Council pressed city staff on salaries, benefits and a net 9.06 FTE reduction in FY27 budget

Budget staff told the Portsmouth City Council that salaries and benefits compose roughly three‑quarters of the proposed FY27 spending and are the principal driver of year‑to‑year variance.

“Across the board, our salaries are rising by $1.5 million — a 2.33% increase — and that already reflects a 3.03% COLA,” Nathan said, explaining the city uses a 10‑year rolling CPI average to calculate the contractual cost-of-living adjustment baked into union agreements.

Staff noted the FY27 book also assumes a net reduction of 9.06 full‑time equivalents citywide. Departments with material headcount changes include inspection (net +6 FTE to address sharply higher inspection demand), public works (net -3.1 in general fund, with reallocations to enterprise funds), and schools (net -7.5, with some targeted additions including an assistant special‑education director and a middle‑school behavioral position).

Collective bargaining and contingency: Nathan said five of 15 city union contracts remain unsettled; the FY27 budget contains a $460,000 contingency to be transferred to department salary lines as agreements are finalized. He cautioned that applying a broad vacancy factor to salaries reduces the city’s year‑end fund balance and can put credit ratings at risk.

Questions from councilors focused on whether the budget could more aggressively assume vacancy savings, how much of salary changes reflect step increases versus COLA, and the loaded costs of new roles; staff committed to follow-up with granular loaded‑cost figures for positions such as the deputy fire chief training post and school hires.

What’s next: Staff will provide breakdowns showing how much of the salary/benefit increases are COLA versus step changes and more complete loaded-cost estimates for any positions added or reallocated.