LACONIA — When the City Council met this week City Manager Scott Myers suggested that preparing a city budget for the 2017-2018 fiscal year that complies with terms of the property tax cap promises to be no less a challenge next year than last.
The tax cap limits the annual increase in total expenditures funded by property taxes to the rate of inflation, measured by the Consumer Price Index — Urban (CPI), for the prior calendar year, plus an additional amount representing the 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.
Myers recalled that last year the rate of inflation was a mere 0.1 percent while the value of new construction was $27.2 million. This year, after 10 months, the values of the two multipliers are reversed as the CPI has risen to 1.1 percent, but the value of new construction has fallen to $13.8 million. From these numbers Myers has calculated that city expenditures can increase by approximately $367,000 without breaching the tax cap.
But, contributions to the New Hampshire Retirement System alone, Myers said, will increase by some $200,000. He said that the city has yet to receive a "not to exceed" projection of the increase in its contribution to the cost of health insurance premiums for its employees. but projections received by other municipalities, he said, were "mostly in double digits," which Myers found "very scary." This fiscal year the city budgeted $2.6 million for health insurance. An increase of 10 percent would represent an additional cost of more than $260,000. "Right now it's ugly," Myers said. He said when asked what keeps him awake at night, "personnel costs we can't control."
Meanwhile, the collective bargaining agreements with the four unions representing city employee— the Laconia Professional Firefighters, Laconia Police Association, State Employees Association and American Federation of State, County and Municipal Employees — expire in June. Myers said that negotiations for new contracts presented an opportunity to address some costs.
Myers noted that he has no reason to anticipate significant increases in municipal revenues from sources other than property taxes to supplement the budget. Instead, he referred to a report issued last summer by the New Hampshire Municipal Association, which tallied the revenues withheld from and the expenses transferred to cities and town by the state during the past six years. He urged the councilors to press local legislators to begin restoring state funding to municipalities, especially municipal revenue sharing and proceeds from the rooms and meals tax, as well as the state's share of the contribution to the New Hampshire Retirement System for municipal employees. "We need to engage our delegation," he said, referring to the 18 members of the House of Representatives from Belknap County and especially the five who represent the city.
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