Town revenues: Going to the dogs?
Dogs: a town’s best friends.
Well, that may be stretching it. But in 2008, they were a pleasant surprise in Milford’s budget picture.
For some reason, the town registered 15 percent more dogs than it expected to last year – bringing in 17 percent more money in fees than officials expected.
“Conversely, cars didn’t do so well,” Town Administrator Guy Scaife said with a laugh.
It’s too bad dog licenses make up such a small piece of Milford’s overall revenue pie, which – along with many local communities – is shrinking in the lagging economy.
Officials from across the region reported they’re scaling way back on revenue projections for the coming year. These include interest income, motor vehicle registrations, building permits and land-use-change taxes – fees paid to towns when land is taken out of conservation for development.
In the meantime, communities that operate on a fiscal year ending June 30 are keeping a close eye on the numbers.
“We always try to be very conservative on revenue projections, but this year we may have a shortfall due to the economy,” Merrimack Town Manager Keith Hickey said.
In Greater Nashua, one of the hardest-hit revenue streams for local communities is interest income.
“Banks are paying nothing,” said Merrimack’s finance director, Paul Micali, adding that the town may face up to a $75,000 interest shortfall in the current budget year. “You’re lucky if you get a percent.”
Dave Fredette, Nashua’s treasurer and tax collector, said the economy hasn’t really affected revenues in the current budget because of conservative budgeting. He noted that a few years ago, the city earned $4 million in interest income. That number has waned to about $2 million.
While Hollis fared better with interest in its last budget, which ended in December, Finance Director Paul Calabria said the town reduced its anticipated figure by $53,000, down to $177,000.
“That was a big hit,” said Scaife of interest income, which contributed to Milford’s $250,000 total revenue shortfall last year. “Everyone who had any savings at all collected a heck of a lot less interest.”
Another consistently declining revenue source has been motor vehicle registrations. Officials said this is mostly because people aren’t buying new cars, which garner higher registration fees.
In Hollis, which fell short in auto registrations last year by $47,000, the problem was compounded by Skillings and Sons, Calabria said. When it moved to Amherst, it took a hefty share of commercial vehicle registration fees, Calabria said.
In Merrimack, Micali said the town is on track to meet its registration fee estimate of just over $4 million, but next year, the town anticipates taking in $100,000 less in this area.
Building construction has also plunged, causing some shifting in building permit revenues.
“There’s been a little bit of a drop in the last couple of years, but not as much as maybe one would think,” said Nashua Community Development Director Kathy Hersh, noting a decline from 1,291 permits issued in 2006 to 1,041 in 2008.
“Sometimes, instead of buying a different house, they might do other work at their house, so we’re still seeing a bit of activity.”
In Merrimack, building permits projections are being reduced for next year by 60 percent, from $150,000 to $90,000.
And that’s one area where there could be a gap in the current budget year, depending on how the spring building season goes. That would include Chelsea Property Group, which has been scheduled for groundbreaking in the early months of 2009.
The state of the economy has officials eyeing other revenue lines, too, such as land-use-change taxes.
Calabria, of Hollis, said this year’s budget estimates $5,000 in that category, in comparison with the high-water mark of 2003, when the town was in the $180,000 ballpark.
Last year in Milford, Scaife said, development “didn’t stop, but it surely took a huge nosedive.”
For now, officials say they’re keeping an eye on a few things that could rock the boat even more, such as:
Gov. John Lynch’s plan to cut state revenue sharing and replace it with federal stimulus money.
Legislation being proposed in the state Senate that would give approved auto dealers power to process registrations, thereby shifting fee incomes out of some communities and bolstering others.
But there may be reason to hope.
For instance, Hollis actually came out with a small budget surplus last year, Calabria said.
“We know it will turn around,” said Scaife, of Milford. “People will be back buying new vehicles. People will develop land. . . .
“It is comforting to know that this issue will solve itself over time, and those revenues will bounce back.”