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Portsmouth proposes $149.9 million FY26 budget; managers say tax rate would rise about 39¢
Summary
City Manager Karen Conard and finance staff presented a $149,894,940 proposed FY26 budget that would increase the tax rate by an estimated $0.39 (3.49%) and reduce more than 15 FTEs across departments; city officials emphasized timing, revenue assumptions and the end of ARPA funding.
City Manager Karen Conard presented the city’s proposed fiscal year 2026 budget at the May 28 work session, saying the plan “comes in at $149,894,940, an increase of just over $5,000,000 or 3.4% total,” and that it would translate to an estimated tax rate of $11.57, up $0.39 (3.49%).
The budget document is scheduled for final consideration at the council’s next regular meeting on June 9, Conard said. Finance staff framed FY26 as the first full year after most American Rescue Plan Act (ARPA) support ends: “FY26 has to address a deficit in that regard of nearly $2,200,000,” Nathan Lenny said during the presentation.
Why it matters: the proposal would preserve core services while trimming staff, the manager said. Conard told councilors the package would reduce more than 15 full‑time equivalents across all departments, with over 10 coming from the general fund, and noted a multi‑year comparison showing the city’s average compounded budget growth below CPI and the Social Security index.
Most important facts: staff listed revenue offsets and pressures. Lenny identified several revenue increases that helped close the FY26 gap: an estimated $400,000 from building‑permit inspection fees, $300,000 from motor vehicle permits, $100,000 from ambulance fees and a combined $300,000 from school tuition and state revenues. He also said the budget assumes roughly 21% of city revenue comes from grants and generated revenues, about 2% from uses of fund balance and the remainder from property taxes.
Officials highlighted timing and technical assumptions. Lenny said county tax projections are still in process and that the city budget had conservatively projected 3% for county increases while early county projections are closer to 4%; he told the council the city’s share is driven by equalized valuation and that changes in Portsmouth’s equalized valuation can materially change the city’s share of county costs.
Context and tradeoffs: Conard and staff said the FY26 plan reflects a mixture of service preservation and restructuring, including an enterprise resource planning (ERP) implementation intended to yield efficiencies over 12–18 months. Lenny also told councilors FY25 was the last year to rely on ARPA funding and that staff increased use of unassigned fund balance by about $1 million to help smooth FY26’s revenue shortfall.
What was not decided: Councilors asked multiple department heads detailed questions; several councilors signaled they may propose budget adjustments at the June 9 meeting. No formal vote or adoption took place at the May 28 work session.
Ending note: staff committed to provide additional detail requested by councilors—examples included updated overtime figures for public safety, detailed IEP/paraeducator counts from the school department and a rate‑model update for water and sewer this summer.
