Portsmouth's proposed FY20 budget calls for 2.54% tax hike

Administrator’s $64.78M spending plan goes to council Monday

By Jim McGaw
Posted 4/17/19

PORTSMOUTH — The property tax rate will increase by 2.54 percent in fiscal year 2020 under Town Administrator Richard Rainer, Jr.’s proposed municipal budget that will be presented …

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Portsmouth's proposed FY20 budget calls for 2.54% tax hike

Administrator’s $64.78M spending plan goes to council Monday

Posted

PORTSMOUTH — The property tax rate will increase by 2.54 percent in fiscal year 2020 under Town Administrator Richard Rainer, Jr.’s proposed municipal budget that will be presented to the Town Council Monday night, April 22.

First the down-and-dirty numbers: Mr. Rainer is proposing total expenditures of $64,777,283, a 2.41-percent increase over the current budget.

Revenue to be raised through general property taxes (residential, commercial and tangible) is projected at $54.09 million, $1.78 million more than the current figure of $52.31 million. That 3.41-percent increase means the budget complies with a state law that caps the amount municipalities can raise in new revenue each year at 4 percent.

The total levy is 55.94 million, a 2.5-percent increase.

The proposed tax rate for the next fiscal year is $16.38 per $1,000 of assessed value, a 41-cent increase over the current rate. If the budget were to be passed as presented, the owners of a home valued at $400,000 would see their property tax bill increase from $6,388 to $6,552, a $164 jump. 

(The median home value in Portsmouth is $381,800 and is expected to rise 2.3 percent within the next year, according to Zillow, the online real estate database company.) 

Mr. Rainer said he’s proud of the spending plan, which maintains a steady-strain approach to capital improvements and community services while remaining fiscally responsible. Last December, the council asked that Mr. Rainer’s 2020 budget stay within 1 percent of the inflation rate based on the Consumer Price Index, and the administrator said he was able to achieve that goal.

Schools’ portion

The budget includes $38.08 million in total expenditures for the School Department, an increase of about $1.05 million (2.83 percent) over the current spending plan. After subtracting out federal revenue and local receipts, the town’s appropriation for the schools (what needs to be raised through taxes)  is about $34.03 million, a 3.6-percent increase over the current figure. School spending accounts for roughly 59 percent of the total budget.

The School Department “essentially” received what it asked for, Mr. Rainer said. After the School Committee approved its budget last month, health care premiums decreased by $96,565, so Mr. Rainer made the appropriate adjustment.

“Bottom line, I’m recommending to the council $96,565 less than the total they asked for,” he said.

Biggest drivers

Mr. Rainer said one of the biggest drivers in the budget involved a capital improvement line item for the school district that didn’t exist last year.

“Last year was the high-water mark for debt services and it was a very tight budget; we got to the end game and we still needed to cut money. The schools had a surplus in their capital account and they offered to pay for their own capital improvements,” he said.

That created a “hole” in the budget which reduced spending — “We were right at the cap, at 3.97 percent,” Mr. Rainer said — and enabled the town to balance its budget.

But the capital improvement line item is back this year, to the tune of $534,000. “Now I have a hole I have to plug, because the town funds the school’s capital. That’s half a million dollars into the budget. That’s a huge driver,” he said.

Without that added expense, he said, “there would be almost a zero-percent tax increase.”

State aid for schools is projected to be cut by $133,832 this year (about a 3.2-percent decrease), while the state housing allowance is down by $149,851 (nearly 21 percent less). Losing nearly nearly $284,000 “is a huge hit in the budget that has to be made up for,” he said. “Our debt service dropped by over $200,000, which is to the favor of the town, but because state aid dropped, it’s a wash.”

Another driver is the Prudence Island transfer station, Mr. Rainer said,

“We’re projecting almost $105,000 to run that transfer station, but we’re projecting only $20,000 in sticker sales on Prudence Island. That’s an $85,000 hit to the budget,” he said. “When the Town Council voted to put the transfer station into the general fund, in essence they were spreading the cost of the transfer station out among all the taxpayers in Portsmouth.” 

Of course, he said, if the station operations were kept in the enterprise fund, the sticker price would have been raised for everyone accordingly, he said.

Mr. Rainer has also proposed adding an additional $100,000 to the road budget, increasing it to $700,000.

‘One of the better budgets’

Despite the tax increase, Mr. Rainer said Portsmouth remains in the “bottom third” of all cities and towns when it comes to the residential property tax rate, based on 2018 numbers. 

“But not all cities and towns have their own school district, or a police force or a professional fire department. When I compare Portsmouth to towns that have checks in all those blocks, we’re in the bottom quarter. I predict we will probably stay right around there,” he said.

In a summary that accompanies his proposed budget, Mr. Rainer points out the spending plan "supports an ongoing road paving program, funds acquisition of Public Safety equipment and vehicles, accounts for prioritized capital improvements, pays down our debt service requirements, continues to fold the Prudence Island Transfer Station operation into the tax base, accounts for higher than normal retirements by personnel in the defined benefits program, and provides funding required to support special needs education.” There are no new employee positions proposed in the budget, he added.

“This is probably one of the better budgets we’ve had in quite a while,” he said.

Budget dates

Mr. Rainer will present an overview of his proposed budget to the Town Council at its regular meeting Monday night, April 22.

After that, he said the council will discuss revenue and town and school expenditures on Tuesday, April 23, and budget deliberations will continue as needed on Wednesday and Thursday, April 24 and 25. All meetings begin at 7 p.m. at Town Hall. 

Portsmouth Town Council Portsmouth budget

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