City Manager's 2014 budget makes tough cuts but still calls for tax increase

BERLIN – City Manager Patrick MacQueen's proposed fiscal 2014 city budget cuts four full-time positions and reduces two other full-time positions to part time.
But despite producing a budget that is essentially flat, MacQueen said decreasing revenues would result in a tax rate increase of about $4. He said such an increase, which would translate to $399 on a home valued at $100,000, is "clearly unacceptable and a great deal of soul searching is going to have to be carried out to reduce or eliminate such an increase".
MacQueen kicked off the city's budget process Monday night with the submittal of his budget to the mayor and city council. Over the next three months, the council will meet with department heads, review MacQueen's figures, and vote on a final budget by the end of June.
MacQueen proposes a total general fund budget of $32.84 million, up $239,160 or .07 percent. To achieve that MacQueen made some tough cuts, eliminating two positions in the fire department and two positions in public works. He also reduced two other full-time positions - the code enforcement/housing secretary position and a park laborer – to part-time status.
Even with the elimination of two positions, MacQueen noted in his written overview that the fire department budget is up 1.1 percent or $22,185. He said the department requested adding two fire fighter positions to allow it to maintain four shifts of five firefighters. Currently, there are two shifts with four firefighters on duty. MacQueen said his budget would erode those on-duty staffing levels further.
"Large or multiple fires undoubtedly require more responding staff in order to be effective at the scene," he wrote.
MacQueen is required to present the school department budget as submitted by the school board. The school budget is up 3.4 percent or $575,691. He noted, however, that debt service for the school department has dropped dramatically which offsets a good part of the department's budget increase.
MacQueen also submits the police budget as proposed by the police commission. The proposed police budget is up 3.8 percent or $106,136.
The city manager said the city's main budget problem is declining revenues. MacQueen said non-property tax revenues dropped by $747,799 or 4.3 percent.
The biggest single revenue reduction is a $373,684 cut in state education equitable aid to Berlin. The city has been told it will receive $10.38 million for fiscal 2014, instead of the $10.75 million in the current budget. But Gov. Maggie Hassan in her speech to the chamber Friday said her proposed budget fully funds state equitable aid, offering some hope that the cut will be restored.
The city last year used $100,000 it received from Burgess BioPower as part of the project's New Market Tax Credits to fund the Berlin Main Street Program's Moving Downtown Forward initiative. The remaining funds from that payment are targeted for the Hutchins Street project and not for the general fund.
The council last year also used over $1.7 million from the undesignated fund balance to reduce taxes. MacQueen said the proposed budget calls for using $1 million to reduce taxes because it is too early to know how that fund will look at the end of this fiscal year.
A big variable for the city is the Berlin's overall assessment. MacQueen said his budget is based on the current city assessment, in part to allow the council to compare the current and proposed budgets. He noted, however, assessments have been declining and the city has several assessment disputes with major taxpayers such as Great Lakes Hydro and Fairpoint Communications. A decline in the city's total assessment would force an increase in the tax rate.
The city will start its budget sessions next Monday when it meets with the Berlin School Board at 6:30 p.m. The tentative schedule calls for the council to meet with the Administration/General Government/Outside Agencies on March 13, Police/Ambulance on March 20, Fire/Housing on March 25, Public Works on March 27, and Community Service on April 3. All meetings are at 6:30 p.m. at city hall. The public hearing on the budget is set for May 22, with the council scheduled to approve a final budget on June 17.