Special Board of Aldermen Public Hearing — May 20, 2020 Page 8
Let’s go to the next slide. This tells us that Proposed Operating Budget is $284 million dollars. Now this is an
increase from the current Fiscal Yar of $8.9 million dollars. If you break that increase down, without that one
healthcare line that I’ve discussed, the Budget is only up 2.1%, it is around the cost of living, all the other line
items put together. The one line item of insurance as we have already discussed is $3 million dollars. So of
the $8.9 million, $3 million of that is the one line item. If it were not for that, the Budget would be up 2%.
Instead, in total it is up a little over 3%. Now in terms of the revenues that are projecting that we will receive
in Fiscal ’21, we are budgeting those conservatively, we don’t want to overestimate revenue, especially with
the economic climate we are facing. We will continue to be in a low interest rate environment; this means
that the City will not be earning a lot of money on the accounts and reserves that we hold so there will be
some, a little bit of income this way but not a great deal. We need to think about the potential of a reduction
in State Aid as a result of the State being hit also with the financial and fiscal impacts of COVID-19. That
could play out in subsequent years, not just in the year to come. We hope that will not happen; we have to at
least keep it in mind as a possibility.
Now | want to go to the Fiscal ’21 Budget Challenges and we will get into more of the details here as we go
on from here. As we have mentioned, we face potential reductions in State Aid and also in local revenue;
automobile registrations and other sources of revenue that the City gets beyond property taxes. As we have
already discussed, the second big bullet, the cost of City-provided healthcare were last year and this a major
challenge again. And as a result of these challenges, the proposed budget requires that the School
Department, the Police and Fire Departments and the Department of Public Works all live with a 2.25%
increase in the Budget. And of all the Departments that have submitted budgets higher than this, | have
reduced those budgets to 2.25. Now just to be clear, the Financial Team and | issued guidelines to these
Departments back in January saying that no proposed Budget should be over 2.25%. However we have
various Departments who are independently managed and they submitted higher budgets but | reduced them
to 2.25%, our target, which | am very glad that | did now that COVID-19 has hit because we need to be more
cautious than ever as a result of COVID-19. All other Divisions, other than the major ones that you see,
were held to a 2%, plus or minus, increase.
Now let’s go to the next slide. | have touched generally on State Aid, | just wanted to show you what this,
what the major components of the State Aid will be in Fiscal ’21. First of all, there is a portion of the Rooms &
Meals Tax that is collected by the State of New Hampshire that goes to cities and towns. Nashua’s share of
that money is $4.5 million. Now there’s a weekly call with the Governor that the Mayors across the State
have and | have asked the question — Well obviously Rooms & Meals revenue are down for the State, is this
number safe? Now the Governor's response has been, “yes, it is, because by Statute the amount being
distributed to cities and towns is a given amount and is not tied to revenue”. But that law could be changed,
so | think for the short-term we should consider this relatively safe but be aware that who knows, we don’t
know what is going to happen.
There is a highway block grant of about $1.6 million dollars, now we direct this totally into paving. That is
funded by gas tax, that probably is safe but we are not sure. We are not sure if the whole thing will come
through. Then we go to the most significant paid and that is the State Adequacy Grant for our Schools. Now
that is shown at $35 million dollars, it gives a bit of a misimpression because most of this money we collect on
our property tax bills. If you look at the tax bill it says “State Education” or something like that; most of that
we collect right here in Nashua and is never sent to the State but it’s treated as though it is State Aid. But in
any event, a portion of this does come as a direct check sort to speak and you have to ask the question,
could that be affected? And again, we don’t know for sure, we are projecting and thinking maybe not, but we
don’t know for sure.
And finally you see one-time revenue, now this is the one-time revenue | have referred to before. This is one-
time State Aid that we are going to get this year and definitely not again. This is potentially $2.9 million for
schools and $1.8 million for the City; again one-time revenue which we should be very careful about
expending, because we should not add this to Operating Budgets because the money will not be replaced
and in the end if anyone did that, we would be creating budgets which are not sustainable in the future.
