Town tax rate estimated at $5.47, down 23 cents

By Loren Billings

The municipal portion of the tax rate is expected to drop 23 cents this year to $5.47, for a number of reasons, including the fact that voters were conservative in their town spending at the ballot booth in April.Earl Sires, town manager, released his estimate at the regularly scheduled selectmens meeting this week, although the base tax rate, which is set by N.H. Department of Revenue Administration, wont become official until later this month. That rate will include not only the municipal portion, but the county portion and the state and local rates for the school district. For property owners in one or more of the towns precincts, those rates are separate and are not part of the base rate. Last years base tax rate was $21.27 per $1,000 of assessed valuation. The municipal portion was $5.70.The 4 percent estimated drop in the municipal rate results from a combination of factors, according to Sires. First, the voters gross spending on the town budget and warrant articles was $7.75 million, down from $8.15 million the year before; second, the towns total assessed value increased $20.5 million or 2.8 percent to $745 million; and third, selectmen used $592,554 in uncommitted funds, from the so-called rainy day fund, to lower the rate, up from $500,000 last year.Although the municipal tax rate could have been brought even lower by applying a greater amount of the towns reserve funds down to $5.13 if $850,000 were applied or $5.33 with $700,000 Sires did not recommend it.Officials at N.H. Department of Revenue Administration recommend municipalities keep 5 percent to 10 percent of gross budgets in reserve, he said. The gross amount includes the school district budget.Ours works out to 7.5 percent, Sires said.The town doesnt have to have a fund balance, he said, but it helps the towns credit rating and its prudent for the town to keep $1.5 million in the reserve, which totaled $2.6 million as of Jan. 1, 2002. If Siress $5.47 municipal tax rate estimate is borne out, it will be the second lowest rate in five years, the lowest being 1999 when it was $5.38.In 1997, the rate was $5.82; in 1998, $5.62; in 1999, $5.38; in 2000, $5.80; and in 2001, $5.70. The voters expectation is that the rate is going to go down, Sires told selectmen. They voted in the default budget and liquidated the swim fund, and that money right off the bat was 14 or 15 cents (on the tax rate), so what Im saying is it makes sense to me if you add in some additional funding, another $400,000 or so, to get the tax rate down to $5.47.If the rate is dropped too low, artificially low, he said, then the expectation is that it will stay that way.There are things on the horizon that must be taken into consideration, Sires said, noting the first payment on the library bond is due next year, and the states new assessing certification. The town has to have its assessed property values at 100 percent of market value in 2004 to get certification under the new statewide assessing standards. Sires suggested the town may have to commit additional resources to get the job done.This year property values have taken off so quickly that selectmen changed the towns policy of keeping values at about 90 percent of market value. Instead they adopted a policy of maintaining equity among the various classes of property and kept assessed values at about 75 percent of market value.I would say this is a good balance in lowering the tax rate, Sires said. Its not too far so as to create an unreasonable expectation, and were leaving ourselves a cushion to address issues that might come up in the future.In addition, Sires suggested there could be an article on the towns April warrant to use some of the reserve funding to pay for road improvement projects, such as Quint Street and Jack Frost Lane, that were postponed this year because of budget cuts. If the money for those projects were taken out of the towns reserve fund, Sires said, it wouldnt have a tax impact. Status report on revenueAlso discussed with selectmen was the towns revenue projection, which totals $3.17 million, which includes the $109,761 previously held in the capital reserve swim fund, but released by voters in April to offset taxes.Those areas not expected to meet original projections include the room and meals tax down $8,945, conservation funds down $17,320, the timber yield tax down $10,000, interest on taxes down $25,000, sale of town property down $30,000, and interest on deposits down $50,000. Those expected to exceed original estimates include building permits up $8,000 primarily for residential projects, business license and permit fees up $5,000, motor vehicle registration fees up $25,000, and commercial garbage fees up $25,000.In addition, the town had two unexpected revenue sources: $2,700 from the states railroad fund distribution, resulting from a change in the law, according to Sires, and $10,000 written off in uncashed checks dating back years. The largest uncashed checks were one for $624 written to Fleet Bank in 1999 and one issued to Peoples Heritage Bank in 1998 for $754, according to Lucy Philbrick, finance director. There was one to this newspaper for $16.One area of concern, according to Sires, is the definite downturn in revenues from commercial haulers who are not using the landfill to the same extent they were prior to fee changes, although the loss, Sires said, is being offset somewhat by other fees.Although Sires has had to adjust his 2002 projection upward for commercial hauling revenue from $225,000 to $250,000, suggesting good news, he notes the amount is down from last year. At this time last year, he said, the town had received $234,000 in revenue from commercial haulers, and this year the town has received $219,000.By the end of the year, Sires said he expects total commercial hauling revenues to be only 80 percent of what they were in 2001, or $250,000 from $318,000.Tipping fees for commercial haulers serving businesses were increased from $45 to $85 a ton this year, and a new $45 a ton fee took effect in September for commercial haulers serving residential customers.The price has gone up, Sires said, but the volume is down significantly.Original discussions called for both fees to be set at $85 a ton and expectations were the fees would generate between $500,000 and $600,000 a year.Selectmen changed the fees in part to try and reduce reliance on property taxes to pay for operations at the landfill. Sires suggested that this year he is leaning toward reducing the amount budgeted for legal costs while adding to the welfare budget because of expected increases in expenditures. Other towns are referring people who need assistance to Conway, he said. The law does not allow the town to turn away people who are in need.When asked if the other towns are turning these people away, Sires said, thats my understanding, but I dont want to get too much into it.