The override: The cap and Manchester's budget
On Tuesday, Manchester aldermen voted for the first time to override the city’s tax and spending cap. The board’s 12 Democrats voted to override — with Republican Mayor Ted Gatsas’ support. Why? Because cutting the city budget at this point is much easier said than done.
First, some numbers. According to the city Finance Office, the average annual property tax increase since the tax cap took effect in 2011 is 1.96 percent. That includes the 3.99 percent increase approved on Tuesday. The cap has achieved its intended effect. It has pushed the city’s property tax increases far below what they would have been without the cap. Not so long ago, city taxpayers were suffering tax increases in the high single, even double digits. The cap has worked exactly as designed.
That design includes the override provision. The cap holds tax increases to no more than the rolling, three-year average of the rate of inflation. The override provision allows adjustments if elected officials believe the budget needs cannot be met under the cap’s constraints. Even Mayor Gatsas says the override was needed this year to keep the city functioning at a basic level.
“If we didn’t have it, the city would be devastated,” Gatsas said of the tax increase approved on Tuesday night. “I don’t know how we would plow the roads.”
With an economy still sputtering, city payrolls already cut, and compensation concessions already made by most city employee unions, balancing this budget with cuts was not a viable option, according to the mayor. He insisted that the tax hike be no more than four percent, and aldermen complied. Unfortunately, his reluctant acceptance of an override gave aldermen who had no interest in staying within the cap an excuse to avoid pursuing needed reforms this year.
Aldermen Keith Hirschmann and Joe Kelly Levasseur proposed an alternative budget that they said cut 15 vacant but funded positions, trimmed department budgets and keep the city budget within the cap, all while avoiding layoffs. There is some dispute about whether the numbers actually added up, but they knew their budget would go nowhere, regardless.
Laying the groundwork for this year’s override was last year’s decision by aldermen to spend the city’s $2.5 million surplus. Had it been saved, as Gatsas advocated, a smaller tax increase could have been achieved this year.
The good news is that Alderman Joyce Craig, co-author of the new budget, stated on Tuesday that an override was justified only this once, and that aldermen have to take on the Yarger-Decker employee pay formula if they are to stay within the cap next year (which is an election year). She is right, and given that city union contracts expire next summer, aldermen have no time to waste. Voters might forgive one tax cap override. They are unlikely to forgive two consecutive ones.