On paper, town plan up 18%, rate off 1%
MERRIMACK – When is an 18 percent budget increase really a 1 percent decrease? When you’re dealing with a town that’s changed a key accounting practice.
That’s what is happening in Merrimack this year – on paper, spending is going up, while taxes are projected to go down.
The town’s spending plan for 2009-10 is $31.59 million. That shakes out to a $4.9 million increase over current spending, or 18.4 percent.
It seems like an astronomical number, but town officials have been quick to point out that it is inflated. More accurately, they say, the proposed budget would fall under current spending by $365,000.
It’s all due to a new budgeting procedure dealing with capital reserve accounts.
Generally, reserve accounts grow over time with deposits and cover big-ticket items, such as dump trucks or bridge projects. In past years, town councilors have voted to withdraw money from those capital reserve accounts throughout the year.
But this year, those funds have been built into the regular budget, mainly to protect against potential accounting errors, such as a $1 million miscalculation that town officials discovered this summer.
>>Town Meeting ‘09<< The accounting change means this: $5.2 million of the proposed increase is accounted for in items that taxpayers have already paid for and will not have to again. So, in subtracting that reserved money from the bottom line, the proposed budget is actually $365,000 less than current spending. The Town Council has been driving for a zero-increase budget for months and instructed Town Manager Keith Hickey to present them such a proposal. He accomplished that, in part, by proposing a pay-as-you-throw trash and recycling program this fall. The program ended up being largely rejected at a public hearing last month, sending the council on a course to make up an $800,000 shortfall. Councilors next trimmed more than $1 million from the spending proposal to meet its guideline of a zero increase. What does this all mean for the taxpayer? Last year, residents paid $12.92 million in property taxes for town expenses with a tax rate of $4.23 per $1,000 of assessed value. This year, taxpayers may be in for $12.78 million, a savings of about $140,000. The proposed tax rate for the town is $4.19. On the tax bill of a house assessed at $300,000, the town portion would be $1,257. Residents will also be asked to consider separate warrant articles. One is $2.82 million for upgrades to the wastewater facility, to be bonded and entirely paid for through user fees. The second is a union contract, which is still being negotiated.