The council should realize the risks they’re taking when we go right up to the cap and we’re spending to the maximum amount of property taxes we can take.”

Larry Fitzmorris, Portsmouth Concerned Citizens

PORTSMOUTH — Only two residents commented during last week’s annual budget hearing, but at 63 minutes it was still one of the longest in recent memory.

The hearings have traditionally been held at Portsmouth Middle School, but due to low attendance this year’s meeting on Wednesday, June 12, was at Town Hall.

Town Administrator Richard Rainer, Jr. presented highlights of the total proposed spending package of $74,404,959, which would increase the current tax rate by about 3.15 percent in 2024-25. 

Under the proposed budget, the tax rate would go from its current $12.782 per $1,000 of assessed valuation to $13.181 — about 40 cents more. The owners of a property assessed at $450,000 would see their tax bill increase from the current $5,751 to $5,931.45 next year, or $180.45 more. The owners of property assessed at $600,000 would be taxed $7,908.60 next year — $239.40 more than what they pay now.

The levy, which is $64,232,385, represents a 3.76-percent increase over last year, so it’s under the state-mandated cap of 4 percent. 

“It’s about $148,000 below the cap, which is the limit to which the levy can be raised year over year,” said Rainer.

Some minor adjustments were made to the proposed spending plan in light of changes made to the state budget, which impact the amount of revenue the town will receive. On June 7, for example, the House of Representatives approved a budget that increased the town’s share of state educational aid by $92,456. That allowed the council to reduce the local appropriation to the schools by the same amount.

Changes can still be made to the spending plan before it is formally adopted on Monday, June 24, and then sent to the state. Monday’s council meeting begins at 7 p.m. at Town Hall.

Pension, bond questions

Only two residents, Tom Grieb and Larry Fitzmorris, commented on the budget. Both are frequent critics of the council.

Grieb said his first concern was the town’s pension contribution, which he said could put the levy over the 4-percent cap if it were fully funded. 

Rainer replied that the funds will be accounted for. “As we have reported every month, we are on track for a significant surplus … and we have frozen discretionary spending to ensure we have that amount of money (for the pension contribution),” he said.

Grieb then brought up the 2021 school bond, which he said featured a “non-standard debt service and reimbursement” that was not revealed to voters beforehand. Voters, he said, were “deceived” on the bond, which is driving taxes up.

Council member Charles Levesque took issue with Grieb’s accusation. “Whom are you accusing of deception, or deceiving the public?” he asked.

Grieb replied he didn’t know. “It could be the School Committee, it could be the Town Council, or it could be (the R.I. Department of Education) themselves,” he said. “I don’t know when the unusual reimbursement and debt service schedule was put together — or who put it together — but it certainly wasn’t provided to the voters before they voted. And to me, that’s a deception. Every other bond we have is a normal bond. This has variable interest rates, this has interest-only terms. This is a very non-standard bond and the people should have known that going into the vote.”

Fitzmorris, speaking on behalf of Portsmouth Concerned Citizens, questioned how the 2021 bond is presented in the budget. “It says this bond is for $19.5 million at 5 percent for 20 years. The 19.5 is accurate; the 5 percent is not, because it’s a variable rate. It’s clearly not 20 years; it’s 23 years. There are errors in this thing and it should be fixed,” he said, adding that should be a matter of concern for citizens as well as bond rating agencies. (Rainer said the town would correct the errors.)

Levesque then noted the town has a AAA bond rating, which is “the best bond rating you can have.”

“That doesn’t mean it’s going to be that way forever,” replied Fitzmorris, who also raised concerns about how close the town is to the 4-percent cap.

“This year we seem to be very close to the limits at what we can tax. Obviously we’re running some pretty good-sized surpluses, but our budget is premised upon a fundamental belief that the housing business is going to provide enough new taxable properties in the coming year that will be OK,” he said, adding that according to his figures, 31 percent of the increase in the real estate property tax is anticipated to come from new housing coming onto the tax roll.

Not true, said Hamilton. The total grossed assessed values show a differential of only about 1 percent, not 31 percent, he said. Later on in the meeting Matt Helfand, the town’s tax assessor, said it was actually less than 1 percent.

Fitzmorris was unfazed. “The council should realize the risks they’re taking when we go right up to the cap and we’re spending to the maximum amount of property taxes we can take. One of these days it’s going to go wrong on us and we’re going to be in real serious trouble,” he said.