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Manchester aldermen talk of overriding city tax cap

New Hampshire Union Leader

May 07. 2014 10:50PM

MANCHESTER — With a final budget due in about a month, debate is intensifying among city aldermen and the mayor over whether to override the tax cap.

At Tuesday’s Board of Mayor and Aldermen meeting, several aldermen came closer than they ever have to openly advocating for an override, while pressing Mayor Ted Gatsas to take a position on the question.

“I’m going to be very clear; I’m willing to override the tax cap,” Ward 2 Alderman Ron Ludwig said, turning to the mayor. “Are you?”

Gatsas did not respond directly to the question. “There are things people will not do in public life that they will do in the private sector,” he said. “The private sector would work on ways to find solutions, not say here’s the money.”

The budget proposed by Gatsas in late March allocates $159.5 million for the school district and $137.4 million for the city, while leaving $6 million in projected health care and severance costs unfunded. Since then, the city’s finance director has upped the estimated unfunded portion of the budget to $7.5 million.

Gatsas had called on department heads to put forward revenue proposals with the goal of shoring up that gap, but the aldermen are likely to rebuff the most significant of those, a pay-as-you-throw system of trash collection.

Finance Director Bill Sanders said at Tuesday’s meeting a tax cap override needs to be seriously considered.

“In my humble judgment, I think (an override) has a significant role to play in any solution here,” he said. “I had hoped some of the revenue options put on the table ... would have been more favorably received.”

Overriding the tax cap requires a two-thirds majority of the 14-member board, or 10 votes.

Health care makes up $3.7 million of the budget’s unfunded costs. The concern is compounded by projections that health care costs in the current fiscal year will go over budget by $1.7 million.

The issue has prompted finger-pointing among city officials, with some aldermen faulting the city’s health care consultant, Workplace Benefit Solutions, for not providing sounder projections and guidance on how to control the costs.

But Human Resources Director Jane Gile insisted that WBS has performed its contracted role.

In Gile’s view, the projected health care costs for the current budget of around $8 million were too optimistic. Instead, they’ll likely top $11 million this year. The estimate for next year’s health costs, nearly $14 million, is more realistic, Gile said. Unlike last year, it is based on WBS’ calculations, she said.

Gile said that contract concessions that resulted in city employees paying a significantly higher share of premiums generated cost savings the first year they went into effect, but that created a “new baseline.” Costs have escalated since then.

Alderman-at-large Joe Kelly Levasseur said everyone bore some responsibility for underestimating health care costs last year.

“It was an election year; $3 million would have busted the cap. It was a smooth move. I don’t want to blame anybody. It’s too late to deal with it now,” he said.

Ward 12 Alderman Keith Hirschmann faulted his colleagues and the mayor for not making cuts part of the budget discussion.

“We should start with department heads: 13 step increases — gone. Then start negotiating on the contracts. Cadillac health plans for everybody — we can’t afford that,” he said.

Hirschmann added that the proposed budget relies too heavily on leaving nearly 200 positions vacant.

“All these ghost employees is how we’re balancing our books, it’s bogus,” he said.

Under the city charter, the budget must be finalized by the second Tuesday in June, which this year is the 10th.

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