For the second year in a row, the Concord City Council is expected to pull from its savings and hopes to use federal aid to pay for new spending and avoid a spike in taxes.
The council is due to vote on a proposed $109.3 million budget following a public hearing Monday night. Overall spending is expected to go up by $3.1 million over this year’s projected expenditures, an increase of about 2.9%, when the fiscal year closes at the end of June.
Much of the new spending is due to wage increases and benefits for municipal employees, including a rise in the city’s required contribution to the state retirement system that will add more than $1 million.
Despite the added expenses, cutting back didn’t factor into the council’s deliberations.
“Decreasing spending means you have to cut services,” said City Manager Tom Aspell. “As far as I can tell, the city council hasn’t received any a significant input from anyone who said ‘we really don’t need leaf pickup anymore’ or ‘we really don’t need fire services at night.’ ”
The budget includes a tax rate increase of 2.5% to meet new spending demands but also relies on $1.75 million from the city’s unassigned fund balance, which is made up of savings from previous years’ budgets that the city can spend in emergencies, to stave off a larger tax increase. Last year’s budget used $1.5 million of that money to keep the property tax rate increase at zero percent.
“The purpose it’s there for is when a financial emergency comes along, which is what COVID has caused,” Aspell said. “Why not take money out of there instead of raising people’s property taxes?”
In his letter to the city council introducing the budget, Aspell warned that “the continued use of unassigned fund balance diminishes the city’s fiscal health and poses future challenges.”
The city felt the impact of COVID-19 in some revenue areas, although more people made their property tax payments than originally expected. Special funds for parking and the Everett Arena saw losses due to the pandemic, but revenues are expected to rebound next year.
Although Concord received federal funding from the CARES Act, Aspell said that money paid for new costs brought on by COVID-19, like paying firefighters to distribute vaccines at Steeplegate Mall. The city also expects to receive $4.3 million from the federal government over the next two years from the American Rescue Plan.
One major area of new spending comes from rate increases from the New Hampshire Retirement System. To make up for the state’s unfunded liability for its pension fund, the rate that municipalities must contribute for each of its employees increased between 19% and 26%.
However, the overall contribution rates are more than double for police officers and firefighters compared to all other city employees. For example, the city would contribute about $14,000 a year to the retirement of one of its division heads making $100,000 a year, but would pay nearly $34,000 a year for the pension of a police officer making the same amount.
“It’s all controlled by the state,” said Aspell. “We’ve tried to work with the state in terms of putting money back in like they promised, but they have decided not to.”
The public safety budget will increase by $1.3 million, with $516,000 going to the police department.
Aspell said officer pay needs to be competitive with wages in neighboring cities and Massachusetts in order to attract quality candidates and reduce the overtime the department pays.
“We’ve found if we’re able to raise wages we can fill positions,” said Aspell. “It really wasn’t a big increase but it’s something that really made a big difference in attracting people and holding onto people.” Aspell told councilors 16 officers were hired in 2020 and three more joined the department in 2021. Three officer vacancies remain.
There are also staffing changes in this year’s proposed budget, including the replacement of the Economic Development Director with a new fellowship position, which will save the city $170,000. Funding is also allocated for a help desk technician to improve the city’s technology infrastructure and new part-time trails ranger position.