Town Pays $5,722,373 to PSNH

At the budget hearing on the town and school district budgets for the coming fiscal year Harry Judd, Selectboard Chair, announced that on February 12 the town delivered a check to PSNH for $5,722,373.

Judd said that amount covered the back taxes owed Public Service Company for 2012 and 2013, however, the interest accruing at 6% has not been paid. “By paying this money we stop interest from running” said Judd.

Estimates of about $2,000,000 in interest still owed were not confirmed nor how the town will come up with the funds to pay it.

Sources told this paper the town may choose to litigate the years 2014-2017, but would use a new expert on utility valuation. On several occasions in Superior Court Judge Richard McNamara’s opinion he found the town’s expert to lack credibility. The Supreme Court likewise hung its hat on the fact that it does not reconsider trial judge’s findings on credibility when it affirmed McNamara’s opinion.

When asked how many millions were involved in the years 2014-2017 Selectman Judd declined to even give a range from low to high.

The source of the $5.7 M was as follows:
1. Abatement overlay …………………….$1,400,000
2. Allocated fund balance ………………..$1,000,000
3. Unexpended balance in the town’s
“checkbook” termed the unassigned
fund balance …………………..$3,322,373

As for the future Chairman Judd said “It is unlikely there will be a global solution by town meeting.”

Voters Send a Message

by Chuck Douglas

After learning that the Board of Selectmen were proposing a warrant article to spend $100,000 to level the Community Building, part-time Recreation Department Michele Vecchione, became a woman on a mission.

At her expense, Michele pulled together a Heart of the Community flyer and a citizen petition warrant article to keep the building operational by doing the life safety requirements called for by the Fire Safety Engineer Bob Cummings at a cost of $76,900 (fire alarm, fire retardant wallboard, etc.), as well as another $465 for fixing a threshold and fire retardant paint. Removal of the generator and fuel tank on the fire side come to $2,500.

Also included was $14,480 for necessary upgrades as called for by the Fire Marshall and Yeaton & Associates. Long time Bow Rotary member, John Ruggles of R & T Electric, provided a hard “will do it for that price” analysis with no fluff in it.

Michele took the numbers and the total came to $94,345 to save the building for a lower cost than destroying it in hopes of bonding a new one. The money would come from a municipal building reserve fund with over $300,000 in it so taxes would not be increased. It would bring the building into compliance with the State Fire Marshall’s concerns of several years ago. Her citizen warrant article reads:
“To see if the Town will vote to raise and appropriate the sum of $94,345 for the purpose of Life Safety compliance and electrical upgrades to keep the Recreation Department side of the Bow Community Building open for assembly, operation of the Bow Recreation Department, and community use and to authorize the withdrawal of up to $94,345 from the Municipal Building and Grounds Capital Reserve Fund for the above purposes.”

Then came the sales job for Rotary, The Men’s Club, etc. and the petition soon went viral on social media. Group after group and neighborhood by neighborhood circulated it for voters to sign to have a choice at town meeting.

The 25 needed signatures were obtained the night she spoke to the Men’s Club, but on she went for more signers.

At the petition due date on Tuesday February 6, there were over 532 voters choosing to save the building and the activities in it.

That night as the Selectmen took up what to do with the Community Building the voter’s voices were heard. Selectman Chris Nicolopoulos moved to withdraw the proposed $100,000 warrant article calling for razing the building and prevailed by a 4 to 1 vote. Selectman Colleen Hunter, who wants a new building, voted no.

The board next discussed the recent price for the removal of asbestos by Penial Environmental Services. Their price of $21,200 is the same whether the building is destroyed or not.

Chuck Douglas told the board he expected a floor amendment to add that asbestos number to the $94,345 so that “all health and safety issues could be done once and for all.” Again, Selectman Nicolopoulos made a motion to add that number to the building maintenance line item. The vote in the affirmative was 4 to 1, with Harry Judd voting against it.

The board’s discussion recognized that their desire to have a new building was dramatically changed last month with the loss of power plant tax case in the Supreme Court. The board then went into nonpublic session to discuss a possible multi-million dollar settlement with Eversource.

The board hopes to have a proposal before town meeting on how to pay back the millions at stake.

Budget Committee Chair Explains Spending Cuts

by John Heise

I felt it would be appropriate to share some insight into this year’s budget review so you may gain an understanding of what we do and how we go about our evaluation process. In addition, I would like to add some color around some of the proposed cuts this committee has recommended specifically about those involving the School Department.

This year certainly presents some challenges as we look to strategize over the recent Superior Court ruling awarding PSNH a victory with regards to their tax abatement. While it may be premature to put a nail in the proverbial coffin as the Supreme Court has agreed to hear/evaluate the case, we find it prudent as a committee to evaluate various outcomes should the tax abatement be upheld.

Here’s what we do know!
The Town of Bow has been collecting property tax revenue based on a valuation that is greater than what the Superior Court has determined.

The court has determined the following values for 2012 and 2013, $67,566,774 and $67,362,827 respectively. During that same period, the Town of Bow had valuations of $195,842,087 and $161,431,587.

If the lower court’s ruling is to be upheld this would call for a refund along with accumulated interest of approximately $8.5 million dollars. In addition, it should be noted that PSNH is also seeking an abatement for 2014 and 2015, and we fully expect 2016 to follow. Those additional years may present an additional liability of another $4 million dollars for a total of approximately $12.5 million in tax refunds and accumulated interest.

What does that mean? If these refund dollars were to be deemed due in one year i.e.; $12.5 million dollars due now, that would translate to an increase of $10.78 p/$1,000 to the tax rate. On a home valued at $300,000 that would mean an additional $3,234 due in one year in a worst case scenario. In addition, it should also be noted that many families in Bow have mortgages on their home for which many escrow their tax payments. This may place additional financial pressures on those individuals as each bank must perform an escrow analysis to adjust for any shortfall in tax collection and remittance.

Refund dollars only part of the problem! In addition to the amount potentially due as a refund, we most likely must contend with a reduced valuation in future years. If the valuation determined by the Superior Court stands and/or, if, and when, PSNH assets are sold at auction in the spring, a new value will be determined. This new value will most likely be lower than what we have currently booked for valuation and we estimate that to equate to an increase in the tax rate by approximately $.79 p/$1,000. On a home valued at $300,000 that would translate to an $237 p/yr. in additional property taxes going forward.

Certainly, the PSNH valuation issue is of paramount concern to our committee but these are not the only issues facing our community. In addition, our Elementary School needs some major repairs, projected to cost around $3 million dollars and we have underutilized properties in town like the Community Building, etc. that have drawn interest.

How does this all relate to our process? Each year the Budget Committee meets in January and February to review both the Town Budget as well as the School Budget. This is an interactive process between town and school officials. Our committee goes line by line though each department for both the proposed Town Budget as well as the School Budget, to discover potential savings. In most recent years there has been some great strategic initiatives by both the Town and School Board to reduce their budgets. These initiatives include the movement to higher deductible health plans at both the School and Town, conservative spending policies, as well as the movement of our police dispatch to the county.

Extraordinary times seek extraordinary measures! Although substantively that may be true I am not sure that tells the full story. To mitigate the effects of this litigation as well as a quest for a stable tax rate, we as a committee are looking hard at every budget item. With respect to the School Budget, last year we basically agreed to the same number but this year is a little different and for the following reasons.

First, let me say that we believe our great school system is the leading reason why people choose Bow over many other communities and is the reason my family chose Bow. There are some moving parts in this year’s budget that have raised concern for the budget committee.

The budget presented to the Budget Committee had a total appropriation of $27,366,857 for 2017-2018 School year. 2016-2017 had a total appropriation of $27,426,119, a difference of $59,262. At first glance you would say great a budget decrease! However, what is missing from the equation is the fact that the High School Bond Payment of approximately $850,000 has been eliminated, we have additional revenues from Dunbarton of $520,000, and some savings from the switch to a Higher Deductible Health Insurance Plan of $270,446, inclusive of an increase in the GMR (Guaranteed Maximum Rate) Increase of 11.5%. The above additional revenue and reduced expenditures total approximately $1,640,000.

We do concede that there are additional expenses, some unexpected such as an increase in the Retirement System of $257,992, and those expected, like 2% negotiated wage increase for BEA & BESS union contracts and non-unionized employees in the amount of $469,559.

That amount also includes newly proposed staff. In addition, with the retirement of the bond a reduction in building aid has be realized in the amount of $249,442. These items total approximately $975,000.

The above analysis is not meant to be inclusive of all budget factors but designed to highlight the major items. The difference between these two numbers total $665,000 ($1,640,000-$975,000).

Another factor we looked at was the difference between the Approved Budget and Actual Expended for the last couple of years.

2014-2015 Approved Budget $26,344,942,
Actual Expended $25,749,662, ($595,280 under), -2.31%

2015-2016 Approved Budget $27,131,986,
Actual Expended $26,483,141, ($648,844 under), -2.39%

We absolutely appreciate the prudent spending nature of the administration and we also concede that these monies do go back to the taxpayers at rate setting time in Oct. However, it also shows that by reducing the school budget we feel comfortable knowing they will still be able to deliver the high-product we have come to value.

We have provided a summary of suggested reductions in a separate attachment and support our recommendations. To highlight a few, you will notice we have kept the Full Day kindergarten program, Co-Curricular and athletic programs, the Chinese program, and agreed to some additional staffing including a new Assistant Principal at BES.

This has certainly been a challenging year and we anticipate additional challenges over the next few. I would like to thank my fellow Budget Committee members and of course our recording secretary Wendy Gilman, the Board of Selectman, the School Board, Town Administration, and the School Administration for their involvement in this process this year.

John Heise has been chair of the Budget Committee for the last four years.

It’s Cutting Time in Bow

by Chuck Douglas

The first of two power plant shoes has fallen with a $14,000,000 thud. Superior Court Judge Richard McNamara has held that Bow over assessed the plant and other Eversource properties by 58%, meaning for the tax years 2012-2015 Bow owes about $14,000,000 with interest.

Now that the goose that long laid golden eggs has become a turkey vulture there will have to be large tax increases or spending cuts to fund the check to Eversource.

While the town has appealed, the effort seems futile given that most of the judge’s decision was based on a lack of credible evidence from the town’s expert on valuation of utility properties. The Supreme Court does not make new determinations of credibility.

After hundreds of thousands of dollars in attorney’s fees and expert costs the town should take several steps now:

1. Get a new town counsel
2. Get an attorney that specializes in tax cases
3. Settle as soon as possible
4. For future years have the State value the property
5. Tell the voters how much the tax jump will be per thousand of residential tax dollars to make up for this fiasco
6. Cut the town and school budgets — not increase them!

The alternative is to borrow $14,000,000 at 4% interest for 20 years, which at 4% will cost at least $20,000,000 and will run us $1,000,000 a year to acquire nothing.

Finally, new blood will be needed on the school board and board of selectmen to retire the tax and spend crowd so long in control and who will surely resist the needed budget cuts.