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Manchester budget up, but will tax rate fall?

New Hampshire Union Leader

June 14. 2018 12:40AM

Manchester Mayor Joyce Craig gives her budget address at City Hall in March. (THOMAS ROY/UNION LEADER)

MANCHESTER — Reaction to the city budget passed by aldermen Tuesday night ranged from praise to skepticism over whether the property tax rate will actually go down.

On Tuesday, Board of Mayor and Aldermen Chairman Dan O’Neil presented a 2019 budget that checked in at about $342 million — roughly $152.1 million for city services and $169.4 million for schools. The budget gives schools superintendent Dr. Bolgen Vargas an additional $1.25 million more than he asked for — $2.4 million more than last year. It also sets aside $2 million of city money in a contingency fund aldermen use at a later date.

That requires a 2.34 percent increase in tax revenue, well over the 1.63 percent increase Mayor Joyce Craig proposed in her tax cap budget.

The mayor’s proposed budget came in at $338.6 million, with $152.8 million in spending on the city side and $168.1 million for the school district. Craig referred to her budget as a good “starting point,” but remained hopeful through budget discussions that city officials would find a way to move the city “forward.”

“Manchester is stronger when we work together and that’s exactly what happened with this budget,” said Craig in a statement. “We found common ground in making critical investments in our city while at the same time reducing the tax rate and protecting our residents’ hard-earned tax dollars.”

Former mayor Ted Gatsas consistently voted against tax cap overrides, forcing the board to vote to override his action. In contrast, Craig praised the board for its budget.

“No budget is perfect and no compromise gives any one side everything they are looking for, yet this budget demonstrates a willingness to work together to solve our city’s problems,” said Craig in a statement.

Tax impact uncertain

O’Neil’s budget reduces the mayor’s proposed tax rate by 5 cents, from $23.70 to $23.65. Aldermen voted 11-3 to override the tax cap and tap into an anticipated $85 million increase in assessed property values, a figure Craig isn’t allowed to use when crafting her budget.

Actual taxes paid by most property owners could go up due to those rising values, but the added revenue will decrease the tax rate. “We won’t actually know for months,” said city assessor Bob Gagne.

Gagne said he provided aldermen with what he termed a “conservative” estimate projecting an increase in assessed property values between $55 and $75 million, but O’Neil used a figure of $85 million when writing his budget.

“We tend to be more conservative with our estimates, because you don’t want to come up short and have to make up the difference,” said Gagne. “But we’ve consistently beaten our number every year for the last five or six years, so they usually go with a higher number.”

According to Gagne, the city’s tax rate could decrease because the aldermen voted to override the tax cap and use the anticipated $85 million increase in property values. Using the increased valuation makes the property tax base is larger in FY ’19, which drived down the tax rate. According to O’Neil’s budget, the percentage change in tax rate from FY ’18 ($23.32) to FY ’19 ($23.65) is 1.42 percent.

The tax rate is calculated by the state, and won’t be finalized until sometime in September or October, Gagne said.

Ward 8 resident Jim Gaudet said on social media was “skeptical” of using the $85 million figure.

“That $85 million isn’t in the bank,” wrote Gaudet. “It’s a very hopeful projection. I like safe, ‘conservative’ budget revenue estimates. We won’t be chasing shortfalls year after year if they don’t reach expectations.”

Ward 12 Alderman Keith Hirschmann also urged fellow board members prior to the vote to go with Gagne’s conservative estimate.

Ward 6 Alderman Elizabeth Moreau said she wished O’Neil’s budget — and a second option proposed by Hirschmann — were made available for public review prior to Tuesday’s meeting.

“Not a lot of people in Manchester have seen these budgets,” Moreau said. “Why isn’t the public aware of them?”

What it buys

Alderman Kevin Cavanaugh said he doesn’t think the tax cap should drive discussions on the budget. He said he consistently hears from residents in Ward 1 who want to see action in terms of addressing the opioid problem and public safety issues in the city, along with additional funds for city schools.

“People complain all the time about why don’t we repave instead of filling potholes,” Cavanaugh said. “I support this budget but in talking with department heads, they can’t do the services we want them to do. Those are concerns I get. Constituents are saying we need the city to step up.”

According to the mayor’s office, O’Neil’s budget includes $1.1 million to cover severance payments, funds an additional domestic violence prosecutor, includes $3.5 million to fund the city’s Mechanical Equipment Replacement program, funds upgrades and treatments to 52 miles of streets in the next year through the city’s Right of Way road reconstruction program, and funds $1.5 million in citywide technology upgrades over the next 4 years.

The school board and city teachers’ union are now at a standstill over a new contract, but a key school board member said the extra $2.4 million above the superintendent’s request isn’t likely to go for raises.

“There is no (budgeted) money for raises,” said Richard Girard, an at-large school board member and chairman of the negotiations committee.

He said the extra funding will more or less maintain the status quo in Manchester schools, with a few improvements in class sizes.

Girard said $1 million is needed to cover unanticipated special education costs, and Vargas has laid out the spending in other areas: school social workers, intervention teachers, and additional staff at Manchester School of Technology.

If the school board opted to use the money instead to fund a new teacher contract, “that would break faith with the aldermen,” Girard said.

He said raises could be funded if the teachers union agrees efficiencies in areas such as health care, sick time, absenteeism and the school calendar.


New Hampshire Union Leader staff reporter Mark Hayward contributed to this report.

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