State aid affects city budget preparation

NASHUA – Top elected Republicans in the city have split ways over the state’s funding of education.

Mayor Bernie Streeter said Sen. Jane O’Hearn is not representing the interests of city residents during the education funding debate.

“We’re going to continue to educate Senator O’Hearn on Nashua’s plight,” Streeter said, adding he had expected the city’s appeals to stem the loss of education money “would have fallen on more sympathetic ears.”

Streeter endorsed O’Hearn when she was re-elected in 2002, and she backed his mayoral campaign this fall.

In the past two years, the city’s state education grant has plunged from $29.5 million to $26.3 million, and it is projected to drop to $21.9 million in the next fiscal year.

O’Hearn, the chairwoman of the Senate Education Committee, defended her stance.

She said Nashua had been in line to lose more education aid if changes hadn’t been enacted.

“The mayor looks at it as a loss. But if we had not changed (the law), he would have lost $2 million more,” she said.

O’Hearn also said the mayor is ignoring the $24 million in tax relief that residents will see with a reduction in the statewide property tax approved by the Legislature.had to be changed,” she said.

The steep drop in state education aid is one of several issues forcing the city’s hand as the budget-writing season begins.

Streeter said this year’s budget deliberations promise to be the most challenging yet to keep the tax rate increase under control.

The most recent tax rate increases have been 3.3 percent in 2003, 4.9 percent in 2002 and 5.4 percent in 2001.

Director of Administrative Services Maureen Lemieux said just to handle the forecasted increases would mean an 11 percent tax rate increase.

But that is not likely to happen, since there is a reserve fund the city can tap to reduce any rate increase, she said.

“We just have to get through the next year,” Chief Financial Officer Carol Anderson said.

Streeter, who is preparing the first budget of his second term, said he would frown on any budget requests that add to City Hall’s payroll and most big-ticket items.

School officials unveiled a preliminary budget earlier this month that contained about $9.5 million in potential new spending, though a good portion of that could be eliminated from the final version of the budget approved by the Board of Education.

Streeter called the notion of an increase of nearly $10 million “ludicrous.”

“That will break the bank. The taxpayers in the city will revolt,” Streeter said.

The decline in state aid for education comes at a time when the city is also facing increases in recent union contracts, and higher pension and insurance costs. City leaders say a combination of increasing costs and declining revenue will amount to a $15 million hit on next year’s budget.

To try to get a better handle on the budget, Streeter is expanding his budget committee, which reviews his recommended spending plan.

Typically handled by Lemieux and Anderson, and a representative of the public, Streeter plans to bring in City Treasurer David Fredette and a second member of the public. Mike Lowe, a Planning Board member, has been the public representative in the past.

More people will bring a wider range of perspectives to the issue, Streeter said.

Also, he dispatched his budget team to work with division directors early as they prepare their budgets.

The goal will be to review the budgets and, if necessary, make strong recommendations to division leaders to drop requests early in the budget-writing process.

In Concord, the legislative study committee reviewing the allocation of state education aid wrapped up its work earlier this month.

Streeter appeared before the committee twice to lobby for revisions to the formula.

“We are a very deserving community,” he said.

If the special legislative committee’s recommendation is adopted by the House and Senate, the communities that faced the biggest losses of aid will get a little more financial help, but not an amount equal to this year’s aid.

City administrators pointed out that Nashua’s enrollment has dropped less than 1 percent and the city’s level of aid has dropped close to 25 percent.

Meanwhile, in Manchester, where student enrollment is 4,000 more than Nashua, the city’s education grant jumped $4 million.

O’Hearn said the mayor does not realize that legislators need to approve a system that is constitutional and provides enough help for poor communities.