CLAREMONT — Increases in the proposed $18 million municipal budget are almost entirely attributable to higher costs for commodities such as fuel, salary and benefits increases for five union contracts and an overall increase in the cost to provide city services, according to Lisa Richmond, the city’s finance director.
The City Council will begin its review of the budget for the fiscal year beginning July 1 on Wednesday, with an all-day session scheduled for May 14. The budget represents an increase from this year’s spending of less than 1%, or about $162,350.
Richmond said interim City Manager John MacLean asked departments to level-fund their budgets to the greatest extent possible, but some increases are outside the city’s control.
In his budget report to the council, MacLean said the municipal cost index, which measures the costs to municipalities to provide services, has risen significantly with the onset of inflation during the pandemic.
According to MacLean’s report, the MCI (calculated by American City and County magazine) in 2019 was about 1.75% but grew to 10.82% by December 2021 to more than 12% in March.
“This increase means the cost to the city for operations and doing projects is climbing,” MacLean wrote. “As the MCI increases, it leaves the city to do fewer projects for the same amount of money.”
On Thursday, MacLean said the MCI “really exploded” over the last four months.
Gasoline and fuel account for two of the major drivers for the MCI increase along with contracted work.
As an example, the police budget’s gasoline line item in the current budget is $36,000, and the proposed figure for 2022-23 is more than $64,000.
Fuel oil is being budgeted at 50% more across the board, Richmond said.
One item that always generates discussion among the councilors is paving. The council pushed last year for a million dollars for paving and ended up approving $746,000. MacLean is recommending the city borrow to pay for the work for 2023 because the $3.4 million bond to pay for the closure of the landfill will be paid off in the next fiscal year
“The creative solution offered to achieve this goal without increasing the tax rate is to utilize retiring bond capacity,” MacLean said in his report.
MacLean said if the city were to borrow the money in January 2023, it would coincide with summer road and sidewalk work and would allow the city to continue the goal to spend $1 million on road projects.
“The first bond payment is not due until the (fiscal year) 2024 budget,” MacLean wrote. “This would have a net neutral impact on the budget.”
On Thursday, MacLean said borrowing would minimize the burden to the taxpayer because it is less than the cost of the landfill closing.
“It puts us in a very good place,” he said.
The Public Works budget is down $624,000 with paving expenses removed.
The projected municipal property tax rate under the budget is $15.26 per $1,000 of assessed value, a 25-cent increase from this year.
That adds $37.50 in city taxes on a property assessed at $150,000.
Richmond said the current rate is “not realistic” because of additional one-time revenue the city received last year from the federal government during the pandemic that helped lower the rate set in October.
With a projected fund balance of close to $4 million for the fiscal year ending 2021, MacLean is recommending using $700,000 of the surplus to offset some of the tax increase.
The city is in negotiations with four of the five unions that represent municipal employees, and negotiations with the fifth are expected to begin later this spring.
No agreements have been struck, Richards said, but anticipated increases in wages and benefits have been built into the budget proposal.
MacLean said the administration understands the community wants it to be very careful with the dollars it spends, adding that he is comfortable defending the proposed spending before the council.
“I think if you look at this budget and start to see the whole picture, you will see this is a very reasonable and good budget in terms of sustaining the economic health, affordability and quality of life of the city,” MacLean said.
Patrick O’Grady can be reached at pogclmt@gmail.com.
