Mayor says tax rate may climb, not bills

NASHUA – The tax rate may rise, but not many residents’ tax bills because property values are expected to drop by an average of 12 percent following a revaluation.

That’s the bottom line of a proposed Fiscal Year 2010 budget Mayor Donnalee Lozeau presented the Board of Aldermen on Tuesday.

The general fund budget proposal totals $217.9 million, up 2.3 percent over the current year. The total budget, which includes special revenue and enterprise funds, totals $251.5 million.

To fund the budget, the city will need to raise $144.4 million in taxes, an increase of just less than 1 percent from the current year, the mayor said.

In response to an alderman’s question later, Lozeau said, “The average taxpayer should pay less than they did last year in taxes.”

That’s because taxes are based on a home’s assessed value. If the value drops, then the homeowner would pay less in property taxes even if the tax rate increases slightly.

However, the Board of Aldermen took an action later in the evening that will cost many city residents more money next year. The board voted to raise sewer fees by 15 percent, which will cost ratepayers on average an additional $40 for the year.

The sewer system’s operating expenses outpaced revenues beginning in 2005. That has caused the city to dip into cash reserves.

The deficit is partly because the Board of Public Works approved a 30 percent rate cut in 2003, when operating revenues were about $2.5 million more than expenses. Now, operating expenses exceed revenue by more than $700,000.

Both the Board of Public Works and the aldermen’s infrastructure committee voted to recommend the rate increase.The rates take effect in Fiscal Year 2010, which begins July 1 and ends June 30, 2010.

As for her proposed budget, Lozeau labeled the spending plan “responsible.”

“It comes in at approximately $1.4 million below the spending cap,” Lozeau said near the end of lengthy comments in introducing the budget.

For 2010, the spending cap – which limits increases in city spending – is 3.4 percent, based on an inflationary measure for urban areas in the Northeast.

“This year, it is not about what we are allowed to spend. Instead, it is about what we can afford to spend,” Lozeau said.

“I am pleased to say this budget also has no layoffs, no reductions in services,” she said.

The board voted to accept the budget and refer it to the budget review committee, which next meets Thursday. After the mayor presents the budget, it becomes the domain of the Board of Aldermen, which can make bottom-line changes, and in many cases, change individual spending lines.

Lozeau’s presentation outlined the process she and her budget team of the city’s former and current chief financial officers went through in considering spending requests from city departments.

While the mayor asked each division to request spending increases of no more than 1 percent, she did give wiggle room to some.

The school, police and fire departments were allowed increases of 1-1/2 percent because of “compelling arguments” made by the departments’ oversight boards, Lozeau said.

Among the capital improvement projects funded in the mayor’s proposed budget:

$1.5 million for street paving and $100,000 for sidewalk projects.

$600,000 for deferred maintenance projects at schools and $75,000 for such projects in the fire department.

$52,650 to replace the Manchester Street bridge.

Lozeau also noted she is reorganizing the management of the city’s parking operation to address concerns about maintenance of the Elm and High streets parking garages.

Residents and officials for several years have raised concerns about the condition of the two parking garages.

The city faced several challenges with the proposed budget, including the specter of potential cuts in state funding and a decline in revenue from motor vehicle registrations. Lozeau admitted that a budget line to save money to replace equipment and vehicles “remains underfunded.”

One labor contract covering city workers is expired, while six more are scheduled to expire June 30, Lozeau said, citing another potential cost concern.

Also, in addition to the budget, the city may have to borrow money to pay for several large projects, including the construction of the cross-city Broad Street Parkway, improvements to the combined wastewater and storm sewer system and needed renovations and repairs to City Hall and other city-owned buildings, Lozeau said.