Merrimack Town Councilors got their first full look at the budget Town Manager Eileen Cabanel has proposed for 2013-14 and if it were to pass as it stands now, residents who live in a $300,000 home would see a $30 increase in their tax bill from this year.
It is highly unlikely, however, that nothing will change from now until the deliberative session in March, Council Chairman Tom Mahon said, especially not knowing what awaits the municipalities of New Hampshire when state budgets come down late next spring.
“It's still a fluid process and a fluid document at this point, we have been surprised before,” Mahon said.
The increase, in the proposed tax rate of $5.25, is actually not an increase from the 2012-13 approved budget, it is static. It's an 11-cent increase from 2012-13 because the Merrimack Premium Outlets and a PSNH substation property in town were both valued higher than the town originally projected which shaved money off the overall tax rate.
Despite the 11-cent difference between the new budget and this year's actual tax rate, Cabanel told the Council that what she's proposing, after a lot of time spent looking for places to cut, meets the goal set at the beginning of the process.
“That was our goal to achieve the $5.25 tax rate again, and that's what this budget does,” Cabanel said.
Cabanel's total budget proposal calls for $28.7 million in spending – which includes $20.6 million in the general fund $926,000 in capital reserve deposits, $98,000 in other capital expenditures and $700,000 in road resurfacing expenses. With $8.5 million less in expenses than what was approved in 2012-13, to make up for much lower revenue projections this year, Cabanel said the amount to be raised by taxes, after several parts are factored in, is $15.2 million.
Divide that by the town's value of $2.9 billion and you come to the $5.25 tax rate, she said.
From the outset this has been a difficult budget to build, Cabanel said, because there are four significant challenges the town is facing that it has little control over: health insurance increases, retirement increases, workers comp increases and property liability increases.
All told, those four items left Cabanel, Finance Director Paul Micali and the department heads looking to cut more than $869,000 from the budget in order to help bring forward a budget that wouldn't increase the tax rate over last year.
“Our original challenge was to make up $869,000,” Cabanel said.
They did that by making heavy cuts in several departments, notably the highway department, which cut $100,000 from the paving budget; $50,000 from sand and salt and $60,000 with an equipment operator position that won't be filled following a retirement.
After cutting $370,718 initially and taken into account anticipated revenues, which weren't as high as first anticipated, Cabanel said they still had work to do.
“None of these choices were real easy choice we were just faced with having to cut another $175,000,” Cabanel said.
Cabanel said she, Micali, and Human Resources Coordinator Sharon Marunicz shut themselves in a room with the department heads and “knocked heads” until they came up with further reductions that included $32,000 from Community Development in delaying the GIS software upgrade for a year and another $56,000 from that department by filling a full-time position being vacated by retirement with a half-time employee. They also reduced the legal budget by $20,000 and computer expenses by $15,000.
“I appreciate them coming to our aid again,” Cabanel said of the department heads.
By far, the biggest players in the need for cuts are the huge increases in retirement and insurance, Cabanel said. General fund operating expenses increased by $367,000 and that relates mostly to health insurance and retirement, she said.
With lower spending levels planned in with capital projects – by about half – the town is able to make up $1.2 million dollars in the total general fund, despite the operating increases, Cabanel said.
The Town Councilors were very receptive to the draft budget, and commended Cabanel and the department heads for pulling together a tight budget in difficult times.
Dan Dwyer, who said he hates to see any sort of increase in a tax bill, said he appreciated the work done thus far on the budget.
“I have to say that's a great job, where we knew we were almost $1 million over last year. For her to make those cuts and suggestions that she's done, we're looking at a$300,000 operating expense more from last year and I will say the word we're only potentially having a $30 bill to the people at home.” There are still several months until voters will make a final decision on the budget, the first public hearing is less than a month away on Jan. 3