Selectmen take raises out of 2007 Gilford default budget

Despite the strenuous objections of Chairman Dennis Doten, the Board of Selectmen yesterday bowed to objections from members of the Budget Committee and struck funding for pay raises for non-union employees from the 2007 default budget, a move that trimmed $118,237 from the back-up spending plan presented to the Budget Committee last week.

Connie Grant championed the decision and Alice Boucher cast the deciding vote.

The default budget is prepared in the event that voters reject the operating budget recommended by the Budget Committee when they go to the polls in March. In Gilford, the selectmen are responsible for building the default budget, although the voters could choose to delegate this authority to the Budget Committee.

If the voters reject the operating budget on the ballot, the selectmen, who have the exclusive authority to transfer funds between and within departments, would create a budget from the bottom-line of the default budget.

The board will recommend a default budget of $10,466,656, exclusive of warrant articles, which is $201,520 less than the $10.7-million budget proposed by the Budget Committee. Although the selectmen eliminated the money for pay raises, they committed themselves to funding the increases should the default budget be adopted by shuffling the total appropriation.

After several budgeteers questioned including appropriations for the performance-based increase Thursday night , Assistant Town Administrator Debra Shackett prepared two other default budgets, which the selectmen considered at yesterday's work session. The first included money for the pay raises, but where the 2006 appropriations for other line items differed from the 2007 recommendation, she applied the lower of the two amounts. The second excluded the money for the pay raises, but used the 2006 appropriations throughout.

The Budget Committee had challenged the inclusion of funds for pay raises as contrary to the state law which defines default budget as "the amount of the same appropriations as contained in the operating budget authorized for the previous year, reduced and increased, as the case may be, by debt service, contracts, and other obligations previously incurred or mandated by law, and reduced by one-time expenditures contained in the operating budget."

Doug Lambert, who broached the issue at the Budget Committee meeting, said that pay raises for non-union employees did not rise to the level of a contract or obligation within the meaning of the law.

Since Gilford adopted the official ballot (SB-2) in 2004, funding for cost-of-living adjustments and merit pay increases have twice been included in the default budget. Although the Budget Committee was aware of the practice, it was not openly challenged until last week. Shackett reminded the selectmen that they justified their decision by treating the funding of pay raises as an "implied obligation," but suggested it fell short of a "contractual obligation." She recommended excluding the funding.

Lambert also questioned the decision to include the 2006 appropriation rather than the 2007 recommendation when the latter was lower. However, Shackett insisted that the statute referred specifically to the prior year's operating budget and made no reference to incorporating recommended appropriations in the default budget.

Troubled by Shackett's recommendation, Doten said "I think we've been doing it right and should do it until we're told different." Shackett explained that the New Hampshire Department of Revenue Administration (DRA) declined to provide guidance on the issue and that twice in the past two years the Legislature had rejected bills designed to clarify the statute.

"I want to reserve the right on implied contracts," said Doten, who feared that agreeing to exclude funding for pay raises would amount to an admission of past errors.

Shackett pointed out that both the selectmen and the Budget Committee included funding for performance-based raised in their budgets. Under the plan all employees would be eligible for up to a 5-percent increase, but the program would be funded only to 3.75-percent because it is assumed that not every employee would get the maximum raise allowable. Although she recommended eliminating funding for the raises from the default budget, she assumed that if voters rejected the operating budget, the selectmen would still fund the raises and therefore, included the increases in social security, unemployment compensation and workers compensation required to match the greater payroll figure.

"We are going to work our way around funding wages to their fullest," said Grant, while musing that "if voters choose the default budget, they are probably not voting to fund a wage increase."

Town Administrator Evans Juris, who had sat silent during the discussion, appeared to discount Grant's concern. "The default budget is the selectmen's budget," he declared. "Frankly the board has been more than accommodating to the Budget Committee. They're throwing things at you and saying do this or else."

Juris's remarks emboldened Doten, who repeated that the performance-based raises represented an "implied obligation."

Grant countered that it was not a contractual or binding obligation and including the funding was "not in the spirit of what the default budget is intended to do." She proposed accepting Shackett's recommendation to exclude funding for the PBI, but reiterated that "our intention is to fund wage increases" and agreed that social security, unemployment compensation and workers compensation should remain in the default budget to support the wage increase.

Unmoved, Doten insisted "we've been doing it for a lot of years and we've been doing it correctly.' He acknowledged that the statute was open to interpretation but said that the board was advised to be consistent. "We've been consistent," he said. "If it was flawed, that's okay, because it was consistent."

As the board readied to vote, Juris said "whatever you decide is what the administration will defend and present."

Lambert seemed satisfied with the outcome. "If the budget recommended by the Budget Committee stands as it is, I will enthusiastically urge my fellow citizens to vote for it," he said during a later telephone interview. "But, if it starts getting chopped up at the deliberative session, I'll go for the default budget." In particular, Lambert accepted the selectmen's decision to fund the performance-based raises should voters adopt the default budget. "My purpose is not to create havoc with the employees," he said.