Portsmouth council funds $1,500 legacy retiree stipend; schools seek $3 million more as budget talks continue

Portsmouth City Council on April 8 agreed to include a $1,500 stipend for legacy retirees in the proposed fiscal 2026 operating budget, a change officials said will cost about $1,400,000 in the coming year.

The action came during public hearings on the city manager's recommended FY2026 budget and a sequence of public comments and council deliberations that focused on pensions, school funding and several capital projects.

The stipend for legacy retirees was the product of an earlier work‑session consensus, Councilman Hugo said, adding: “we have asked the city manager to include $1,400,000 in the current budget so that that $1,500 per retiree is funded as part of the budget and not after the fact when the budget is done.”

Why it matters: Legacy retirees and city staff have been at odds over how to handle long‑standing unfunded pension liabilities. Speakers at the public hearing urged either a one‑time stipend or a permanent pay increase; council members said they would not commit to a multi‑year, $12.8 million recurring increase that some legacy retirees requested.

Discussion and context

Retiree advocates and retired city employees argued the city has eroded purchasing power for legacy beneficiaries and urged larger fixes. Colin Alexander, a retired firefighter, said he could not reconcile the larger long‑term cost projections and urged action on raises: “I don't understand how you come up with… We came up with 1.376961 for the 5% step,” he told council during public comment.

Council members repeatedly emphasized the difference between the immediate stipend and a permanent increase to pension payments. Councilman Hugo explained the council’s position: funding a $1,500 stipend this year is manageable, while raising ongoing pension contributions from roughly $8–9 million to $21–23 million annually would be unsustainable without major tax increases. “We want the legacy retirees to get their retirement,” he said, “and the only way we can do that is to continue paying down the debt service… to ensure the retiree account remains solvent until the last person collects their last retirement check.”

School funding request

School Board members and other speakers urged full funding of the school division’s request. School board member Arna Ronette McSwain said many educators are considering leaving for higher pay, and asked council to “please, consider fully budgeting the school board.” Councilwoman Thomas said the school funding request is a priority and cited a reported $3 million shortfall: “the manager knows where I stand on it… I think this is a $3,000,000 shortage, so that the schools can fully support their staff compensation pay plan,” she said.

Council members and the manager said they were working on scenarios. Manager Steven Carter and school officials were meeting to reconcile numbers, and council members requested fiscal‑impact scenarios showing how an additional $3 million could be funded and what tradeoffs would be required before the May 13 adoption deadline.

Other budget items and timing

Speakers also addressed elements of the capital improvement program, including a proposed combined public safety building and a planned replacement of city hall within three years. Public comments asked council to keep City Park redevelopment on the schedule and to revisit an earlier water‑feature proposal as a soft‑edge approach to sea‑level rise.

Council members noted a pending General Assembly action that could affect school funding: Hugo and others said the General Assembly passed legislation to lift a cap on SOQ positions, which was awaiting executive action and could change the state revenue picture for the schools.

Next steps

Manager Carter said he and school leadership were meeting to finalize scenarios and that council would see recommended options at the next work session on May 12; the council must act on the budget by its statutory/managerial timeline so adoption occurs at the meeting scheduled May 13. City Attorney Levanda Graham Williams urged council members to communicate any preferred funding sources in advance so budget documents can be drafted accurately.

Quotes and attributions above come from speakers recorded in the council session.