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Retirement Costs Hit Hanover Budget

Hanover — A more than 20 percent increase in retirement contributions for employees and growing costs for paving materials could cause Hanover residents to see a nearly 3.4 percent increase in the municipal property tax rate.

Town officials said that Hanover is facing an increase of $250,000 that it owes to the New Hampshire Retirement System as the result of the state “downshifting” costs to the municipal level. The Selectboard has said that it will not absorb the increased costs by cutting services, so it will need to pass along the expense to taxpayers.

“We’ll pass it onto the taxpayer and the taxpayer needs to make a decision about whether they are exercised about it enough when it comes to who they put in Concord,” Town Manager Julia Griffin said.

Earlier this month, the Selectboard adopted a $22.2 million budget, which is a 2.4 percent increase over the current year’s. The budget will be presented to voters at a May Town Meeting.

Griffin nonetheless called the budget “pretty lean” and noted that the largest increases are due to factors outside the town’s control.

“We’re all about trying to just maintain business as usual,” Griffin said. “Fund the moderate increases we have in our operating costs that are coming at us from the outside world and not try to tackle any big expenditures.”

Another factor in the proposed budget is the higher cost associated with paving Hanover’s roads. Over the past four years, the town has seen the cost of paving materials increase from $35 a ton to $80 a ton. In order to keep up with the demand for road maintenance, the highway department is seeking a $70,000 increase in its paving budget.

The Selectboard plans to implement that $70,000 increase over two or three years. This year, the paving budget would increase by $40,000.

“When your prices more than double, you have to double your paving expenditures or otherwise you can only pave half as much road length as you were able to previously,” Griffin said.

If the budget is approved, residents could see their municipal tax rate increase 14 cents per $1,000 of assessed value to $4.32. The owner of a $400,000 home would pay an additional $56 annually on their tax bill for a total of $1,728.

When town administrators first presented the budget to the Selectboard in February, the board was warned that residents could be facing a 5 percent increase in the tax rate. But town administrators suggested tapping the General Fund’s “undesignated” balance to help offset the tax rate. Each fund within the town budget has its own undesignated fund and when there’s additional money in the fund, the town can draw upon it for unforeseen emergency projects or to help offset the tax rate, Griffin said.

The town at first proposed pulling $240,000 from the undesignated fund balance to help offset the tax rate, but the Selectboard chose to only use half of it — which will cause a greater tax burden — because board members worried that they would need to dip into the fund again next year, Selectwoman Nancy Carter said.

“Our concern is that spending today is impoverishing tomorrow,” Carter said. “We always know there is another budget next year and we thought it was prudent to hold some back.”

The town is also facing a decrease in revenue due to a lack of issuing new building permits — many of which come from Dartmouth College. Betsy McClain, deputy town clerk and director of administrative services, said that the town might need to take a harder look at increasing other fees to help offset the impact on taxpayers.

In addition to the $22.2 million budget, the town plans to spend an additional $1.8 million in capital reserves, which don’t affect the tax rate. About $350,000 could be spent on behalf of the fire department, which plans to buy a new fire truck. The town has also set aside about $250,000 to replace a water line on Lebanon Street, which has broken several times in the past year, twice closing Hanover High School.

Other capital reserve expenses include $340,000 for parking operations because the town is planning to research new parking meter technology, possibly investing in meters that take credit cards.

If all $1.8 million worth of capital reserve expenses are approved, then the total budget, including all funds such as fire, water utility and Hanover Ambulance Service, would be $24 million, a 7.2 percent increase over the current fiscal year budget.

The town is also approaching the final year of a three-year bargaining agreement with employees, who are scheduled to receive a 2 percent cost of living increase.

Hanover’s Town Meeting is on May 14 at 7 p.m. at the Hanover High School gym. The Selectboard will also hold a pre-town meeting public hearing on April 1 at 7:30 p.m. at the municipal building. The meeting is meant to review and weigh proposed warrant articles for the May Town Meeting.

Sarah Brubeck can be reached at sbrubeck@vnews.com or 603-727-3223.