Jim Donchess | Budget cap helps city find the right balance between spending and tax burden.
Nashua’s budget cap, a provision of the city charter, is a tool that helps resolve the annual question of how much the city can afford to spend for services. If I am again elected mayor, I am committed to proposing budgets that comply with the budget cap and provide the quality city services our citizens deserve.
How does the cap work?
Under the city’s budget cap, certain parts of the budget cannot rise more than the trailing three-year rate of inflation unless 10 members of the Board of Aldermen vote to override the cap. The budgets for schools, fire, police and for the general operation of city government come under the budget cap.
However, a significant part of city spending is exempt from the budget cap. Payments of principal and interest on city debt are exempt, as are enterprise funds and spending done from special revenue accounts, which are generally established to manage outside sources of revenue. For example, in the current budget these are some – but certainly not all – of the items which are outside the cap: $17.8 million in principal and interest payments on city debt; $2 million spent on street paving through a special revenue account; $19.9 million spent from the wastewater enterprise fund, which pays for the treatment plant and sewer system; and $3.1 million spent from the solid waste enterprise fund, which helps pay for the landfill and garbage pickup.
Separate out special education costs
We can achieve greater budget transparency by separately budgeting part or all of the $30 million cost of special education through a special revenue account. Special education is a legally mandated cost, which is partially funded through revenue received from the state and federal governments. Special education is also a large and fluctuating part of the school budget – in the range of 18-20 percent. We could provide more budget transparency and manage spending more effectively if we were to separate special education spending from the remainder of the school budget. Of course, I am not suggesting that we should reduce special education services for the children that need them. We must continue to meet the special education needs of all our children.
Bottom line is tax rate
The tax rate remains the bottom line for city taxpayers. The amount that each taxpayer pays in property taxes is what the Mayor and the Board of Aldermen must have in mind when considering any city expenditure.
A stable tax rate is critical for Nashua’s success. Good city services – schools, fire and police protection, well-maintained public parks and green spaces – are equally critical to our success. The trade-off between the need for the lowest tax rate possible and the need for high quality services underlies the consideration of Nashua’s city budget each year.
Over the past few years I have talked with thousands of Nashua citizens at their homes about city government. I have heard from residents about how difficult it is for them to pay $4,000 or $5,000 or $6,000 in property taxes. And on the other hand, I have also heard from citizens who want better city services, such as school parents who are concerned about the reduction in teachers in recent years or about a lack of books or technology in our schools.
This is the trade-off between taxes and services which we must weigh each year at city budget time. Finding the right balance is one of the most important responsibilities of the mayor and the Board of Aldermen. The budget cap is useful in reaching this balance.
Jim Donchess is an alderman-at-large and former mayor.