Portsmouth city manager: Residents value high level of services even with tax rate hikes

PORTSMOUTH — City Manager Karen Conard’s proposed municipal budget for fiscal year 2025 will increase property taxes by an estimated 4.45% if passed as proposed.

The proposed $144.8 million budget would mean a tax increase of about $347 for the owner of a median price home in the city, Conard said. The median price home in Portsmouth is valued at $482,000.

The proposed tax hike — which results from a proposed $6.2 million or 4.5% increase over the current fiscal year’s budget — would be another in a line of budget and tax hikes approved by the City Council in the past several years.

Despite those increases, there has been little pushback from city residents on the rising budgets, perhaps in part because the value of Portsmouth homes continues to rise.

City manager says residents expect high level of services

Asked if she believes residents are comfortable with the level of spending, Conard said, “I think there’s an appreciation that for the high level of service people expect from the city, we are doing our best to provide those services as efficiently as possible.”

Conard responded that for the city to pass a budget with no tax hike, that “would directly mean a reduction in services.”

“Until such time that the policy direction from the (City) Council is to reduce services, what we aim to do is provide the highest level quality of service with as much efficiency and sensitivity to cost as possible,” Conard said during her annual budget presentation press conference in City Hall last week.

Conard said if the budget is passed as proposed, the city’s new estimated tax rate would be $16.85 per $1,000 of property value. That translates to an increase of 72 cents per $1,000, or 4.45% higher than FY24, she said.

Mayor Deaglan McEachern agreed the primary drivers of the budget increase are the cost of living adjustments and step increases in city contracts. There are 16 unions that work for the city, and Conard noted that all 16 have reached contract agreements with the city.

“When I see budgets increasing as a result of COLAs, I understand the aspect of that in terms of wanting to make sure we hire correct people for those jobs,” McEachern said during the press conference.

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The mayor stressed while he doesn’t want to see cuts in the number of city employees, he’d like to see the growth in city positions stopped.

“How can we meet the demand of a growing city, while not increasing the headcount?” is one of McEachern’s goals for this year’s budget review.

Because of the council’s guidance, the number of full-time employees proposed for the FY 25 budget increased by a net of only .32, Conard said.

The proposed FY 25 budget calls for 898 full-time personnel and 100 part-time personnel.

There are 897 full-time and 114 part-time employees in the current budget, she said.

The new budget year starts on July 1.

Parking revenues offset taxes

Conard stressed too the positive impact that parking revenues have on both city services, and the city tax rate.

Conard estimated that parking revenues will come in at about $9.4 million for FY 25, which represents an increase of $555,000 or 6.2% from the current fiscal year.

The proposed new budget includes another $2.5 million in parking revenues going directly into the general fund, as has been the practice for many years.

In addition, parking revenues are also used to “try to offset the cost of other services that many people enjoy that can somehow relate to parking,” Conard said.

That includes, Conard said, snow removal, trash removal, downtown maintenance, the implementation of the bike/pedestrian master plan, the cost of EV charging stations and monies toward police and fire support services.

“The key that we like to highlight every year is for FY 25 services provided by the parking revenues will offset the property tax by almost a dollar, by 95 cents,” the city manager said. “For the median single family home valued at 482,000, this equates to a tax offset of $456.”

“So we’re proud of that figure,” Conard added.

Water, sewer rate hikes

Sewer and water rates will be rising under the proposed budget, Conard said. She stated that “water and sewer rates are going up conservatively, we have maintained a glide path if you will, or … a steady predictable rate of pay for water and sewer users.”

Water rates are increasing by 6% over the current year, she said, which would cost the average residential customer $16.64 more in FY 25.

Sewer rates are set to increase by 5% in the FY 25 budget, which would cost the average residential customer $49.80 more a year, Conard said.

The increases are due to “regulatory compliance costs,” as well as inflation that’s “affecting things like chemicals and materials and project costs,” and some facility improvements.

Fire Department budget increase leads departments

In terms of department budgets, the biggest proposed increase by percentage came from the Fire Department, according to the FY 25 budget book.

The proposed FY 25 Fire Department budget comes in at $12.4 million, up 11.11% from the current $11.2 million budget, according to budget documents.

McEachern attributed that increase to the raises the council voted to approve for firefighters and police in September 2023.

The council’s decision to approve the contracts and subsequent pay hikes came a year after they voted to approve a 4% across-the-board pay hike for all city employees.

The council approved new three-year contracts for firefighters and fire officers and new four-year contracts for police patrol officers, police ranking officers and police civilian employees’ associations.

Judie Belanger, the city’s director of finance and administration, estimated the new contracts would result in an increase of $2.5 million over four fiscal years.

City manager touts working to make employees feel valued

Conard agreed her administration has worked with the City Council to provide better pay for city employees, while working to make them feel valued.

“If someone could describe the culture … for the city of Portsmouth, I’d like it to be one where we take care of each other, and in so doing, everyone really feels a sense of ownership,” she said during her press conference Friday.

Conard said the pay hikes have “definitely helped to attract and retain staff” in the police and fire departments.

She reported that the Fire Department is “fully staffed” and the Police Department “remains down a handful or so” positions.

“But it really has made a positive impact,” she said about the pay hikes.

This article originally appeared on Portsmouth Herald: Portsmouth city manager: High level of services in $144.8M budget