MANCHESTER — To avoid asking voters to approve a tax increase during a period of economic uncertainty, town officials have taken a Proposition 21/2 debt exclusion out of the fiscal 2009 budget and will recommend covering equipment and facility improvements by using town reserves.
The debt exclusion would have raised taxes above the 2.5 percent state limit to pay for replacing Department of Public Works trucks, new devices to read water meters and a new refueling station for town vehicles. When those expenses were paid for, the tax increase, which selectmen projected to be around $350,000, would have expired.
Susan Thorne, chairwoman of the Board of Selectmen, said yesterday that the new equipment, expected to save the town money in the long term, was too vital to pin to a tax increase vote, especially considering the shaky state of the regional economy and a hostile climate for overrides and debt exclusions in other towns.
"The current economic environment doesn't bode well, and a couple of the (capital items) are things we really need and would have significant cost savings in the future," Thorne said. "While I recognize that Manchester voters have been very supportive of overrides and debt exclusions in the past, we felt if we can do these things with reserves, we should."
Both the Board of Selectmen and the Finance Committee voted to remove the debt exclusion at a joint meeting Monday night.
In addition to eliminating the debt exclusion, selectmen also voted not to recommend funding two requests made by the Fire Department. The two requests, replacing a car and the garage doors to the station, had been cut by the Finance Committee earlier in the year.
The board also voted to have the Department of Public Works handle installing a handicapped-accessible entrance ramp and a new concrete apron at the front of the station building, instead of using outside workers, in an effort to reduce costs.
The town is planning to conduct a study of Fire Department facilities. During discussions about the requests for the new department car and station improvements, Finance Committee members said they would prefer to wait for the results of that study before committing to the improvements.
Because of the cuts and the use of a $50,000 payment from the builders of the Algonquin liquefied natural gas pipeline, the amount being drawn from the reserves to compensate for not having a debt exclusion would be around $280,000, Town Accountant Charlie Lane said yesterday.
If the board had gone forward with the debt exclusion, the tax increase would have needed approval from Town Meeting and from voters in a referendum to go into effect.
Town Administrator Wayne Melville said dipping into reserves this year is a sign that financial pressure from rising health insurance and energy expenses would require finding new revenue or facing more tax increases in the future.
"There is a trend that we are not adding to reserves but are drawing on them," Melville said. "Either we cure that structural deficit or we need to raise more revenues."
Thorne said that although the board was pleased to spare the town a Proposition 21/2 tax increase in a tough fiscal year, residents should be aware that the same might not be possible in coming years if expenses continue to rise.
"The town has to realize that we are taking this dip into reserves, but in the future we will likely be asking for a debt exclusion or override," Thorne said.
