Portsmouth NH City Manager Presents FY24 Proposed Budget

May 2, 2023

The Fiscal Year 2024 (FY24) Proposed Budget for all appropriated City funds was distributed to the Mayor and City Council on April 27, 2023. This budget document and accompanying interactive user guide are posted to the City website: portsnh.co/budgets.

The release of the FY24 Proposed Budget to the City Council marks the start of the formal presentations to the City Council and the public, beginning with the Public Hearing on Monday, May 8 at 6:00 pm in the City Council Chambers or via Zoom. There is also an opportunity to participate in a day of Listening Sessions for the General Government, Fire, Police, School, Parking and Transportation, and Water and Sewer Divisions, scheduled for Monday, May 15.

Additionally, the City Council will host an evening of Public Dialogue Sessions on Thursday, May 18 at three locations around the City: 5:30-6:30 pm at Portsmouth Middle School (155 Parrott Avenue), 6-7 pm at the Community Campus Movie Room (100 Campus Drive), and 7-8 pm at the Senior Activity Center (125 Cottage Street). Members of the City Council and City management will be on hand to discuss the budget and respond to feedback from residents in an informal manner, designed to maximize input and share information.

The FY24 Proposed Budget totals $137,283,375, a net increase of $4,858,464 or 3.67%, which is below the directive of 4.5% provided by the City Council and notably below the rate of inflation. As presented it would result in an estimated tax rate of $16.13, an increase of 93 cents or 6.13% over FY23. The estimated tax rate would result in an annual increase of $447, or $37 per month, for the median single family residential home valued at $480,100. It is important to note that the final tax rate is set by the New Hampshire Department of Revenue Administration (DRA) in the Fall, once all state revenues, property valuation, and county tax obligations are finalized. The City typically announces the final tax rate for the Fiscal Year in November and issues tax bills for the first half of the Fiscal Year in December.

In FY23, the City received revenues from two one-time sources which had the effect of providing property tax relief to our residents. The State granted a 7.5% rate reduction from retirement contributions back to communities and a State Adequate Education Grant from the Statewide Education Property Tax (SWEPT). Together, these one-time revenue sources totaled nearly $4 million, and coupled with the use of ARPA monies and increased meals and room tax contributions, provided essential relief to taxpayers last year, keeping the tax rate increase for FY23 to 17 cents or a 1.1% increase over FY22.

For FY24, the budget must be carefully prepared to overcome the revenue loss created from the one-time revenue resources and replace those funds in a way that does not overly burden taxpayers. To this end, the recommended FY24 budget utilizes $759,000 of ARPA funds and

$4,428,379 from Fund Balance to reduce the Operating Budget for Capital Improvement Projects and IT Upgrades and Replacements. The use of both ARPA funds and Fund Balance amount lessens the impact of the gap left by those one-time revenues and will, over the course of a two- year implementation schedule, provide a smoother transition in absorbing the increases.

The Proposed Operating Budget (81% of the total budget) is $111,675,612. This represents an increase of $5,540,429 or 5.22% over FY23. The Operating Budget finances the services provided by the General Government, Fire, Police, and School Departments as well as General Fund obligations for the Indoor Pool, Prescott Park, and Community Campus.

The Proposed Non-Operating Budget (19% of the total budget) is $25,607,763. This is a decrease of $681,965 or -2.59% from the prior year. Approximately 84% of the Non-Operating Budget includes expenditures associated with Debt Service, Overlay, Rockingham County Tax, Property & Liability, Landfill Closure Monitoring Fees and other Legal Obligations. The remaining 16% funds the continued investment in the City’s programs and infrastructure needs, as identified in the Capital Improvement Plan (CIP).

The Parking and Transportation Special Revenue Fund is funded by parking system user fees, which include parking passes, on street and garage parking, and parking fines. In addition to accounting for all parking operation costs, parking contributes a $4.6 million offset to the General Fund. The monies collected for parking pay for transportation planning and engineering support, downtown snow and solid waste removal, school bus support, senior transportation, the downtown trolley, the City’s proportionate share of public transit (COAST), downtown police details, and school crossing guards. The services provided or supported by parking revenues amount to an annual tax offset of 70 cents on the tax rate, which equates to $336.00 per year in savings for a median single-family home taxpayer.

Water and Sewer Enterprise Funds – The City continues to utilize a rate stabilization model, first implemented in Fiscal Year 2014, to address long-term financial planning and major capital needs for our water and sewer ratepayers. Using this fiscally responsible approach, the FY24 Proposed Budget seeks a 4.5% increase in both Water and Sewer user rates.

The Sewer Rate increase is less than the 6% increase anticipated in the rate model due to a $35 million State Aid Grant (SAG) to offset the Sewer Revolving Fund (SRF) loan payment for the Peirce Island Wastewater Treatment Facility. This grant is amortized to be paid over the 30-year life of the SRF loan.

“We recognize that taxpayers expect and deserve a high level of City services,” said City Manager Karen Conard in presenting her budget to the City Council. “Working closely with each Department to prioritize their needs to continue essential services, my goal is to submit a budget that meets the City Council’s directive and responsibly utilize resources that would result in minimizing the tax burden without jeopardizing the City’s strong financial position or hindering the progress of providing municipal services. The FY24 Budget combines years of intentional, long-term financial planning with our carefully considered responses to opportunities and challenges. We look forward to working with the City Council and the public throughout the Fiscal Year 2024 Budget process.”



FY24 Proposed Budget