City Manager Presents the Fiscal Year 2025 Proposed Budget

The Fiscal Year 2025 (FY25) Proposed Budget for all appropriated City funds was distributed to the Mayor and City Council on April 30, 2024. This budget document and accompanying interactive user guide are posted to the City website.

The release of the FY25 Proposed Budget marks the start of the formal presentations to the City Council and the public, beginning with a daylong Budget Presentation and Listening Session, scheduled for Monday, May 13 from 9 am to 3 pm at the Portsmouth Public Library in the Levenson Community Room. This is followed by a Public Hearing that evening at 6 pm in the City Council Chambers and via Zoom. The City Council will meet on May 23, 2024 at 6 pm for a Budget Review Work Session. The June 3, 2024 City Council meeting includes a continuation of the Public Hearing on the Proposed Budget and the anticipated adoption of the Budget.

The FY25 Proposed Budget, both Operating and Non-Operating, is presented at $144,861,347, a net increase of $6,237,972 or 4.50%, which honors the goal to submit a budget that meets the City Council’s guidance, responsibly utilizes resources, maintains current services, and protects the City’s strong financial position. 

With the Budget as presented, this will result in an estimated tax rate of $16.85, which represents an increase of $0.72 or 4.45% over FY24. This compares to an increase of $0.93 or 6.12% in FY24 over FY23. The estimated tax rate would result in an annual increase of $347.04, or $28.92 per month, for the median single family residential home valued at $482,000. It is important to note that the final tax rate is set by the New Hampshire Department of Revenue Administration (NHDRA) in the fall, once all state revenues, property valuation, and county tax obligations are finalized. The City typically announces the final tax rate for the fiscal year shortly thereafter and issues tax bills for the first half of the fiscal year in December.

In FY25, there are two changes to reporting in the Operating Budget. First, the General Government section reflects a change in reporting expenses for Subscription Based Information Technology Agreements (SBITA), moving those from the Information Technology Department to the non-operating budget. This recording assists in accounting for SBITA due to a pronouncement made by the Governmental Accounting Standards Board (GASB) in reporting for SBITA and to recognize the change in how software has migrated from server-based to cloud-based. Second, the proposed FY25 Budget now reports abatements not as an expense but as an adjustment to revenue. This change allows the City to report property tax revenue more accurately in accordance with both the NHDRA and Generally Accepted Accounting Principles (GAAP).

The FY25 proposed Operating Budget, which represents 82% of the total budget, is $118,554,293. This reflects an increase of $5,988,681 or 5.32% over FY24. The Operating Budget finances the services provided by the General Government, Police, Fire, and School Departments as well as General Fund obligations to the Indoor Pool, Prescott Park, and Community Campus. 

The FY25 proposed Non-Operating Budget is $26,307,054. This represents an increase of $249,291 or 0.96% over FY24. Approximately 64.3% includes the continued investment in the City’s program and infrastructure needs, as identified in the Capital Improvement Plan through Debt Service, Capital Outlay, and IT Equipment Replacement. The remaining 35.7% includes Rockingham County tax, Property & Liability, the interest portion of overlay, and Rolling Stock.

Estimated revenues, excluding Property Tax levy, American Rescue Plan Act (ARPA) funding, and use of fund balance, are estimated to result in a net increase of $1,871,766 or 6.7% over FY24 for a total of $29,752,505.

The FY25 estimated total revenue in the Parking and Transportation Special Revenue Fund is $9,448,774. This represents an increase of $555,628 or 6.2% over FY24. Expenditures are funded 100% from parking-related revenues. 

The FY25 Budget reflects a continued distribution of $2,500,000 from parking-related revenues to the General Fund. The Parking and Transportation Division provides additional services typically funded in the General Fund, which include snow removal, trash removal, downtown maintenance, School Bus, Fire, and Police Service support, Bicycle Pedestrian Master Plan implementation, and electric vehicle charging stations, among others. For FY25, services provided by parking revenues will offset the Property Tax by $0.95. For the median single-family home valued at $482,000, this equates to a tax offset of $456.

The Water and Sewer Enterprise Fund Divisions are strongly impacted by the capital costs associated with federal and State regulatory issues and the ongoing need to upgrade and maintain infrastructure. The City’s comprehensive rate model, first implemented in Fiscal Year 2014, created a financial plan to address the current and future major capital requirements while mitigating unexpected spikes in the user rates.

The FY25 user rates for water consumption reflect a 6% increase over FY24 rates. For comparative purposes, the FY24 rate increase was 4.5%. Inflation continues to force major increases in chemical, material, and project costs, as well as pending costs associated with EPA’s Lead and Copper Rules and new PFAS regulations. The City continues its proactive, conservative approach in planning for water source protection and interconnection. 

The FY25 user rates for sewer usage, based on water consumption, reflect a 5% increase over FY24 rates. This compares to a 4.5% increase in FY24. As with the Water Division, inflation has driven up chemical, material, and project costs. This rate increase also forecasts future costs associated with the Pease Wastewater Treatment Facility and Mechanic Street Pump Station upgrades.

“As we prepare for FY25, we continue to face inflationary pressures, affecting materials, construction, wages, and utility costs. In addition, we must absorb increases in health insurance, workers’ compensation, and other contractual obligations,” said City Manager Karen S. Conard in presenting her budget to the City Council. “Through our dedicated and talented staff members, our primary focus remains to preserve and enhance the quality of life for the citizens of Portsmouth by providing the highest quality services with a focus on safety, sustainability, preservation, culture, wellness, and diversity. The continued implementation of long-term financial policies and planning, put into place decades ago, continues to play an integral part in our ability to navigate challenges in the economy and in the financial market, and to set us up for financial success in the years to come. We look forward to working with the City Council and the public throughout the Fiscal Year 2025 Budget process.” 

For more information, including the FY25 Proposed Budget, the Capital Improvement Plan 2025 – 2030, and the budget process timeline, visit the City website.