City Manager Presents FY21 Budget with 0% Tax Rate Increase; No Water/Sewer Rate Increase

April 24, 2020

City Manager Karen Conard released the FY21 City of Portsmouth Budget to the public on Friday, April 24, 2020. A Public Hearing on the Budget is scheduled for the City Council meeting on Wednesday, May 6, 2020, with Work Sessions for Departmental Review and Listening Sessions scheduled for May 11, 13, 14 and 19, followed by a Budget Review City Council Work Session on Thursday, May 21. The complete proposed FY21 Budget is available on the City website (and for a guide to understanding the budget detail, click here).

The City Manager has developed a strategy working closely with each department, prioritizing programs and capital needs to maintain a consistent level of services, and presents a FY21 budget that projects:

• 0% tax rate increase

• No user rate increases for Water and Sewer

The City Manager’s proposed budget results in a combined Operating and Non-Operating budget of $120,653,944 (a 1.7% increase over FY20).

“This City Council has expressed their intention ‘to build a culture of cost management among all employees while maintaining the integrity and quality of life in Portsmouth,’ and this budget sustains the same level of City services,” said City Manager Karen Conard in presenting the FY21 Budget. “The Council’s guidance, subsequently coupled with the unexpected worldwide crisis of COVID-19, has influenced the preparation of this budget which is $4.3 million less than previously identified.”

The four steps needed to accomplish the City Manager’s budget strategy are:

  1. Operating Budget: Fund all services currently provided to the taxpayers of Portsmouth. This effort increases the Operating Budget by $3.6 million or 3.91%, with $2.4 million of the increase due to collective bargaining agreements.
  1. Non-Operating Budget: Delay the bond issues that were scheduled for June 2020, to June of 2021. This will not stop the projects that are already underway or authorized to commence, but does defer an estimated $2.8 million in debt service payments.
  1. Non-Operating Budget: Delay $1.5 million in capital outlay projects, vehicle and equipment purchases requested or identified in the Capital Improvement Plan (CIP).
  1. Delay Water and Sewer Fund user rate increases for one year.

“As we are at the beginning of what will be a long-term challenge, with many short-term uncertainties, I present this budget with the caveat that additional losses in projected revenues and property valuations may change the end result. I can’t stress enough that projections could change as we gain greater understanding of the impacts of the COVID-19 emergency. We are concerned that the COVID-19 downturn could cause a decline in local revenues and diminished State aid to municipalities. These efforts will also have impacts on future budgets,” said City Manager Karen Conard.

The City Manager expressed major concern regarding the potential negative impacts on State aid to municipalities in FY21. Currently estimated revenues coming from the State include:

  • $1,125,000 Meals and Room Tax
  • $452,000 Highway Block Grant
  • $205,234 Municipal Aid
  • $1,757,195 School Building Aid
  • $628,252 State Aid Grant funding.

Any reduction in these revenues will have a negative effect on the property tax rate when it is established by NH Department of Revenue in the fall.  

“Working with the City Council and staff as we look at future budgets, we will need to re-examine all projects in the CIP and review the services that we currently have in place. This is a very unsettling time for budgeting, in terms of the economic impacts; Portsmouth is very fortunate to have implemented a number of long-term financial policies that have resulted in a strong Unassigned Fund balance and AAA bond rating. Without these essential long-term financial planning policies, it would not now be possible to delay borrowing and hold the line on taxes and water/sewer rates for the short term. We must be cautious, moving forward, to make decisions that will protect the City’s financial position. This is the beginning of the budget process and over the next two months I will be working collaboratively with City Council, City Boards and Commissions, department heads and the public. I am confident we will achieve our mutual goal of maintaining the integrity and quality of life in Portsmouth in fiscally responsible manner.”

In terms of economic relief from the Federal stimulus packages, Portsmouth is slated to receive a direct allocation of $313,729 in Community Development Block Grant (CDBG) monies. The exact funding and eligibility guidelines are still unknown. City staff are also closely monitoring all potential opportunities for funding and documenting expenses incurred by the COVID-19 pandemic for the possibility of future FEMA reimbursement.