By Dan Aceto

Staff Writer

Decreased revenues could mean a 2.64 percent increase in property taxes this year. 

Town Manager Tom Hall presented his draft of the combined town and school budget for fiscal year 2012 to the Town Council last Wednesday. 

The proposal decreases the budget by .9 percent from last year’s $70.02 million budget to $69.36 million this year. 

Hall said a 1.1 percent spending increase and 3.7 percent reduction in non-property tax revenue will require a mil rate increase from $12.63 to $12.96 per thousand dollars of valuation. 

That means taxes for a home valued at $300,000 would include an additional $99 for a total bill of $3,888. 

Hall said the revenue reduction “without question” played the most significant role in crafting this year’s budget proposal.

“That’s the tale of this budget,” he said. “I feel like a broken record because you’ve heard that from me for two years running now, but I think that’s going to be a continual issue and one that we need to pay attention to.”

He said the loss of non-property tax revenue is partially attributed to the slow economy.

Hall also cited a reduction in municipal revenue sharing of $509,639 from the governor’s biennial budget, a decrease in excise tax revenue and delayed growth in real estate values. Projections for excise tax revenue were lowered by $150,000, he said.

Hall said valuation projections reflect a “modest growth” of $15 million, although that figure is significantly lower than annual increases of nearly $60 million in years past.

“The town saw soaring growth through the last decade and there were always gains,” Hall said. “In the last three years we’ve seen that number begin to stagnate and drop off, and I don’t see any great gains going forward.”

Hall said the Community Services Department has become increasingly self-sufficient and is now supported 86.6 percent by user fees. The town will fund remaining expenses.

Municipal expenditures have increased by 1.6 percent or $338,553from the 2011 budget, not including community services.

The budget also proposes a .64 percent increase in school funding and 2.7 percent for county taxes.

Hall said a number of fixed-cost increases include a 7 percent increase in health insurance and workers’ compensation premiums, settlement of two collective bargaining agreements, a 2.5 percent increase in cost of living adjustments for non-union employees, and an approximate 40 percent rise in fuel expenses. 

Hall said he has budgeted an additional $97,000 for expected increases in gas, diesel and No. 2 heating fuel. 

The school department will be most affected by the reduction of non-property tax revenues, which amounts to a loss of $580,132, Hall said. 

In addition, Hall said the school department has reported a 26.5 percent reduction in funding from the state’s General Purpose Aid from 2007 to 2012 resulting in a loss of $1.7 million.

 “Unfortunately I don’t see this trend reversing,” Hall said. “If we see this number level out I’d be pleased, frankly.”

The proposed school budget has increased from $35.08 million in fiscal year 2011 to a projected $35.31 million for fiscal year 2012.

The town will preserve funding for a new Wentworth Intermediate School by limiting capital improvement projects to the Higgins Beach parking lot, second phase of the Dunstan improvement project and Cranberry Pines road work.

Hall said the town also would continue an equipment replacement program to lower maintenance expenses for vehicles and equipment and preserve their value before they are traded in.

Hall has proposed using $400,000 from the undesignated fund balance if necessary. He said the fund consists of money accumulated through year-end surpluses. Hall said the fund balance was used in the 2010 budget to stabilize the tax rate at $12.15, and again in 2011 to reduce the tax rate as well.

In 2010 the tax rate increased 3.9 percent and raised the mil rate from $12.15 to 12.63. The tax rate remained flat last year after the town spent nearly all of the allocated $400,000 in the fund balance. 

This year the town has allocated $200,000 in fund balance for schools and $400,000 for the town. 

Although the town is allowed to allocate an additional 5 percent, Hall does not want to use more because the decision could affect the town’s bond rating when it considers a long-term financing plan for Wentworth Intermediate School. 

Hall said additional funding could come from the teacher accrual account, a reserve fund allocated for teacher pay over the summer. He said the fund has a balance of more than $2 million and has been fully funded by the school board and council over the past several years.

Hall said he believes this year’s proposal is a “realistic budget” that takes into consideration the loss of revenue and increase in appropriations the town has faced over the last several years.

He said preparing the budget has allowed the town to review municipal operations to better fit the needs of residents in tough economic times.

“I think there is a bit of silver lining associated with this process,” Hall said. “This has forced us to reevaluate what we do and how we do it. Our next step in making significant headway into reducing cost for the town will require a major structural change, either with the complete realignment of departments or elimination of departments. It’s a conversation we’re going to need to have and I implore the council to be part of that conversation.”

The first reading of the proposed budget will be 7 p.m., April 6, at town hall.

Staff Writer Dan Aceto can be reached at 282-4337, ext. 237.