August 19, 2008
Fosters
DOVER — County commissioners will propose a $977,417 property tax reduction at Wednesday’s Strafford County Delegation hearing.
The reduction comes after almost six months of negotiation between George Maglaras, president of the New Hampshire County Commissioners, and the County/State Finance Commission on how to handle runoff costs associated with shifts in the amount of Medicaid paid by the state and county.
Under the negotiated agreement, none of New Hampshire’s 10 counties will have to pay these costs and they will be carried by the state.
The $1.4 million in Medicaid runoff costs initially reflected in the budget were created when the state and county shuffled responsibility for several programs. The state took over many programs previously shared with the county, including elderly assistance, aid to the permanently and totally disabled, and caring for children, according to Maglaras.
This required the county to pay what previously would have been the state’s share of long-term care services, such as intermediate nursing home care, along with home and community-based care.
Maglaras said there will be a lengthy delay in billing before the state has to pay for these runoff costs, which are paid for out of the state’s constant cash flow of revenue.
“The state is going to accrue those costs without actually having to pay for them, that’s the best way to describe it,” Maglaras said.
In March, the delegation passed a $53.18 million operating budget, which then reflected a 15 percent tax increase.
The negotiated savings will reduce property taxes in all 13 of the county’s communities, with the three cities seeing the biggest savings.
Dover, which is responsible for just over 25 percent of the county’s property tax, saw its tax contribution drop from $6,837,274 to $6,584,332, a reduction of $252,942.
While the reduction will benefit Garrison City taxpayers, it’s too late for it to have any positive impact on the city’s $102,670,312 operating budget, which was passed June 4.
City Manager Mike Joyal said the City Council had to consider the budget the county passed in March when considering how to fund local services and didn’t have the luxury of planning for a reduction.
“Any reduction is an absolute positive that benefits the taxpayers,” Joyal said. “The trade-off at this late stage in the game is the county reduction does not get set in time to be considered by the City Council when they adopted the budget in the spring.”
Mayor Scott Myers agreed with Joyal and said while he appreciates the efforts of Maglaras, the timing of the reduction is unfortunate. He added his issue isn’t with Maglaras or other county commissioners but with the system the budget operates under, where the budget has to be passed by March but not finalized until September.
“Here we are coming into August and we’re talking about a serious change to the budget,” Myers said. “It puts cities like Dover in a difficult position when putting together a budget.”
Myers added he’s pleased this late change was a reduction, noting there have been times where the budget has been increased in August.
Rochester, responsible for over 21 percent of the property tax, saw its contribution drop from $5,679,471 to $5,469,362, a reduction of $210,109.
“In terms of the county working with the state to keep the budget as frugal as possible with the state paying its share, we were supportive of that and we appreciate what the county was able to do in getting a reduction,” said Rochester City Manager John Scruton. “Every cent on the tax rate helps.”
Scruton said it’s his hope that commissioners came up with a fair and sustainable reduction that won’t “yo-yo” back up.
Overall, the county went from paying $26,420,570 in property taxes to $25,443,153.
Of the run-off costs, the county still has $280,083 in liability for pending bills that needs to be accounted for; some of these bills date back to 2001. Maglaras said this is a statewide issue affecting all 10 counties and he’s working to resolve it.
“We continue to be optimistic that through the process that created the current agreement, this $280,083 can be addressed with some form of compromise,” Maglaras said.
However, this couldn’t be accomplished by the Aug. 20 delegation meeting and if the meeting was further delayed, any action taken wouldn’t affect the 2008 county tax rate, according to Maglaras.
In addition, there is also a significant revenue shortfall in the Registry of Deeds Office as a result of the real estate transfer tax, which gives the county 4 percent of the total when real estate is transferred in the county.
“The depressed economy has decreased that revenue for us,” Maglaras said.
The shortfall is estimated at $225,000, and commissioners are requesting a revenue adjustment of $225,000 from the $1.2 million in savings from the run-off costs to account for the market downturn.
Wednesday’s meeting is scheduled for 7 p.m. in Courtroom 1 at Strafford County Superior Court.