City Council - Regular Meeting

Welcome to City of Keen in Focus. Thanks so much for listening. Hello and welcome to our next episode of City of Keen in Focus. My name is Asa Kramer and I am joined today by Elizabeth Ferland, our city manager, Dan Langel, our city assessor, and Carrie Chamberlain, our finance director. Hi everyone. Hey, good afternoon. How's everyone doing? Doing well for a very snowy day. For a very snowy day. My goodness. Well, you know, it's great for tourism, people who like to snowmobile or ski, but it sure does make a mess of the roads.

Yeah. And I feel like this year in particular, we've gotten quite a bit of snow. And I really have to give a huge shout out to our plow crew because they are working. They are doing a great job keeping up with it. Yeah, they certainly are. You know, we've been going through a lot of sand, salt, and overtime. And so, basically, when these storms carry on for long periods of time, we have a crew that's here for potentially overnight plowing and salting and sanding the roads, and they do a fabulous job. They They really really do. But that's not what we're here to talk about today. No, today I think we're talking all things budget, right?

Budget. Budget. And so Dan's with us because you can't have a budget without a tax rate. So we're going to talk a little bit about how those things work together and just give a brief overview. And really this is like a warm-up for you guys because this Thursday we're going to be doing an overview at the finance committee at 6:00. Yes. And Carrie, it's your first time here on our podcast, but it's not your first time here at the city. Has it been over a year now? It was a year mid January.

Yeah, you have been a very welcome addition to the team and it's been a lot. I've actually talked about that before. Just going through a whole year cycle with the city. Everything is new. We move from one thing right into the next and you've had a lot of turnover in your department and your different divisions. So, you've certainly had your hands full. Thank you. We're definitely moving in the right direction.

Yeah, I think so, too. So with the budget, we really are either doing the capital plan or the operating budget all year long because you move right from one into the other. Now we do the full extensive update of our capital plan every other year, but we do have to update it every year when we do the budget. So right now we are in the process of updating our capital plan. So this capital plan will go from 2027 to 2033 and beyond. So, if you want to take a look at our capital plan, go to keenh.gov. It's on the finance department. We have the operating budget, the capital plan, lots of really good information there. But if you look at the capital plan, you'll see we have projects that are beyond because they're in the back in the appendix. So what happens is a project may start in the appendix and it moves its way through the timeline until it becomes a project in our current year which then it becomes part of our operating budget. So the capital plan it's either a project over 50,000 with a useful life of 7 years or it could be a program. So, we added programs to the capital plan several years ago because those are the things that they may not hit that $50,000 mark, but we know that we need to plan for them. And so, these different programs have become very helpful. And then the operating budget is basically the the budget for the year plus the current year of the capital plan. And really, the budgeting process even goes back one step further. It starts with our master plan. So our master plan, which was recently updated, has within it certain priority areas for the city, things that the people who live here want to see the city focus on. And there are lots of initiatives in the master plan that are then also discussed

as part of the city council goals. And so when the departments are putting their budgets together and their capital projects, they are really tying those budget items, those projects to both the master plan and the city council goals. So what do we have coming up right now? So this Thursday at the finance committee meeting at 6 p.m., Dan and Carrie are both going to be doing that overview. But after that, the following week on Tuesday, we have our capital planning process kickoff, which is going to be at Heerten Hall. Starts at 5:30. Now, this is considered a workshop. So, what does that mean? That means the public can come, watch, listen, but not participate. This is a workshop for the city council and the mayor to be able to ask the department heads questions. And so the department heads are preparing right now boards for some of the projects that are coming up in the next couple of years. And that first half an hour or so between 5:30 and 6:00 p.m. the council and the mayor will walk around in the Heton Hall and look at all the different projects that we have coming into the capital plan and ask questions. And so it's a really good informal opportunity to learn about the projects. Usually it's the ones that are either brand new coming into the plan or the ones that are coming up this year or next year in our capital plan. And so I know like Robin Hood Park will be on there and then we have a perimeter fence project that's getting ready to kick off up at the airport. So those projects, those larger projects will be the focus of that first half an hour. And then there will be a presentation and you know it's going to be Don Lucier because honestly if you look at the capital plan the majority of the projects are coming from public works and so they've always led that initial presentation of the

capital plan and so there'll be a presentation that will happen for probably about an hour and that'll give the council an opportunity to ask questions. Now, we also invite the planning board members because under state law, the capital plan is actually something that the planning board adopts. And I know that sounds weird because it's a budgeting tool for us. But it is a long range plan. And so, under state law, it's the planning board that adopts it. And so even though it'll go through our budget process, it will also be adopted by the planning board and by the city council and then rolled into our operating budgets. And so that's the kickoff Tuesday, March 3rd, 5:30 at Heertton Hall. And then we have lots of individual presentations. Gary, want to talk a little bit about um the upcoming schedule for the presentations at FOP?

Sure. So after the kickoff presentation, we have some special meetings that are scheduled on Tuesday, March 10th. We have a special finance committee meeting and that is where we will have assessing the city clerk, IT, facilities and community services, community development, our parking fund operations, police, fire, parks and wreck do their presentations and that meeting is open to the public so that they can get a better understanding of what the projects are. The second meeting that we have is on Thursday, March 12th. That's also a finance committee meeting in which additional departments will present their projects. We have a CIP public hearing which is scheduled for Thursday, March 19th at 7 p.m. And then the planning board will meet on Monday, March 23rd. Another finance committee meeting. That is actually where the finance committee will make a recommendation to council on the CIP. That's on Thursday the 26th. And then on Thursday, April 2nd, the entire CIP project will go to council for adoption. So for the capital planning review, we go page by page, section by section through the book, similar to how we review the operating budget when it's time to review operating budget. So it's a great opportunity and if you're just interested in the projects that let's say assessing has, you only have one in there, right Dan?

Just one. Just Yeah. Yeah. It's the reevaluation. Just a minor one. Just a minor one. Yes. Well, we do have to set aside money for that. And so if you're interested in that project, you would want to come on the night that Carrie was mentioning, which I think is the first FOP night. Yes.

But maybe you're interested in just the fire department. So if you want to look at that detailed schedule, we will have it posted and we will be going over it as well. And if you just want to come and listen to the whole thing and offer comments and ask questions, you know, we really hope that people take advantage of this opportunity because we have all the right people in the room to answer those questions for you. One other quick thing to note in the capital plan is several of our projects will be budgeted in multiple lines. So for instance, the downtown infrastructure project, you will see items that are budgeted in both the general fund. So you'll see it under streets and sidewalks and traffic signal replacement and storm water resiliency program, but you'll also see parts of that project in the sewer fund and the water fund. And so when we have projects that are budgeted in multiple lines, multiple divisions or departments, there is a consolidated funding overview in the CIP, which is also helpful to be able to crossch check because I know understanding the general fund is the portion that is raised by general taxation, so by your taxes, whereas the water and sewer fund is supported entirely by the rates. And so those that have water and sewer services with the city and are build for those services, they are paying for that portion of the project. So in addition to the capital budget process, we are rolling into the fiscal year 27 operating budget process. The departments look at their budgets and they present a proposal which once that comes through finance, we put everything together. We compile all of the information. Then the departments actually do individual departmental

presentations to finance department as well as the city manager. And once that process is done, we actually go back, we review the overall budget. The city manager then needs to evaluate where we are in the budget and make sure that both the the personnel expenditures as well as the non-personnel expenditures that the total overall budget doesn't exceed any of the guidelines that we have within fiscal policy. We need to make sure that any projects that we are going to send out to bond that our overall indebtedness is not exceeding our fiscal policy. We have to ensure that our fund balance falls within the guidelines. We're currently with the GFOA guidelines are 5 to 15% but the state of New Hampshire I believe it's 7 to 17%. So we make sure that we follow the New Hampshire guidelines.

And Carrie, can I ask a quick question? What is GFOA? It's the Government Finance Officers Association. Okay, great. Thank you.

Yeah, I know we all tend to use acronyms, right, in our own world every day. So there's actually a New Hampshire GFOA as well as a national finance association as well. So I think it's really important. Thank you for explaining that, Carrie, because the city council adopts a fiscal policy almost every year. Not every year, but just about every year, they are making changes to that fiscal policy. And that fiscal policy puts a cap really on spending. It tells the city manager how much new taxes can be included in the upcoming budget. So, how much new expenditures can be included? And that calculation is based on a rolling three-year average of cost index. And we've gone back and forth which cost index and it's made very little difference. But that calculation is done by the finance department. So, you get to do that one Carrie.

That's always fun.

That is always fun. So we do that calculation that tells us where that bottom line of the budget needs to be. And that is for both operations and capital projects because the capital projects remember are the first year of the capital plan are now rolled into the operating budget. And so what we do what the council decides on the capital plan impacts how much can be allocated to the operational budget as well. And so those fiscal policies are really, really important. And it does start the process. If the council is interested in making changes to their fiscal policy, it's usually done late summer when they get back from their break before we start the next step in the budgeting process. So Dan, you've been sitting here and I haven't dragged you into this conversation very much yet. Well, it's common though because you talk about capital improvements, you talk about the budget, and all that really leads to is what someone wants to know is what does this do to my tax bill?

Yeah. How much is this going to cost? Exactly. And what we're talking about really is only 39% of your taxes. 51% goes to the school, 10% goes to your county, and then the city portion is only 39% of that.

Yeah, that's really important because the tax bill comes from the city. Actually, it's one of your divisions, Carrie. The revenue office works with assessing and puts together the tax bills and we are actually collecting the money for the school and the county. The city council only has control over that 39% which is for the city budget. And by the time we do our budget here at the city, the county and school is done. Their portions of the budget are already done and we're the last piece of the puzzle before those numbers are set and then the tax rate gets actually set much later.

Yes. So the tax rate actually gets set in the fall. So we take a look at all the budgets for the year, the county, the school, the municipality, and we subtract any other additional revenues that we get either from grants or any other type of funding sources. Of course, majority does come through on property taxes. So you take that as your top line, and then you divide that by the total assessed value for your community. That's how you get your tax rate. Now, this year is going to be a little bit unique because we're not at market value this year and we're going to be bringing our properties up to market value. So you're going to see a pretty significant increase in your valuation, but that doesn't mean your taxes go up, right? The tax rate will go down. Correct.

Yeah. It's confusing, but because the values will go up so much, the actual overall tax rate will drop. And I know we've talked about this a little bit before, Dan, on this podcast, but it's not a one for one.

Yeah. So it's not there's always a tax shift. And just because one property goes up, that doesn't mean a property across the city goes up at the same rate or commercial property versus a residential property. The market really dictates what the values of these properties are. That's nothing that we're dictating. We're just analyzing what the market does. And as different properties go up at different percentages that shifts tax burden onto whoever goes up at a greater percentage. We saw this in 2021 where your residential properties went up more significantly than the commercial. So there was a tax shift. residential payers, even though the tax rate went down, their taxes still went up. Right now, we're still seeing that again, you know, the residential property is just going up at such a rate, it's hard to have anything else to offset that.

Yeah. And the most affordable residential properties, it's pretty easy to see. If you go and you take a look at your assessment right now, if you go to the city's website under the assessing department, pull up your tax card, and look at your value, then take a look. And Dan hates it when I use this example, but it's just like the easiest one. Go look it up in Zillow and see what's I'm sorry, but go look it up in Zillow because it will tell you what pretty close of what the market value of that property is and you'll see the difference. And so if we are at the city are going through this revaluation of bringing all these properties up to market value, that's going to be a big jump for residential properties and especially the more affordable residential properties. you know, to try to offset some of that, we will be looking at our exemptions and credits to try to help the most vulnerable of the community. So, obviously, city council has to make that determination. When we get tax bills in the city, we get build twice a year. The first one usually goes out around June to July and the second one goes out in the fall, usually do by December 1st. So, your first tax bill is always an estimate of the previous year. So, you're using the value from the previous year and using half the tax rate from the previous year. When you get your final bill in December, so for this year, that's going to include the new value. So any changes made to the property plus whenever we're doing the revaluation then also takes in consideration the new budgets for that year. So if you owe more then you see a bigger tax bill into the year. If you owe less then you'll see a smaller one. So depending on what happens with the budget cycles and what happens with your value. I think that as we move through this process this year for capital planning, for the operating budget, for the revaluation, we'll try to share as much information as possible and offer as many opportunities as possible for people to be able to come in and ask questions. Dan's staff is really great about answering questions, anything related to your either your property, your property tax card, or the tax rate and that process. So they're located on

the second floor of city hall. Car's office which is collecting the taxes on the first floor. The revenue office, they are also really great about answering questions, but they're not going to answer the budget questions. That's going to have to come from Car's office or me. So those types of questions really should come to us so that we can get out the correct information because revenue is really just collecting it. So, if you have a question about what's been build to you or when it's been build, the revenue office can answer those questions. And if you have a question, what's on your tax card, the assessing office can answer that. But when we go through the reval process, there will be a very large effort to outreach.

Yeah. So, we'll be doing a lot of outreach leading up to that. Obviously, there's this podcast here. I'll be on the radio. We'll be doing the presentation on Thursday. And then we'll continue to be updating our website. That's a great source. Post any updates that we have on the website. And then each individual property owner will be receiving a letter from us notifying them of what their preliminary value is. So we'll go over a brief process of what we've been through for the past year, what their projected value is, and then we have some times available for someone to come in and and speak with the representatives who set those values. So if they have questions on the process, what sales happened in the city that are comparable to their property, if they have other information that we may not have known about their property. So there'll be time before that before we set those final values so everyone has a good opportunity to have an understanding of the process. So last year during the budget process, again, if you take a look at the budget and the budget memo that I create each year, it's posted on the finance section of our website. The budget memo attempts to break down what some of the drivers in the budget are and also sort of like what the one-time things are that are happening. So for instance, last year we talked about we start with the fiscal policy for the city council and the CPI calculation was actually 4.1% last year was kind of high which is not surprising because of the cost of living index but the budget that we proposed and the council ultimately adopted the city's portion of the tax rate was increasing only 2.06% 06%. So well below the fiscal policy limitations and that resulted in about 28 cents increase on the tax rate for the municipal portion. But again remember the tax rate is made up of the city, the school and the county. So even though our percentage was in line with fiscal policy, it was well below fiscal policy, the overall tax rate did increase much more than that. And you know, a big portion of it is related to the school district. I know I've talked

about this before, but the way that education is currently funded in the state of New Hampshire is creating all sorts of issues at schools across the state. They're not funding an adequate education. Their funding is based on enrollment, but we know that families are not having as many kids as they once did. And so population is declining and we're not seeing as many children in the school districts. And so the formula is reducing the amount that the schools are receiving, but not enough to, let's say, eliminate a teacher. It's never an equal distribution. And so there's this real struggle with the school district budget right now and the funding. And you know, we've seen several lawsuits over the years about adequate funding for school districts. I don't know what the answer is. They're just going to keep fighting it out because they haven't figured it out yet. And no matter what we do at the city level, that is going to continue to be a struggle moving forward, I anticipate. But for us, you know, we have projects in the capital plan and what we try to do with the capital plan is look at the bottom line and try to keep it somewhat level in terms of new dollars being raised for those capital projects so that we are setting aside money in our capital reserve accounts and planning for the future in an attempt to avoid spikes in the tax rate as a result of projects. And then we try to do the same with the operating budget. There's always lots of needs, but we have to prioritize those needs every year and take a look at what's happening. And we look at not only the city's portion of the budget, but the whole tax rate in general because we recognize that it's really getting, I think, harder and harder every year. So much pressure is put on the residential property tax to do so many things, but it is the system that we have here in New Hampshire. The other thing, so you look at the revenue side, what's happening in terms of funding. There are

a few things that we do here at the city also to try to generate revenue outside of just getting it through property taxation and that is grants. And we do a really good job and carrier team does a great job managing all those grants. Uh, next week I have a meeting with several of the departments to strategize which grant applications would be the highest scoring for a potential congressionally directed funding request. And so we'll take a look at what the parameters are. We'll look at the projects in our capital plan. We'll brainstorm which one we think would be able to score the highest and then prioritize that. I mean really a lot of effort is done at maximizing revenues and getting as much grant funding as possible. And the other thing that you know we struggle with is the operating budget doesn't change a lot from year to year. It really doesn't. There are very few changes in the departments. And so if you've sat through those FOP meetings where we're going page by page in the budget, you would notice that, you know, there might be $1,000 here or $500 there, but the overall changes there aren't many. So what's driving the budget? It's all labor because we are a service organization and we have six union contracts. Those union contracts and our labor costs are what's really driving the budget. And so, you know, we've been having this conversation about the fire department and what's the right size in terms of our response. And those changes are the ones that are going to impact the city's portion of the budget greatest. And I say this all the time and the only way really to influence the city's portion of the tax rate is to eliminate or reduce services. If the community decides I don't want to have my leaves picked up anymore, there's a service. If the community decides that I don't want to provide as many programs

through parks and wreck, those are the things where cutting $500 for operating expenses, you know, maybe for chemicals for the water treatment plant is not going to really move the needle. So, if there is a desire to really move the needle, really the place to do that is to look at city services. But oftent times we have these conversations and you know, one, why do we pick up leaves? You know why we pick up leaves? Dan, you do. I do. It's more of a drainage maintenance program. So, our water lines aren't getting clogged. That's right. Yeah. Causing more costs.

That's right. Flooding, which we've done a lot of work to try to mitigate flooding throughout the city. So, there's this battle between, okay, we could eliminate pickup leaves, but then we have to deal with the potential of flooding issues. And so, you know, which is better, which makes sense? And then, you know, if there are other things that we're talking about, if you're looking at the fire department, for example, people want to have a response from the city within 4 minutes anywhere in the city. And when it's you and you're having an emergency, you want to have them arrive as quick as possible because your chances of surviving a real severe medical event is greater if you get the medical assistance within a very short amount of time. So there's always this push and pull between the services that we want in the community versus the services that we feel we can afford. And so I guess I just want to bring it back to the big picture because it does all start with the master plan. What are the things that are most important to the community? And then it goes to the city council. What are the things that they are prioritizing in their city council goals? And then what are they telling us as staff they want to see in the budget and how much money do they want us to raise when we're doing that through their fiscal policies? It really all starts there. That's the framework for both the capital plan and the operating budget. And then we sort of move through the process to get to a point where hopefully the city council is on board with what's presented and the community is on board with what's presented. There's a lot there's definitely a lot to it and that's why I think it's so important for people to take the opportunity to come to the presentations that we have during the finance committee meetings, during the public hearing, voice their concerns, their questions. there would be just an opportunity for some clarity and a full

understanding of how the entire process works and tell us what's important to them or tell the council because it is ultimately the council. We make presentations, we make recommendations, but ultimately the city council. They are the ones that will decide what we have in our final budget and they are very responsive to the public. For the eight years that I've been here, I have been just very impressed with how responsive they are to the community. you know, answering questions and so they do listen. So, come to the budget meetings and ask questions and participate. It does matter. Yeah. So, is there anything else that anyone would like to add to this discussion today? It's a really good conversation. It's a lot.

I mean, it's the budgeting 364 like 364 days a year. You finish one, you're moving on to the next. Yeah. And you're problem solving all year long, too. So even after the budget is adopted, you're still problem solving because something happens, something breaks, something we didn't anticipate. We have to save money over here to pay for it over there. And it never stops. The budgeting process really never stops. Well, thank you Dan and Carrie for coming today to talk to us about the budget process and for doing your presentation on Thursday. I think it's a great start and there'll be lots more opportunities to present and ask questions as we move through the process.

And I think if that's it, we will wrap up for today and we will see you next time. Thanks for listening to City of Keen and Focus. We'll see you next time.