Town Manager’s Report
August 14, 2009
I want to take this opportunity to make you aware of some of the recent developments at the State level that will be affecting us directly here in Lincoln. This year the New Hampshire Legislature was faced with the difficult task of balancing a budget in today's strained economy. That difficult task was compounded by the fact that the state was looking to do so without instituting a major tax hike. The result is that the budget was balanced buy using a complex mix of fee and revenue increases (such as increased car registration fees), spending cuts, use of one-time funding sources, and “creative” financing methods.
One “creative” way that the Legislature managed to balance the budget was by eliminating approximately $25 million worth of aid it provided to local cities and towns through the revenue sharing program. This program uses a mathematical formula to proportionally distribute income that the State receives to nearly every municipality in the state. This program has been in existence for many years, and the Town of Lincoln typically receives about $125,000 a year from this source. This money is treated as general fund revenue by the Town of Lincoln, and offsets the amount that needs to be raised through local property taxes. Given the current property valuation and tax rate in the Town of Lincoln, this $125,000 offsets approximately 15 cents on the current tax rate.
This action by the State leaves the municipalities of New Hampshire only two options on how to deal with the resulting revenue shortfall. The first is to reduce spending by an amount equivalent to the reduction in funding. In Lincoln this would mean cutting almost 3% of the municipal budget for this year. The second option is to replace the lost revenue with another source of funding. In Lincoln this would mean “finding” $125,000 in additional revenue from other sources, or raising the money through an additional increase in property taxes on the local level. As I previously mentioned, this could mean an increase of approximately $0.15 per $1000 of valuation. The Board of Selectmen and I are currently examining a combination of these two approaches in order to meet the $125,000 shortfall in the way that is least disruptive to the citizens of Lincoln.
I call this method “creative” financing because it allows the State to hide the true financial impact of its decisions. What essentially happened is that the State was forced to make a difficult decision to either cut services or raise taxes to pay for the services it currently offers. The legislature took a third path, which was to downshift these costs onto the local government and force each city and town to make the same difficult choice that the legislature wasn't able to. Unfortunately, once that decision gets to the local level we don't have anyone else to pass the buck to. Another way to look at the loss of this revenue is as an indirect statewide property tax. Of course you'll never hear a politician utter those words in Concord! The Board of Selectmen and I feel that the residents of Lincoln should be aware of decisions (or lack thereof) like these being made in Concord that can affect us directly on the local level.
Our state legislators (Sen. Gallus, Reps. Gionet and Ford) have been very responsive to our concerns on this issue, but they are only three votes out of 400+. If you feel strongly on the issue, feel free to contact them to express your concerns. If you're concerned about how this decision will affect the Town of Lincoln, as always, I would be glad to talk with you in person at your convenience. I hope you enjoy the rest of the summer in our beautiful mountain town!
Very Truly Yours,
Your Town Manager,
Peter Joseph
Lincoln Town Manager
(603)745-2757
townmanager@lincolnnh.org
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