LACONIA — The City Council on Monday night agreed in principal to trim some $200,000 from the fiscal year 2016 municipal budget recommended by City Manager Scott Myers in order to reduce the projected increase in the 2015 property tax rate for 36 cents to 25 cents, but wound up nearly halving the estimated rate hike while still funding the retention of four firefighters who were hired with grant money.
Myers proposed city expenditures of $22.9, a negligible increase of just $8,446 over the current year. However, revenues from sources other than property taxes, including the use of unreserved fund balance, are projected to drop by 7.1 percent, leaving $15.8 to be raised by property taxes. The budget of $32.6 million proposed by the school district, representing a 5.5 percent increase, is offset by $19.6 million in revenue, leaving $18.5 million to be raised by property taxes.
Together with the county tax assessment of and state education tax, the total amount to be raised by taxes is $41.8 million and the projected property tax rate is $22.76, 36 cents more than the current rate of $22.40.
The new budget takes effect on July 1 but the council is not expected to vote on final approval until it meets again on July 13, a timetable that is allowable under the City Charter.
Henry Lipman, who chairs the council's Finance Committee, began discussion by explaining that $20,000 of expenditures amounts to a penny on the tax rate and calculated that reducing the budget by $220,000, with the cuts shared evenly between the School District and city departments, would reduce the tax rate increase to a desired level of 25 cents.
Myers, who originally projected the assessed valuation of taxable property to rise 1.6 percent to $1,844.646.944, after reconsidering trending property values, suggested increasing the projection by an even $5 million, which he said would reduce his projected property tax rate by 36 cents to 29 cents. At the same time, he advised the council that there were no provisions in the 2016-2017 state budget that threatened revenues the city expected to receive from the state. With the adjustment to the assessed valuation, Myers said the council could meet the Finance Committee's target by cutting expenditures by just $100,000,
Although the councilors agreed to raise the assessed valuation, their appetite for paring spending was not slaked.
The budget process has been overshadowed by the future of four firefighters, hired and paid for the past two years with a Staffing for Adequate Fire and Emergency Response grant from the Federal Emergency Management Agency (FEMA), which expires in October.
Retaining the four positions, which enables the department to staff each shift with nine firefighters — six at the Central Station and three at the Weirs Beach Station — is the highest priority of Fire Chief Ken Erickson.
Myers has recommended a plan to fund the positions for the next three fiscal years. LRGHealthcare, which contributes to the cost of ambulance service under a contract with the city, will bear half the annual cost of the four positions. The balance would draw on an account established in anticipation of the expiration of the grant, money budgeted to fund the positions through the current fiscal year on the assumption the grant would expire in May and $100,000 in unexpended grant funds. These funds would be supplemented by appropriations of $50,000 in 2016 and $45,000 in 2017 and 2018, representing total new expenditures of $140,000.
Anticipating the councilors may be evenly divided, Mayor Ed Engler said that he was prepared to cast the deciding vote in favor of funding the four positions as Myers proposed with the condition that the Fire Department's overtime budget be reduced by $50,000. This, he explained, would enable the positions to be funded without raising new money through property taxes.
A straw poll confirmed the council was split, with councilors Ava Doyle (Ward 1) David Bownes (Ward 2) and Lipman joining the mayor and councilors Brenda Baer (Ward 4), Bob Hamel (Ward 5) and Armand Bolduc (Ward 6) still opposed to funding the positions..
The council also agreed to shelve the purchase of new radios for the Fire Department for a year. The budget allocates $155,000 for the purchase, of which $85,000 is included in the budget and the balance drawn from the Motorcycle Week special revenue fund. The council halved the budgeted amount, which together with the $50,000 stripped from the overtime budget — actually several different line items — would reduce appropriations for the Fire Department by $92,500.
In May, the Finance Committee advised School Superintendent Terri Forsten that they expected the School Board to cut its budget by as much as $150,000 and both Lipman and Hamel repeated the request when the council met this week. Speaking for the School District on Monday, Ed Emond, the business administrator, said that $150,000 could be eliminated from the budget by shelving budgeted contributions to a capital reserve fund for repairs at Laconia High School and a fund to offset future increases in health insurance costs.
Lipman asked if the cost of operations could be reduced, in particular if the special education account could be reduced. Emond reminded him that the funds were set aside for unforeseen expenses associated with a student whose identity was unknown. He noted that the district added one new position to teach law enforcement at the Huot Technical Center, replacing contracted services.
Hamel said that $150,000 was a small share of a $32.6 million school budget. He noted that the taxpayers have supported construction of a new middle school and improvements at the high school and said "it's time to give them a little bit of a break." Councilor Brenda Baer (Ward 4) said that the increase in the school budget "looks a little high" and told Emond "I'm sure you'll find the money. You always do."
Ultimately the council followed Lipman's suggestion to require the School District to reduce its operating expenses by $100,000 and, failing that, cut appropriations for the capital reserve and stabilization funds by $150,000.
Altogether the cuts to the city budget amount to $92,500. However, Myers reminded the council that the subscription to Lakes Region Public Access-TV was under budgeted by $6,722. The council also approved Hamel's proposal to borrow $60,000 to replace windows at City Hall, which would increase payments of principal and interest by $1,200. Consequently the net reduction in the city budget would be $84,578, which represents 4 cents off the property tax rate. The requested cuts to the school budget would reduce the tax rate by at least 5 cents and at most 7 cents.
With the increase in the total valuation the budget cuts would decrease the projected increase in the property rate from 36 cents to at most 20 cents and at least 17 cents, sparing the owner of a $200,000 home at most $38 and at least $32 in annual property taxes.
When the mayor opened the public hearing on the budget at the same meeting, not a single member of public rose to speak.