Council Looking at Fiscal Cliff of 91-Cent Tax Increase

City Councilors got their first look at what lies ahead for the Fiscal Year 2014 budget process during a work session at City Hall on Tuesday night.

The one figure that City Manager John Bohenko shared with them that really opened their eyes the most was the potential 91-cent property tax increase to support $94.5 million budget.

Bohenko emphasized that the figures he presented to the council are very preliminary and should not be interpreted as set in stone. But the biggest drivers of the potential tax increase are health care costs and pension benefits that must be paid to retiring city employees in the face of decreased state Retirement System funding.

Mayor Eric Spear acknowledged the initial budget forecast could make it very difficult to maintain the same level of city services that exist now. “It continues to be a struggle to deal with these cost factors that keep coming down,” he said.

“We’ve reached the point where we are going to start cutting things that people really enjoy and expect from their city government,” Spear added.

Spear proposed a guideline for city department heads that they keep their budget increase requests under 4 percent.

Assistant Mayor Robert Lister said it will be important for department heads to look at ways they can consolidate their services to save money.

“It’s important for the community to understand that everyone is working on this together,” Lister said.

Much of the council's ire was directed at the State Legislature for giving the city less of their rooms and meals tax money and decreasing previous contributions to the state Retirement System, which has repeatedly resulted in a downshifting of costs to cities and towns.

Councilor Ken Smith said Concord is to blame for the city’s pension dilemma.

"We have watched the folks in Concord take away our rooms and meals tax and now we are watching them take away our retirement system funding," Smith said.

Councilor Esther Kennedy disagreed with the 4 percent ceiling that Spear proposed, but also blamed Concord for putting the city in such a bleak position.

She urged her fellow councilors to proceed cautiously in the months ahead because any property tax increases will be coupled with higher water and sewer rates, which she said amounts to another tax increase.

Kennedy said the departments need to work hard to find the “extras” to cut and should not add any additional positions. She also said the council's legislative committee should go to the State House and make their voices heard as much as possible.

“If the state owes us this money and we are not receiving it, then we need to take some action.”