April 15, 2010

Council approaches $40 million budget

Union Leader Correspondent
DERRY – It is belt-tightening time, as the town begins to scrutinize its preliminary Fiscal Year 2011 budget, which comes in at $40,049,252.
During the first of four workshops held Tuesday night, Council Chair Brad Benson steered the council through a fairly smooth process that began with a preamble by Town Administrator Gary Stenhouse.
Stenhouse noted that the overall increase over last year's budget is about $100,000, and includes no staff reductions. Because the town's charter includes a tax cap, and there was no increase in the 2009 Consumer Price Index, the 2010 tax rate held steady, meaning some creative budgeting was needed to retain the current level of services, Stenhouse said.
“There are a couple of big things in the budget, something I've only done twice in my 38-year career in local government. First, to recommend the use of fund balance, which I've only done once before, and this year, I'm recommending a reduction in paving program,” Stenhouse said.
The notion of dipping into the town's $9.8 million reserves to the tune of $466,000 was met with mixed reviews. Town CFO Frank Childs reminded the council that they have already committed to shifting $450,000 from the reserve fund to cover the cost of repairing the Drew Road bridge, which was damaged during the past two floods to the point of critical disrepair.
Councilor Kevin Coyle cautioned that once the reserve fund is used for operating expenses, it's a trend that's hard to reverse. However, the consensus was that it might be feasible as a one-time solution, given the unexpected economic downturn, compounded by the restrictive tax cap.
Other contributing factors to the town's budget woes include a dramatic drop in interest income – down from more than $1.4 million only a few years ago, to about $150,000. Also, motor vehicle registrations were way off projections, by $500,000. Retirement costs for police and firefighters formerly shouldered at the state level were shifted to municipalities last year, which cost the town $106,000.
Ultimately, the council requested a run down on the fund balance for the past seven or eight years, to help estimate whether they would be risking the town's bond rating at a time when investors will be considering doing business here by borrowing from it. Childs said it's hard to predict how much weight a town's rating has on the overall financial picture, but reassured the council that the town's fund balance is considerably strong compared with other towns in the state.
Holding off on road paving for one year would save the town $400,000. Stenhouse pointed out that, should a second round of federal American Recovery and Reinvestment Act money be distributed, it could be used for paving.
The council went through seven departmental budgets during the two-hour session, including Administration, Health, Police, Animal Control, Information Technology, Planning and Cable TV, flagging items which might be expendable or could allow room for savings.
Newly elected Councilor Joel Olbricht was unable to attend the workshop, as previously announced during a council meeting, due to a prior commitment.
The next three budget workshops will be held tonight at 6:30 p.m. to look at Library, Finance, Town Clerk and Elections; April 17 at 8:30 a.m. to look at Public Works; and April 22 at 6:30 p.m. to look at Fire and Emergency Management.

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