Courtesy photo Nashua Mayor Jim Donchess speaks animatedly Dec. 7 during the first "open office" informal chat at JajaBelle's at 182 Main St. in Nashua.

NASHUA – The Board of Aldermen passed the fiscal 2021 budget this past week and was able to reduce it by $1.7 million.

Alderman Richard Dowd said that Mayor Jim Donchess proposed a budget of $284,584,408, although the Budget Review Committee whittled that figure down through a number of amendments. With those changes, the budget was at $282,884,408 when it went before the board.

Dowd is chairman of the Budget Review Committee and explained the amendments passed by the committee. Once that version was sent to the full board, a couple additional amendments were made.

“The total adjustment to the budget going into Tuesday night was we had reduced the mayor’s budget by $1,700,000 in order to reduce the property tax impact,” Dowd said.

One of the amendments made ahead of Tuesday’s vote was to eliminate spending $1 million of state money on the plaza outside the Nashua Public Library and apply that to a reduction in the tax rate. Dowd said the next motion was to restore the $207,062 of the police department budget.

The city was going to put $500,000 into the capital equipment reserve fund and officials reduced that figure to restore the additional police funding. Additonally, Dowd said the police will put off the acquisition of four vehicles until to FY 2022.

A motion was then made to reduce the educational contingency priorities. The city had received $2.9 million from the state for educational priorities, and that money was going to be used as contingency funding. After $300,000 was restored to the school budget, the reduction in overall spending stood at $700,000.

Dowd said $245,000 was then put back into the fire department budget from the mayor’s cut to cover contract negotiations, citing how that money also came from the CERF, that $500,000 that was going into CERF. That had no impact on the total of the budget.

In terms of the citywide communications, Dowd made a motion to restore $20,394.

He said the police department has an IT person and wanted to transfer 20 percent of his salary into citywide communications. That would allow him to begin assisting with the programming of the emergency radios in the city, providing backup to the individ because right now there is only one person who knows how to do that. This was to get somebody else as a backup.

Dowd said that the mayor had cut that and did not add the $20,394 back to the police budget, so officials put that $20,394 back into citywide communications. That money also came from what was left in the $500,000 that was going towards contingency.

Dowd also said that last year the city put $3 million toward the cost of health insurance claims. With COVID-19, a number of people did not go have elective surgeries, leaving money left over in the 2020 budget, which he said could stay in a special revenue account for health insurance expenses.

He cited an analysis done by Administrative Services Director Kim Kleiner that said officials could keep $8 million in that account and they could give up $300,000 or so. After some discussion with Kleiner and the Mayor, Dowd said it was decided to make that number $500,000. His motion on Tuesday night was to take the $500,000 from the 2021 health care contingency account and put it into general contingency. He said it took it out of the health care line and made it available for other things.

“There was one other motion by Alderman Clemons to further reduce the mayor’s cut of the fire department by $255,000 to have enough money in the budget to cover the firemen’s contract entirely, and that passed,” Dowd said. “So the budget went up by that $255,000.”

With that increase of $255,000, the budget ended up at $283,139,408, pending the result of negotiations on the firefighters’ collective bargaining agreement.

Dowd made a motion to transfer $1,144,325 out of the payroll line in the firemen’s budget so it can be used when the contract is settled.

Including the amounts in contingency, that then means the fire department budget is up. With that amount in contingency, Donchess said that their budget is then up 5.1 percent. Donchess also explained that including contingency the police department budget is also up. For police, there is $135,000 in contingency and that their budget being up 3.8 percent, including money designated for them that is not yet transferred into the budget.

While Donchess agrees with the cuts made to the budget, he disagrees with these increases. Meanwhile, as these two departments saw increases, he cited how the schools are at 2.25 percent, which is what he had budgeted for all major departments, including police and fire.

“We know there’s going to be a lot of kids that will be way behind when they get back to school in September so, if we have a need, if additions have to be made, in my opinion, it should be in the area of education,” Donchess said.

During Tuesday’s meeting Donchess highlighted a few challenges looking at this budget and the ones coming in the future, next year’s particularly. He cited the rising health care costs and how for two years running they are up $3 million. Combined, that $6 million is 3 percent on the tax rate, and was a condition when the budget was proposed earlier this year before COVID-19 hit. Aside from that difficulty, the pandemic also present large economic impacts. Amidst these unprecedented times, Donchess explained that these economic impacts have been deferred as a result of aid from the federal government which is providing money to thousands of unemployed workers in Nashua.

Then more recently, he said the state hit the city at the wrong moment with up to a $3 million increase in pension costs. The pension bill that the city pays to the state pension system will increase by somewhere in the neighborhood of $2.8 million or $3 million.

Donchess also referenced a memo done by Griffin where he looks at future tax rates, the one after this year for fall of 2021, using a set of very middle road projections.

“He projects a 7 percent increase for taxpayers,” Donchess said. “Now, that is in my mind obviously far too high, much more than we want.”

According to Griffin’s memo dated June 10, he explains that the amounts paid to the New Hampshire Retirement System (NHRS) could increase by at least $3 million in FY 2022.

“This increase could be more as there are many variables associated in the calculation of the NHRS municipal employer rates,” Griffin states in his memo. “From an historical perspective, when NHRS reduced the assumed rate of return from 7.75 to 7.25 percent (a 6.5% reduction) in May 2016, the city’s FY2018 general fund pension budget increased by $2.3 million.”

He also cites how earlier this month, the Board of Trustees of the NHRS voted to reduce the retirement system’s investment assumption, lowering the assumed rate of return from 7.25 to 6.75 percent, which is a 6.9 percent reduction.