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Londonderry boards agree to form committee to solve tax shortfall dilemma

Union Leader Correspondent

December 14. 2017 12:57AM

LONDONDERRY — Facing a $600,000 revenue shortfall after a form miscalculation, officials from the town and school district agreed to form a committee to work out a solution without the need for a supplemental tax bill.

After 30 minutes of back and forth between the town council and the school board, the two sides on Tuesday accepted a recommendation to have a pair of members from each entity meet in the future.

The committee will be tasked with reaching a compromise over $607,053 in tax money that will not be collected because the town’s MS-1 form from the state Department of Revenue did not auto-calculate the value for Londonderry’s TIF (tax increment financing) district.

Because it did not properly net out the necessary amount of $607,053, not enough money will be collected from the December tax bill for the town, county and school district. Of the total, roughly $441,000 would cover the school’s portion and $115,000 is allocated from the town, with the remainder from the county.

Council Chairman Tom Dolan said while this sounds like bad news, the school district and the town have undesignated fund balances to aid for unexpected financial situations. These rainy day funds are available so officials don’t have to go back to voters for more money or send out a supplemental tax bill, he said.

“We have the money; it’s in the bank and we have to decide between the two boards how we execute this,” he added.

The council offered two proposals to the school board: the first calls for the town to pay two-thirds of the total amount, including the school portion, if the school district covers the final third.

Council Vice Chairman John Farrell suggested flipping the totals so the town would cover the school district’s $441,000 if they would pick up the town’s $115,000 tab.

“We’re not asking you to pay the whole ($441,000),” Dolan said. “We’re willing to pay.”

But members of the school board were not expecting to make a decision Tuesday night.

It has only been within the past few years that school districts have been allowed a rainy day fund, and Londonderry has not built its up to a comfortable level, according to officials.

School board member Leitha Reilly said it is nerve-wracking to think the district would be left with insufficient funds if there is an emergency.

“We have no doubt that we all work together in this town and we have the same goals in mind … but depleting such an already small balance is, quite frankly, a hardship,” she said.

Fellow board member Nancy Hendricks agreed, saying removing too much from the undesignated fund balance is a dangerous proposition.

“An emergency to us is a furnace that fails, a massive leak in a roof. And to put a large amount of money into this particular situation …. would be very, very fiscally risky,” she said. “And we cannot be assured that when we ask the voters to put money into this fund that they’re going to say yes. So I’m quite sure that you can understand how difficult this position is for us.”

No decision is needed until the spring, but town and school officials concurred it is important to solve this issue sooner rather than later.

Local and County Government Londonderry

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