Nashua aldermen on Tuesday adopted a $332 million city budget for fiscal year 2021.

The spending plan is $1.7 million less than the budget initially proposed by Mayor Jim Donchess.

“My priority would be to maintain services basically as we have been, hold fast and try to do the best with the tax rate as circumstances develop,” said Donchess.

Aldermen approved the new general fund budget of $282,884,408 with a unanimous vote; the overall budget, which includes special revenue and enterprise funds, is about $332 million.

“We don’t know what is coming,” Donchess said of the economic uncertainty, noting health care costs have increased $3 million for each of the past two years.

The new tax rate, which would have been a 4.5 percent increase, is now closer to a 3.7 percent increase, according to city officials.

The new budget is expected to increase the tax rate from $21.76 per $1,000 of assessed valuation to about $22.59, which would result in a $208 increase for a home assessed at $250,000.

“This is an issue I know we are all concerned about. Under the conditions we are operating, no budget is easy to make,” said Donchess.

The mayor said the city has been economically impacted by the COVID-19 pandemic. Automobile registrations are down, state revenue will likely be off and it is unclear whether the state could be facing a major recession, said Donchess.

To further complicate matters, Nashua has been hit with a $3 million increase in pension costs, he said.

Donchess said the city’s chief financial officer is projecting that future tax rate increases could hit 7 percent.

“Now that is, in my mind, obviously far too high. Much more than we want,” he added.

Alderman Richard Dowd said the budget committee was able to reduce the mayor’s proposed budget by $1.7 million.

In doing so, however, aldermen reallocated more than $450,000 to the city’s police and fire budgets despite the mayor’s recommendation to cut those spending requests.

The aldermanic budget review committee removed $1 million allocated for the Nashua Public Library plaza renovations to instead reduce the tax rate.

In addition, an extra $700,000 in one-time state revenue funds for educational priorities was removed from the city’s contingency account to further offset taxes; the $700,000 is part of $2.9 million in extra state education adequacy aid given to Nashua.

Alderman Richard Dowd stressed that extra education aid is not part of the school board’s budget, but rather additional funds from the state. He also noted that the school district is set to receive an extra $3 million in aid to assist with COVID-19 expenses.

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