread among seven departments. In other words, without reducing the cost of handling trash by increasing the volume of recycling deeper cuts to other municipal services, programs and projects would be required to comply with the tax cap.
Myers, who stressed that his assumptions and projections are conservative, assumed that the volume of recycled material, which amounts to about 14-percent of the total solid waste tonnage will increase to 25-percent with the introduction of more aggressive incentives. As a result the expense of hauling trash to the Concord Regional Solid Waste/Resource Recovery Cooperative is estimated to drop by $27,000, of collecting residential and commercial trash at the curbside by $30,000 and of incinerating the the trash by $112,000.
Apart from these savings, higher fees at the transfer station, where loads of more than 100 pounds will pay 4.5 cents a pound or $90 a ton beginning July 1, are projected to add $100,000 to revenues, without which further spending cuts would have been required.
Myers increased expenditures by $781,929, not only meeting the city's contractual obligations, but also increasing capital outlays by $119,000.
Net of budget reductions of $292,800 and increased revenues of $8,698, the increase in the amount to be raised by property taxes is $480,431, below the cap of $498,662.
The City Council is scheduled to hold hearings on April 8, 22, and 29 and May 13 and 28, all beginning at 6 p.m. The new fiscal year begins July 1.