Town looks at ’11 budget

Friday, August 20, 2010

BEDFORD – The town has its work cut out for it, in terms of planning a 2011 town budget.

In a workshop serving as a “prelim to the prelim” stages of the 2011 budget process, the Town Council met with tax collector Crystal Dionne to get a head start on brainstorming solutions for a range of challenges facing Bedford in 2011.

Among them is an estimated $750,000 obligation in increases and revenue decline the town must cover in 2011, before even thinking about the budget.

“It’s going to be a tough year, not only at this level, but at the state level, too,” Chairman Mike Izbicki said in his opening comments about the workshop. “I want to open it up and let people throw out some ideas.”

The workshop was orchestrated for the council to provide direction and criteria for Town Manager Russ Marcoux and Dionne to work with, as they formulate the 2011 budget that is ultimately presented back to the council for discussion and approval later in the year.

Dionne, standing in for Marcoux, kicked off the workshop discussing estimated increases Bedford will see from 2010 to 2011, including the consequences of lost revenue from the state and contractual obligations.

“We did have a 5 percent increase last year that was part of the state’s share that they contribute towards New Hampshire retirement that they have trickled down to the municipalities,” Dionne said.

“We’ve had to absorb that additional increase for six months of 2010 – it was roughly about $60,000 to $65,000, and that was for a six-month period, so we had a full year of that coming for 2011, so roughly $120,000 to $130,000. On top of that, we have an additional 5 percent passed down from the state on top of the 5 that we’ve already received, that will be an additional 5 that will be effective for July 1, 2011. So, we’re looking at probably $70,000 to $80,000 on top of what we’re experiencing in 2010.”

Dionne estimated a 15 percent increase in health insurance costs for 2011, an added total of about $260,000 on Bedford’s budget.

“We could say $300,000 to be ultraconservative,” Izbicki said. “So, we’re faced with about a $435,000 increase because of lost revenue from the state and medical insurance going up, before we even start,” Izbicki said.

Eliminating the cost of insurance increases, in terms of contractual obligations on the town, Bedford faces another $250,000 between wage and benefit costs, Dionne said – thereby bringing the estimated obligations total for 2011 to approximately $685,000.

To meet those obligations, Dionne said the town could face a tax increase somewhere in the vicinity of 21 cents per thousand, without even considering revenue decline for 2011.

For 2010, Dionne reported Bedford intends to generate $22 million in revenue, between $13 million in taxes, plus another $9 million the town generates as a lump number including revenue from motor vehicles, building permits and other departmental incomes.

Dionne said it was “fair” to say Bedford could see a 5 percent decline in the town’s $9 million revenue, collected outside of taxes, for next year, Dionne said.

Thus, with Bedford’s lost revenue predicted for 2011 – on top of lost revenue from the state, and increasing costs associated with contractual obligations, insurance, retirement and inflation for 2011 – Izbicki estimated the town budget may need to compensate for a $750,000 obligation before they start formulating a budget plan for next year.

“We’re in the hole $750,000 before we even start,” Izbicki said. “We’ve got a problem.”

The conversation shifted to potential solutions for the town to afford obligations as hefty as $750,000, and how to handle the 21-cent tax increase estimated for 2011.

Izbicki suggested cutting down contributions toward the town savings account to as low as $100,000 for 2011.

“It seems like a very easy place to tackle, and I don’t necessarily disagree,” Dionne said. “But just keep in mind that whatever direction you go in for cutting out of the budget in one year, that’s grounds you have to make up in the next year, so you’re already putting yourself behind for future years.”

Izbicki voiced concerns about sticking residents with a 21-cent increase per thousand in taxes and indicated he was more inclined to have the town absorb that increase than stick it on taxpayers.

“Right out of the gate, if we had level funding from last year, we could have to add another 21 cents,” Izbicki said.

“The school’s going to add something,” Izbicki said. “Now at some point, people don’t to want to live here anymore. They can’t afford it, so we’ve got to consider that. We’ve got to try to stabilize the tax rate, because I see more and more McMansions going up for sale where I am. People are like, ‘The heck with it.’ One person said, ‘Let the bank pay. I don’t care. I’m not paying $35,000 in taxes anymore.’ ”

Council Vice Chairman Bill Dermody said it would be worth approaching Bedford unions again to see if they would consider foregoing wage increases to aid savings for 2011.

“Londonderry did it – the fire department did it within the last year,” Dermody said. “They just notified the town. They told the town, ‘Hey, we understand your problem and we’re going to forego our scheduled raise.’ I think it’s something we have to ask the unions to reconsider once again. … I know what the answer was last year, but that doesn’t mean we shouldn’t be knocking on their door.”

Town Councilor Chris Bandazian suggested the town look at the life cycle of town vehicles, and the possibility of leasing vehicles, as long as it didn’t compromise their reliability.

Izbicki surfaced the idea of outsourcing IT for the town.

He also brought up the possibility of eliminating certain services in town.

“I think a couple things we’ve got to look at is – we want to maintain the quality of life in Bedford – but is there a way that we can reduce some of the services so that we can maintain that quality of life?” Izbicki said.

Dionne was curious as to what the council would consider cutting if it did come down to reducing services.

Town Councilor Paul Roy suggested “soft services” could be a source of savings, listing parks and recreation, library and transfer station services as possibilities.

Dermody, however, said the town should not penalize itself for the state legislature’s mistakes, and that the increases may have to stand for taxpayers, to serve as a message to residents about the problems streaming from the state level.

“Let the taxpayers understand what the state legislature is doing to us,” Dermody said.

“We’re going to say, ‘OK, we’re going to swallow that within the town budget.’ We’re giving up 4 or 5 cents – we’re giving that up out of our services, to hide the fact that the state can’t manage their expenditures up there. I would just as soon put it out there so the people can see it and let them communicate with their legislatures their displeasure with the way they’re conducting business.”

By fully absorbing that potential 21-cent increase per thousand, the town would be “going belly up to the state,” Dermody said.

“If we suck in the 21 cents and hide it, we’re acquiescent” to the state legislature, Dermody said. “And next year, it’s going to get worse. If we cut that, what are we going to cut next year? We’re getting to the bone.”

He went on to say the town’s full absorption of the increase could force the town to put emergency vehicles like fire engines up on jacks.

Izbicki offered the solution of seeking volunteers to help maintain and operate recreational fields.

“I think they can support it, I know some of them have mowed the lawns on occasion,” Izbicki said. “We need to start looking at that stuff, and I think that will help the community itself, with more people volunteering.”

In the end, the councilors emphasized the workshop was merely an exercise to generate some serious thought toward budget solutions for 2011.

Izbicki ultimately recommended the town consider a flat budget for 2011, absorbing the 21-cent increase, perhaps passing on the state’s 5-cent increase per thousand onto voters, while the town would pick up 16 cents of that increase and cover it within the budget.

Marcoux may have some big decisions to make in terms of what may have to be compromised from the town budget 2011.

“At this point, we’re entertaining every option, whether it be soft services, hard services or whatever, reductions in reserves, this is just the beginning of it,” Izbicki said.

“And it’s going to get worse in 2012.”

Maryalice Gill can be reached at 594-6490 or mgill@nashuatelegraph.com.