DERRY — Town officials are facing a funding shortfall before budget season even begins.
The town faces increases in state retirement costs, and health care and other contractual obligations for fiscal year 2014.
“(We are) at a net negative of $450,000 before we even start the discussion for next year,” Town Administrator John Anderson said.
The town operates under a tax cap required by the town’s charter that keeps spending in check.
Last year’s approved budget was $45.3 million.
This year, as officials get ready to hear from department heads on what their needs will be for next year, the message is clear — be frugal.
“What programs and services we provide to the community are you prepared not to provide anymore?” Anderson asked town councilors at a meeting Dec. 18.
He said individual departments will be responsible for making their own priorities as to what is important and what they may be able to do without.
“What are we prepared to lose that we currently offer?” Anderson asked.
Council Chairman Brad Benson said even if the town faces a shortfall before the budget work gets going, it’s not a doom-and-gloom situation.
“I think it’s very manageable, based on our experience,” he said.
Benson said the town has a healthy fund balance reserve of more than $13 million that could be put to use if the need is dire.
“It will also leave us some wiggle room below the cap,” he said.
Chief Financial Officer Frank Childs said the town should not expect to gain big revenues next year from new car registrations, a strong revenue source in past years.
“We are not seeing a lot of new vehicles being purchased and registered,” Childs said. “That significantly impacts what we get in revenue. At this point, we don’t see this turning around.”
In addition to the regular operating budget, councilors also will consider major capital projects. Individual departments will be asked to consider what their greatest needs are when calculating their budget requests.
School district officials are looking at a lean budget year, too, and are proposing possible staff cuts to make up for funding reductions.
Councilors hope to meet with Pinkerton Academy and Derry school officials on Jan. 29. The meeting could be a starting point for the two entities someday working together more on budgets.
“I think we can start asking the schools to be partners with the budget process,” Councilor Joel Olbricht said. “It’s a great sign to the community, a great sign of cooperation.”
Anderson said many times residents open their tax bills and only see one amount — what they owe. When breaking down a property tax bill, it’s the school portion that often drives the biggest increases, he said.