CLAREMONT — Sullivan County delegates face a tangle of onerous budget decisions entering into fiscal year 2022, including a nearly 10% tax increase in the proposed operating budget, a nursing home in need of costly repairs and upgrades and complete unknowns about the economic future.
These factors combined equated to “a perfect storm” when developing next fiscal year’s operating budget, according to Sullivan County Manager Derek Ferland, who presented the proposal on Monday at a public hearing in Claremont.
In addition to adjusting finances to the known projections — including significantly higher employee retirement contributions and revenue shortfalls — county officials have to consider potential what-ifs and unknowns to follow.
Arguably first and foremost, after the budget, is to weigh the potential risks between bonding a multi-million nursing home project in 2022 or deferring the renovation longer.
County operating budget projects higher costs, revenue lossesThe county is seeking an operating budget next year of approximately $34.6 million, with $14.9 million to be raised by taxes.
The county is also proposing a 2.6% or $900,000 increase in appropriations from the current fiscal year. Additionally, due to key revenue shortfalls, the taxpayer’s portion will increase from $13.6 million this year to $14.9 million, an increase of 9.76%.
The tax impact averages to an additional $37.62 in county taxes for a $150,000 home.
Two notable appropriations are an interest-only bond payment of $640,498 and an estimated increase of $300,000 to the New Hampshire retirement system.
Ferland said the interest-only payment is conditional to whether the delegation decides to pursue the nursing home renovation next year.
The state pension hike is due to a state increase in the adjustable rates for which local municipalities, school districts and counties receive no state-assistance with the burden to fund.
These obligation increases, ranging from 3% to 5% depending on the employee position, are “pretty steep,” Ferland said.
For positions like nurses, the county’s pension obligation will amount to 14% of a nurse’s salary.
For some positions, like law enforcement officers, who have a different contractual agreement with the state, the county’s obligation will be about 33% of the employee’s salary.
Revenue shortfalls, some of which were pandemic-related, also factored into the budget, according to Ferland.
While aided greatly by $960,000 in one-time federally-funded aid to offset impacts of the pandemic, the county also experienced significant revenue shortfalls, according to Ferland.
Proshare revenue, a major revenue supplement to the nursing home’s operations, declined from $3.1 million in 2020 to $2.1 million in 2021. The two nursing home outbreaks of COVID-19, including the one in May, stopped revenue flow typically received through new admissions. Additionally many costs to operate during the pandemic were not reimbursable through federal aid.
Lastly, the county’s fund balance, a savings usually used strategically to keep tax levels stable from year to year, has fallen below the desired level, according to Ferland. As a result the county appropriated a smaller amount of the fund this time than in previous years.
The county delegates are scheduled to meet on Tuesday, June 29 to vote on the budget proposal.
New approach to funding nursing home renovationCounty officials and contractors, in a new presentation to the delegates, offered a third alternative to fund the $54 million nursing home renovation.
Sullivan County Facilities Director Mary Bourque proposed the delegates approve a bond of $38 million rather than the full sum. The county could then appropriate $5 million from its capital reserve and $8 million in available funding from the American Rescue Plan Act to narrow the funding gap to $3 million.
Bourque said the county can nearly close that remaining gap by deferring two of the project scopes: the aesthetic refresh of the McConnell building, for an estimated savings of $1 million, and furniture and equipment purchases of $1.5 million.
Other funding sources could also become available in the near future, according to Bourque, including from the anticipated Biden infrastructure bill, which remains under debate in Congress.
Delegation Chair Rep. John Cloutier (D-Claremont) indicated he will not renew consideration of the renovation project until the next fiscal cycle, which begins July 1.
“My main priority is getting the budget done,” Cloutier said. “I know all of us here are concerned about the nursing home but, in my opinion, I think we need to pass the budget first and go back to the nursing home. Hopefully, if we are lucky, we can resolve the nursing home in the next few months.”
The delegates have ceased discussion since a contentious meeting on April 26 that showed the delegates divided, mostly down party lines, over whether to fund the project with a partial bond or to defer the project to a later time.
Passage of a bond will require support from a two-thirds majority, which proponents of the project have yet to secure.