Letter: Symptom, but not the problem …

Posted 10/31/23

I fervently urge the Town Council to task the Portsmouth Economic Development Committee (PEDC) to conduct a “revenue generation think tank” to generate some creative …

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Letter: Symptom, but not the problem …

Posted

To the editor:

I fervently urge the Town Council to task the Portsmouth Economic Development Committee (PEDC) to conduct a “revenue generation think tank” to generate some creative revenue ideas.

The recent transfer station dilemma is not the root problem. Rather, it is symptomatic of a problem that the town agonizes over every year.

I recall the town budget fiasco in 1997. There was another town financial skirmish in 2007. A special meeting did not occur because there was no quorum. No discussion. No ideas.

The PEDC conducted a series of meetings from 2009-2012. They engaged the public to define SWOT (Strengths, Weaknesses, Opportunities, and Threats) and educate the town about COCS (Cost of Community Services). COCS shows that for every tax dollar received by the town, the town spends more than a dollar on a residential property, but spends less than a dollar on businesses, open space, and recreational residences.

The town budget is now $70 million. Since 1997, my property tax bill has increased at a 2.2 percent annual rate. Two percent of $70 million is $1.4 million. Several years ago, Raytheon was the largest taxpayer in town. They paid $600,000 a year. So to offset the perpetual annual increase, we would need two Raytheons to come to town every year.

A mid-sized business in town pays $30,000 a year in taxes. We would need almost 50 of those businesses to come to town to offset the annual increase.

Where is the money going?

Some would say the schools. And that is correct. Our schools get 60-65 percent of the town budget. But that is the national average.

Another way to look at the budget is to separate salary and benefits versus all other expenses. The result is that 65-70 percent of the town budget goes to support the salary and benefits of about 500 people: 250 active and 250 retired. In a town of 17,000.

But Google will tell you that salary and benefit costs can go as high as 80 percent in any entity. This is not the only cause but arguably one of the biggest causes of the town budgeting woes.

How do you solve the annual budget challenge? There are three macro ways: raise taxes, cut spending, or generate revenue. We know about raising taxes.

Cutting costs works until we get to a point like now. There is no more fat in the budget. As some would say, we are running out of meat and cutting into the bone.

Since residences cost the town more and businesses are “profitable” to the town, one solution is to attract more businesses to the town.

But this solution presents its own challenges. The town is isolated geographically, there is not much commercial property, there are no sewers, and not many people support this option.

A think tank to generate creative revenue for the town will help mitigate raising taxes or cutting services.

Otherwise we will see more town council meetings like last Monday night.

Ray Berberick

25 Robin Road

Portsmouth

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