increased above last year is $3.1 million, which is still under the spending cap by $100,000. Based upon the tax
base that we have, which is a little over $8 billion, given this budget as proposed, we think the tax rate increase will
increase to 2.5% or in that vicinity. As far as revenues go, the city has been budgeting conservatively on revenues
for many years, | would say decades to we don’t run into problems with not having the revenue that we had
projected. We are continuing to budget them conservatively. We are seeing increases in motor vehicle registration
fees which in part come to city. We also have a low interest rate environment so we are not realizing interest on the
city’s assets and investments as we used to. We are getting virtually nothing on interest and another factor is that
we are seeing a reduction in state funds this year, specifically, in education assistance where we are down over
$400,000. The next slide shows you the overall operating budget in a pie chart where it shows the percentage of
the budget going to various categories. You can see that education is 56% and that includes benefits but does not
include the capital or the bonded debt of this portion as it relates to the construction of schools. Police is 11% and
fire is 9% and public works is 4%. The next slide gives you a sense of where the budget has gone over the last 10
years, what the spending cap has been, the amount of the increase and the dollar number that the budget was
under the spending cap. Obviously the only one that | proposed was the final FY °17. The next slide shows you
where some of the costs have gone over the last 10 years and the one that | think you need to note most carefully is
the pension in NHRS which stands for the New Hampshire Retirement System. It has gone from $8.1 million in FY
2008 up to $21.2 million in FY °17 which is a 162% increase while wages have only climbed 24%. | know from
working on the Budget Review Committee and studying the issue since I’ve been Mayor that this is the single most
serious financial issue that the city has been facing for nearly a decade and we expect that the pension obligations
imposed by the State of New Hampshire will continue to go up and we will need to discuss that in much greater
detail. The next slide is the debt service budget. The city has been successful in reducing the debt service budget
in part because the bonds for the two high schools continue to get paid off and the debt service budget for fiscal
2017 is going to be a little over $17 million; about $17.3 million. The next slide shows you the increase of $3.1
million and how that is divided up. Most of it goes to schools but also the police department and the fire department
and our other major departments. The budget challenges which we will face next year; in FY °18 is that the
spending cap is likely to be 1% or 0.9% and at 1% the allowable new expenditures would be $2.5 million and we are
likely to lose education assistance, the State Adequacy Grant is likely to go down as it did this year; something
which is very unfortunate. The state is, under the way things are being handled now, education aid to wealthy
communities is going up; Bedford and Windham have nearly doubled this year. They have 5% and 3% free and
reduced lunch children which is an indication of economic disadvantage. There aid is almost doubling whereas
Nashua’s aid has gone down; we have 43% free and reduced lunch, Manchester has a higher percentage and their
education aid is also being reduced. To the next point, the retirement costs are estimated to increase next year by
another $2 million because the state has taken further actions which will increase our pension liability unrelated to
any increase in salaries. We will also have negotiated wages for contracts which extend into the next fiscal year.
Mr. Chair, | think that gives an overview of the budget and | wanted to give you some insight and | thank you for that
opportunity.
The following departments received public comment:
Department 101, Mayor’s Office
Mr. Fred Teeboom, 24 Cheyenne Drive
This is a public hearing so | would like to make some comments and then | will address line items. First of all,
Mayor, the budget is under the spending cap, congratulations; you met your campaign pledge and | hope you will
continue to meet your campaign pledge as years go on. | think you have done a marvelous job with this budget. |
am not here to second guess your priorities, the priorities are your problem but | would like to make a few
comments. | do feel that there is a sense of entitlement by the police department union, fire department union and
the teacher’s union in its attempt to raise the budget beyond the spending cap limits. There is however, a very
healthy unassigned fund balance, | think it is $28 million more than last year and | thank CFO Griffin for that. A
healthy fund balance could reduce bond rates alone which you have taken advantage of by refinancing the bonds. It
also means that you don’t spend every penny that’s saved. You have to set priorities, meeting a spending cap
means you just can’t spend anything that comes alone. | have some concerns. One concern that | have is the
school capital reserve fund. At one time the education grant that you mentioned earlier was about $34 million and
at one time it was zero. | remember very well back in 1994/1995 at the meeting in Concord, the Secretary of State
said he was going to give us $20 million and we said that’s unheard of and we said just this year? He said no, every
year: | almost fell off of my chair. They were so rich that Mayor Davidson said | will take half of that money and
