Here’s how the new tax rate would impact you

The $69,967,453 budget for fiscal year 2023 that was provisionally approved by the Town Council in late April and reviewed at a public hearing Wednesday, June 15, calls for an overall increase of $892,877, or 1.29 percent.

The tax rate would increase from the current $15.31 per $1,000 of assessed valuation to $15.657 – a jump of about 35 cents, or 2.26 percent more.

Town Administrator Richard Rainer Jr. has pointed out the budget increase is well below the U.S. inflation rate, which currently stands at about 8.6 percent.

Here’s how the spending plan, if formally adopted by the council without changes on Monday, June 27, would impact various property owners:

• A resident owning property valued at $300,000 would pay $4,697.10 in annual property taxes, an increase of $104.10.

• $400,000: $6,262.80 in property taxes, an increase of $138.80

• $500,000: $7,828.50 in property taxes, an increase of $173.50

• $600,000: $9,394.20 in property taxes, an increase of $208.20

• $800,000: $12,525.60 in property taxes, an increase of $277.60

PORTSMOUTH — Only two citizens questioned the town’s provisional $69,967,453 spending plan for the 2022-23 fiscal year during the annual public budget hearing in the Portsmouth Middle School’s “Little Theater” Wednesday night, June 15.

The total budget package calls for an increase in expenditures over the current budget of $892,877, or 1.29 percent, according to Town Administrator Richard Rainer, Jr. The general property tax levy would jump by 3.32 percent, keeping the town under the state-mandated cap of 4 percent, he said.

If the budget is approved with no further changes when it’s formally adopted on Monday, June 27, the new tax rate starting July 1 would be $15.657 — a 34.7-cent increase (or 2.26 percent more) over the current rate of $15.31. (See story at left on how that will impact different property owners.)

For the schools, which always takes the biggest slice of the pie, the budget calls for a town appropriation of about $36.09 million — an increase of $722,195, or 2.04 percent. The total budget for the School Department is about $44.1 million, or about $1.04 million more (2.42 percent) over the current budget.

The annual budget hearings are usually quick affairs since they’re so sparsely attended, and this year’s was no different.

The council breezed through the 96-page document — previously reviewed during several workshops in late April — in only 46 minutes before adjourning for the night.

Not counting members of the Town Council, School Committee and other officials who were sitting up front, fewer than 20 people were in attendance, and most of them were town or school staff members.

Larry Fitzmorris, president of the taxpayer watchdog group Portsmouth Concerned Citizens (PCC), said a 2.26-percent increase on the tax rate isn’t bad, “but it’s higher than it needs to be.”

Fitzmorris said judging by national financial forecasts, the country could very well be headed into a recession soon. “Rhode Island is usually first in the recession and the last out,” he said.

In his budget message that’s included with the spending plan, Rainer acknowledged that “world events are having a significant impact on the world economy and we are experiencing significant inflation,” but that he “kept the tax rate as low as I believe prudent while still presenting to you a balanced budget based on conservative revenue and expenditure projections.”

The spending plan, he said, “supports four collective bargaining agreements, our road paving program, town funded Capital Improvements, continues to pay down our debt, funds our commitment to civic support, accounts for retirements by personnel in the defined benefits program, and provides funding supporting our education programs.”

Fitzmorris also questioned the budget’s significant increase in revenue projections for services related to real estate and building permits. 

For example, the town is anticipating a $400,000 increase in revenue from real estate transfer fees next fiscal year — a 90-percent hike. Similarly, the budget projects a $156,238 increase in revenue — over 45 percent more — coming from building inspections.

“I know we had a good year this year, but I would like to remind everybody … that when the Town of Portsmouth goes into a recession, construction stops dead. My concern is we may have anticipated revenue that’s not going to be there. I don’t remember any increase in fees that would support this,” said Fitzmorris, adding that the town could be running into an “$800,000 deficit” if the projects are wrong.

Rainer responded that he and his staff looked into the projects in great detail, and were confident that the estimates will hold up. “While what you’re saying is intuitive, it’s not what we’re seeing,” the administrator said.

Fitzmorris also commented on the 11.79-percent decrease in total state aid revenue to the town ($684,837) projected for next year. Rainer said the figure comes straight from the governor’s budget and there’s not much the town can do about it. 

“That’s where we get our numbers from. We have to wait until this time of year when we hold our breath,” he said.

Fitzmorris responded that the worst is yet to come. “Over time, it’s fairly obvious that that number is going to be reduced to zero,” he said.

As for total state aid to the school district, that’s down as well — a reduction of $165,584, or 4.36 percent less. “All this money that’s reduced in state aid to Portsmouth is covered by taxpayers — maybe not 100 percent, but 95 percent,” Fitzmorris said. “I don’t think that’s the way to do business.”

Fitzmorris made a point of thanking the council, Mr. Rainer and his staff for presenting a budget document this year that was “noticeably more readable with changes we feel are useful to us. The changes have been appreciated.”

Pension fund questioned

As he has during previous council meetings, local resident Tom Grieb raised concerns over the town’s pension fund. 

“The contribution made to the pension fund in this budget is $1.3 million less than what it was last year,” said Grieb, adding that the longterm wage increase assumption that was used in the calculations is nearly 50 percent less, and “dramatic inflation” is afoot. “Making this change now makes no sense to me.”

Then town needs to do an independent review of its pension plan, he said, with the consultant reporting directly to the council.

“It is my option that this year’s pension payment needs to be recalculated using a more realistic wage increase,” said Grieb.

Council President Kevin Aguiar said the council has recently been working with the town’s Pension Committee to review those concerns. 

“We’re going to wait for some recommendations from the Pension Committee and then the council will discuss it,” Aguiar said, adding that the town will pay for an independent review if one is needed. “We may not get all the answers, but we’ll get to the bottom of it.”