Town of

Salem, NH Presentation of Town Manager’s 2015 Proposed

Budget

August 25, 2014 Keith R. Hickey

Town Manager

Board of Selectmen Budget Instructions Information

• Develop a budget with a 1% tax rate

increase. The increase would change the

Town portion of the tax rate from the 2014

rate of $7.12 per thousand to $7.19 per

thousand. This tax rate increase allows for

an additional $273,224 to be expended.

• Budget should include a road program budget

of $4.75 million, a 3% increase over the 2014

road budget amount or an additional

$138,450.

Town Manager’s Budget…… Information

• Meets the Board of Selectmen’s instructions of

a Town tax rate of $7.19 per thousand.

• Includes the 3% increase ($138,450) in the

road program appropriation and the first year

payment of the 2014 bridge bond ($180,450).

• Includes a 6.9% increase in health insurance.

• More adequately funds winter weather

operations.

• Maintains the water and sewer rates at $3.45

and $3.25 per hundred cubic feet respectively.

Town Manager’s Budget Includes Information

• Reductions in staffing in Recreation, Fire and Community Development impacting the level of services currently provided.

• Funds several capital purchases needed to address infrastructure and rolling stock needs.

• Funds the fifth and final year of the water meter replacement program.

• An additional $100,000 budgeted for winter maintenance. A total of $750,000 is proposed.

Known Impacts to 2015 Budget Projected Projected

Description Increase/(Decrease) Description Increase/(Decrease)

Assumed Increases/Decreases 2014 One Time Expenditures

Gas/Diesel 5,000$ Engineering- MS4 Permit (206,250)$

Electricity 174,814$ Finance- Contract OPEB (4,350)$

Telephone (5,000)$ Elections- Postage Redistricting (10,852)$

Heath Insurance 322,455$ New Debt Impact 105,810$

Retirement 23,488$ Lease Savings (29,348)$

Property Liability Insurance 130,370$ Fire- (2) Cardiac Monitors (68,405)$

Workers Comp. Insurance (62,341)$ Fire - WIFI (3,000)$

Townwide Valuation Update 209,000$ Fire - Voice Recorder (9,500)$

2015 Road Program 138,450$ Fire- Oil Separator System (9,500)$

2014 Bridge Bond Payment 180,450$

New Building Software 20,000$ Capital Project Cost Tax Rate Impact only

Munismart Module Savings (6,302)$ Dam Repair (27,700)$

PC Tech Upgrades 240,569$ (110,000)$

Sub-total 1,130,384$ Fire Vehicles 1,925,000$ -$

Underground Tank 677,865$ (266,565)$

DPW Trackless (57,000)$

Total (717,335)$

Net Impact 413,049$

Assumptions Used to Develop 2015 Budget

% Over % Change

Budget Rate Amount In Budget

Gasoline 3.02$ /unit 3.05$ /unit 0.99% * 3.02$ 0.00%

Diesel 3.12$ /unit 3.13$ /unit 0.32% * 3.12$ 0.00%

Oil 3.07$ /unit 3.27$ /unit* 6.51% * 3.27$ 6.51%

Propane 2.50$ /unit 2.88$ /unit 15.20% 2.88$ 15.20%

Nat Gas 1.20$ /unit 1.27$ /unit 5.83% 1.27$ 5.83%

Health 6.90% 7.10%

Dental 3.00% 3.00%

Workers' Comp -10.00% 0.00%

Unemployment 112.00$ /person 110.00$ /person 1.82% 110.00$ -1.79%

Until 7/15 % Inc (7/1/2015)

Retirement-Employees 10.77% 11.17% 3.71%

Retirement-Fire 27.74% 29.16% 5.12%

Retirement-Police 25.30% 26.38% 4.27%

* Fixed price 2014-2015

2015 Proposed

2014 Budgeted 2014 Actual/Ave

Breakdown of General Fund Personnel, Operating and Capital Budget

Proposed $ %

2014 2015 Change Change

Total Salaries Including Overtime $17,497,213 $17,126,065 ($371,148) -2.12%

Retirement 3,305,135 3,328,623 $23,488 0.71%

Health Care 4,714,644 5,037,210 $322,566 6.84%

Dental 185,044 191,084 $6,040 3.26%

Workers Compensation 647,112 584,771 ($62,341) -9.63%

Total Personnel Benefits $26,349,148 $26,267,753 ($81,395) -0.31%

Utilities 1,028,781 1,134,012 $105,231 10.23%

Other Operating 5,954,965 6,545,826 $590,861 9.92%

Total Operating Other 6,983,746 7,679,838 $696,092 9.97%

Capital 1,215,761 1,043,525 (172,236) -14.17%

Total General Fund Budget $34,548,655 $34,991,116 $442,461 1.28%

Changes to Town Personnel from 2012 to 2014

2012 ACTION TAKEN POLICE

Prosecutor Position Eliminated Records Clerk Position Eliminated ASSESSING

Full time Clerk II Reduction in hours to 25 COMMUNITY DEVELOPMENT

Full time Clerk III Reduction in hours to 25 IT SYSTEMS

Director Position Eliminated /Department Outsourced Programmer/Analyst Position Eliminated /Department Outsourced Programmer/Analyst Position Eliminated /Department Outsourced Programmer/Analyst Position Eliminated /Department Outsourced FINANCE

Purchasing Agent Reduction in hours to 25 DPW Custodian-Town Hall Position Eliminated/Position Outsourced Fleet Mechanic Position Eliminated Notes: The cost of three School Resource Officers were shifted to the Salem School District. Police Department Community eliminated based on staffing cuts.

Changes to Town Personnel from 2012 to 2014

2013 ACTION TAKEN COMMUNITY DEVELOPMENT Chief Building Official Position Eliminated Part Time Plumbing Inspector Added Part Time Clerk III Position Increased from Part to Full Time DPW Fleet Mechanic Position Eliminated 2014 SENIOR CENTER Increase PT Support from 24 to 29 hours Added by Budget Committee COLLECTIONS

Increase PT hours by 5.5 hours Added WATER/SEWER

Meter Reader Position Eliminated

Proposed Staffing Changes in the 2015 Budget

Recreation

• Elimination of the Entire Recreation Department

Fire

• Elimination of 4 Firefighters, one from each of the four

groups

• Replace Firefighter/Mechanic position with a Civilian

Mechanic

Community Development

• Reduce Administrative Secretary to 21.5 hours per week

• Increase Plumbing Inspector to 28 hours per week

Senior Center

• Eliminate the Custodian position and replace with cleaning service

Why Weren’t There Any Reductions in Sworn Police

Officers

The top 4 agencies compared below are most similar in size and demographics such as

population, staffing, etc. The following is a breakdown:

Agency Sworn Full Time Civilian (excluding Dispatchers, Prosecutors, ACO)

Salem 62 5

Portsmouth 61 8 FT/ 4 PT

Derry 56 6 FT / 3 PT

Londonderry 70 7

0

500

1,000

1,500

2,000

2,500

SALEM DERRY HAMPTON PORTSMOUTH LONDONDERRY SEABROOK

NU

MB

ER O

F C

RIM

ES

COMMUNITIES

2013 Rockingham County FBI-UCR Arrest Stats

Park A &CrimesDrugs

Assaults

DWI

Shoplifting

Comparison of the Funds Appropriated for Reconstruction/

Mill and Overlay Annual

Total Road Appropriation

2010 2011 2012 2013 2014 Miles Per Road Mile

Bow 350,000 350,000 509,000 500,000 350,000 81.964 4,270.17$

Hanover 575,208 501,220 643,634 563,294 581,115 94.107 6,175.05$

Hooksett 353,202 321,531 326,112 215,719 333,535 74.064 4,503.34$

Hudson 400,000 340,000 290,000 790,000 790,000 147.909 5,341.12$

Merrimack 825,000 825,000 825,000 825,000 825,000 170.311 4,844.08$

Salem 2,910,000 5,939,314 5,157,000 4,615,000 4,615,000 184.235 25,049.53$

Derry 1,557,983 1,222,443 1,446,837 1,452,266 1,574,733 163.559 9,627.92$

Windham 397,067 886,711 633,000 635,964 759,200 95.902 7,916.41$

Conway 741,000 675,000 741,000 719,000 741,000 82.541 8,977.36$

Durham 129,472 493,917 530,487 309,733 283,431 59.764 4,742.50$

Newington 282,554 265,000 265,000 275,000 200,000 19.006 10,522.99$

Atkinson 168,000 253,400 194,000 278,000 318,700 47.833 6,662.76$

Goffstown 2,224,414 2,009,067 851,450 1,361,994 823,940 130.164 6,330.01$

Barrington 425,000 600,000 857,000 925,000 925,000 68.326 13,538.04$

Laconia 1,075,000 850,000 1,350,000 1,300,000 1,300,000 87.881 14,792.73$

Weare 400,000 400,000 400,000 400,000 450,000 111.456 4,037.47$

Belmont 750,000 600,000 600,000 650,000 750,000 67.038 11,187.68$

Gilford 650,000 575,000 575,000 575,000 750,000 88.515 8,473.14$

Auburn 950,000 950,000 950,000 950,000 950,000 61.435 15,463.50$

Allenstown 74,000 74,000 74,000 74,000 74,000 22.750 3,252.75$

Average cost per Road Mile Excluding Salem 7,929.42$

Appropriation for Salem Using Average Cost Per Mile and Salem's Total Road Mile 1,460,877.16$

Budget Savings (3,154,122.84)$

Tax Rate Impact (0.82)$

History of Road Reconstruction/Mill and Overlay Appropriation

1990-2015

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Annual Appro

priation

Calendar Year

Salem's Annual Cost Appropriation for Road Reconstruction/Mill and Overlay 1990-2015

2006

$4.0 million bond issued

Unassigned Fund Balance Usage and

Year End Balance Estimate Unassigned Fund Balance1/1/14 8,862,234 9.00%

Excess Revenues over Estimates 300,000

Primex Premium Holiday Credit 147,933

2014 Bridge Reimbursements 1,830,000

Fire Vehicles (1,925,000)

Fund 1st year 2013 Bridge Bond (149,689)

Employee Separation (350,000)

Tax Stabilization (800,000)

PC Replacement Program (130,569)

Unexpended Appropriations 75,000

Estimated Unassigned Fund Balance 12/31/14 7,859,909 8.50%

Excess Revenues over Estimates 300,000

Employee Separation (350,000)

Tax Stabilization (800,000)

Fund 2nd year 2013 Bridge Bond (145,855) (1,295,855)

Unexpended Appropriations 75,000

Estimated Unassigned Fund Balance 12/31/15 6,939,054 7.50%

Board of Selectmen Unassigned Fund Balance Goal

6% 5,358,540

Town of Salem, NH – Proposed Use of Fund Balance

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

Use of Unassigned Fund Balance

Information

REVIEW OF PROPOSED

APPROPRIATIONS

Town of Salem, NH – Town Manager Recommendation

2015 Proposed Warrant Articles

2014 2015 Town Manager Increase %

All Funds Budget Recommended (Decrease)

General Fund 31,942,735$ 32,557,432$ 614,697$ 1.92%

Capital 1,215,761 1,043,525 (172,236) -14.17%

Sewer Fund 2,558,628 2,616,940 58,312 2.28%

Water Fund 3,255,114 3,521,962 266,848 8.20%

Sub - Total 38,972,238$ 39,739,859$ 767,621$ 1.97%

Potential Warrant Articles 11,201,666$ 7,001,450$ (4,200,216)$ -37.50%

Library 1,390,159$ 1,390,159$ -$ 0.00%

Total 51,564,063$ 48,131,468$ (3,432,595)$ -6.66%

Note: For budgetary purposes the Library Budget has been level funded. The Library Trustees will submit their

budget request to the Budget Committee at a later date.

Article 1

Water Imp-No Policy, Old Rockingham & Main St

Article 1 includes water improvements on North Policy

and Old Rockingham and Main Street. The estimated

cost breakdown is:

WTP-North Policy $ 1,300,000

Old Rockingham Rd $ 661,000

Main St – No Policy to Sullivan $ 37,000

Warrant Article Total $ 1,998,000

The projects above are recommended to be bonded. Work on Old Rockingham Road

and Main Street are associated with the 2016 road program. The project costs

are proposed to be partially offset by Water DBA of $400,000

Article 2

2015 Town Operating Budget

Article 2 requests the funding of the General, Water and Sewer

operating budgets. Those budget requests are shown below:

2014 2015 Town Manager Increase %

All Funds Budget Recommended (Decrease)

General Fund 31,942,735$ 32,557,432$ 614,697$ 1.92%

Capital 1,215,761 1,043,525 (172,236) -14.17%

Sewer Fund 2,558,628 2,616,940 58,312 2.28%

Water Fund 3,255,114 3,521,962 266,848 8.20%

Sub - Total 38,972,238$ 39,739,859$ 767,621$ 1.97%

Potential Warrant Articles 11,201,666$ 7,001,450$ (4,200,216)$ -37.50%

Library 1,390,159$ 1,390,159$ -$ 0.00%

Total 51,564,063$ 48,131,468$ (3,432,595)$ -6.66%

Note: For budgetary purposes the Library Budget has been level funded. The Library Trustees will submit their

budget request to the Budget Committee at a later date.

Town Property Tax Calculation

2014 2015

Town Operating Budget ( Less Warrant Articles) $38,972,238 $39,739,859

GF Warrant Articles $11,201,666 $7,001,450

Library $1,390,159 $1,390,159

Estimated Revenues (24,798,368) (20,827,258)

Sub-Total $26,765,695 $27,304,210

War Credits/Overlay $813,500 $801,500

Total to be raised by taxes 27,579,195 28,105,710

Assessed Valuation Estimate $3,867,825,879 $3,903,206,367

Total Estimated Tax Rate $7.12 $7.19

Current Rate $7.02 $7.12

Tax Rate Increase $0.10 $0.07

Proposed Tax Rate % Decrease 1.00%

Capital Items Considered for Inclusion in the

Proposed 2015 Budget

Description Fund Amount Requested Amount Funded Recomm. Defer

Town Wide Valuation General 245,000 209,000 36,000

Sidewalk Maintenance - 2015 Road Program General 462,195 - 462,195

Roadway Stabilization Program General 1,030,000 1,030,000

Ford F350 4x4 Pickup-P80 Replacement General 43,169 - 43,169

Ford F450 Dump - 1 ton-D83 Replacement General 50,710 50,710

Freightliner FL80 Dump D12 General 181,325 181,325

Freightliner M2 dump-D21 General 181,325 181,325

Road Reconstruction & Engineering General 3,723,450 3,723,450

Depot Intersection Design General 196,154 196,154

SFD Ambulance General 260,000 260,000

SFD Engine General 646,180 - 646,180

SFD Forestry 1 Utility/Plow Truck General 45,850 45,850

SFD Operations Vehicle General 43,054 43,054

SFD Shift Commander Vehicle General 43,054 - 43,054

Technology Replacement and Improvements General 97,982 97,982

Master Plan Update General 50,000 - 50,000

Howard Street Water Tank Painting Water 450,000 450,000

Arlington Pond Transmission Pipe Chemistry Water 65,000 65,000

Water Imp - No Policy, Old Rockingham Rd & Main St Water 698,000 698,000

Water Improvements- New 16" Line WTP to Old Rockingham Rd Water 1,300,000 1,300,000

Water MP 2-5 South Broadway- S B-Way to Lawrence Rd Water 34,000 34,000

Manor Pkway – Water System Eng & Bid Docs Water 118,450 118,450

Total 9,964,898 8,684,300 1,280,598

Budget Cuts to Achieve

1% Property Tax Rate Increase

Department Description Amt

Community Development CART 47,000

Community Development Admin Sec reduced hours 34,393

Planning Master Plan 50,000

Police Replacement Pay 198,804 level funded

Police Overtime 81,700 level funded

Fire Eliminate 4 firefighters 309,200

Fire Fiber Run 65,000

Fire Replacement Pay 59,128

Fire Carpet 11,308

Fire Eliminate Firefighter Mechanic 95,783

Fire Civilian Mechanic Hire -80,511

DPW Bituminous Concrete 20,000 level funded

DPW Solid Waste 31,231

Recreation Elimination 259,937

Senior Services Eliminate Custodian 73,294

Senior Services Contract/ Cleaning Services -36,000

Capital Pierce Engine 141,750 1st year Lease Payment

Capital Replace 2009 Fire Tahoe 43,054

Capital P80 Replacement F450 43,169

Total 1,448,240

REVIEW OF PROPOSED REVENUES

Town of Salem, NH – 2014/2015 Revenue Comparison

2015

2014 Town Manager Increase

Budget Recomm. (Decrease)

Taxes (not incl property taxes) 291,500$ 255,500$ (36,000)$

Intergovernmental Revenues 3,385,120$ 2,361,215$ (1,023,905)$

Licenses and Permits 5,641,925$ 5,688,450$ 46,525$

Charges for Services 2,818,585$ 2,728,458$ (90,127)$

Miscellaneous Revenues 35,215$ 88,000$ 52,785$

Other Financing Sources 4,939,282$ 1,566,198$ (3,373,084)$

Total General Fund 17,111,627$ 12,687,821$ (4,423,806)$

Income from Sewer Fund 2,558,628$ 2,616,940$ 58,312$

Income from Water Fund 5,155,114$ 5,519,962$ 364,848$

Total Revenue 24,825,369$ 20,824,723$ (4,000,646)$

Intergovernmental Estimated Revenue difference is due to the 2014 fuel tank

replacement and bike/ped project.

Reduction in Other Financing Sources Estimated Revenue reflects that no

Bond proceeds for bridge reconstruction and no capital is proposed for

purchases using Unassigned Fund Balance.

2015 Breakdown of Estimated Revenues Excluding Property Taxes

Revenue

Taxes (not incl property taxes)

2%

Government Revenues 20%

Licenses and Permits 46%

Charges for Services 23%

Miscellaneous Revenues 1%

Other Financing Sources 4%

REVIEW OF WATER & SEWER BUDGETS

Water Fund Budget Comparison – 2014 vs. 2015

• Based upon the proposed Water Fund Budget the current water rate of $3.45

per 100 cf. would not support the proposed budget. I am recommending the use

of Unassigned Fund Balance to fund the revenue shortfall of $154,726.

• Water Capital includes $450,000 to paint of the Howard Street tank. AWWA

recommends the tank be painted every ten years. The last time the tank was

painted was in 2001.

Increase

2014 2015 (Decrease) %

Administration 1,417,223$ 1,311,396$ (105,827)$ -7.47%

Operations 1,012,986 840,559 (172,427) -17.02%

Building 97,556 107,054 9,498 9.74%

Debt Services 610,672 660,503 49,831 8.16%

Water Capital 116,677 602,450 485,773 416.34%

Water Warrant Articles 1,900,000$ 1,998,000$ 98,000 5.16%

Total - Water Fund 5,155,114$ 5,519,962$ 364,848$ 7.08%

Water Fund –Unassigned Fund Balance – 2014-2015

Balance as of 12/31/13 1,454,599$

2014 Revenues 80,000$

2014 Expenditures 20,000$

Balance as of December 2014 1,554,599$

Balance as of 12/31/14 1,554,599$

2015 Revenues -$

2015 Expenditures 20,000$

2015 Use of Unassigned Fund Balance (154,726)$

Balance as of December 2015 1,419,873$

Sewer Fund Budget Comparison – 2014 vs. 2015

Based upon the Board of Selectmen’s 2011 vote to supplement revenues

with surplus Unassigned Fund Balance, the current sewer rate of $3.25 per

100 cf. would not need to be increased .

Increase

2014 2015 (Decrease) %

Administration 2,145,077$ 2,213,289$ 68,212$ 3.18%

Debt Services 412,572 403,651 (8,921) -2.16%

Sewer Capital 979 - (979) -100.00%

Total - Sewer Fund 2,558,628$ 2,616,940$ 58,312$ 2.28%

Sewer Fund –Unassigned Fund Balance – 2014-2015

Summaries above include a GLSD reimbursement that has averaged $240,000 over

the past three years.

Balance as of 12/31/2013 2,341,699

2014 Revenues (153,438)

2014 Expenditures 15,000

Balance as of December 2014 2,203,262$

Balance as of 12/31/2014

2015 Revenues (222,808)

2015 Expenditures 15,000

Balance as of December 2015 1,995,454$

Article 3 – 2015 Road Program

Article 3 requests $4.753 million in funding for the 2015 road program. The 10 Year Road Program was adopted by the Selectmen on July 28, 2014.

Article 4 – Winter Weather Operations

Article 4 requests $250,000 in additional funding for winter operations. There is a $500,000 appropriation in the 2015 proposed Operating Budget.

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

2009 2010 2011 2012 2013 2014

Winter Weather Operations Cost Budget History

Cost Budget

Town Manager’s Recommended

• Restore the Four Firefighter Positions

and Corresponding Replacement Pay $367,328

• Restore the Recreation Department $259,937

Total $627,265

Including the funding requests above will impact the tax rate an additional .16¢ or an additional 2.2%

Town of Salem, NH – Town Manager Recommendation

Questions/Comments