DERRY - The town is facing a $630,000 increase in state retirement costs, contractual increases estimated at $215,000 and an increase in health care costs of $175,000 as it begins the budget process for fiscal year 2014.
"So your net negative today is $450,000 before you even start," Town Administrator John Anderson said.
Unlike the school district budget, the town budget has a tax cap in place that limits the amount of money that can be raised.
At this point, assuming there will be a 2.1 percent permissible increase on the valuation of town property, Anderson said the town will bring in about $573,000 in additional revenue.
But, he said, On the school side, officials are looking at nearly a $1 million hole as they start the budget process, also largely due to an increased share of state retirement costs.
Even with the town looking at a deficit right off the bat, Town Council Chairman Brad Benson said it might not be all doom and gloom, noting the town has over $13 million in its reserve fund balance.
Benson said the town could look at separating out the budget, and using some of the reserve fund for capital items.
"There's always a fair amount of capital items in our budget, but it is broken down into departments," said Benson. "It might be worth taking all our municipal obligations that are non-capital and knowing that number and then taking the capital items and knowing that number."
The town department heads could then rank the capital items with justification for the priority, according to Benson.
"If we can not cut goods and services, that makes the most sense going into this budget season, at least until we can find out what the school system is going to do with their budget," said Benson.
Anderson said he and town finance director Frank Childs have begun the process of looking at potential capital items in the budget.
"Due to the circumstances we are in now, it might make some sense to move those items out of the operating budget into a capital budget," said Anderson.
Childs said he would strongly caution against using reserve funds to pay for operating expenses, however.
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