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Portsmouth proposes $157.97 million FY27 budget, projects 4.9% tax change and $0.56 per-$1,000 impact
Summary
City staff presented a $157,971,390 FY27 budget that would raise revenues by 5.11% and could increase the estimated tax rate by $0.56 per $1,000 (about a 4.88% tax change); major drivers include health-plan cost spikes, modest salary increases and $1.9M of new bonding. Nathan, the city’s budget presenter, outlined options to reduce the tax impact before adoption.
The Portsmouth City Council reviewed a proposed FY27 budget of $157,971,390 at a May 28 work session, a 5.11% increase over the current year that city budget staff said would translate into an estimated $0.56 per $1,000 increase in the property tax rate — roughly a 4.88% tax change under the plan.
Nathan, the city budget presenter, told councilors the headline drivers are health insurance and contractual salary and benefits. “The budget that is proposed for you for FY27 is 157,971,390,” he said, noting that health-care cost increases account for about 2.21 percentage points of the total 5.11% change and that other costs represent approximately 2.9%.
Why it matters: Portsmouth officials emphasized the choice they face between using fund balance to blunt tax impacts and preserving reserves to protect the city’s AAA bond rating and respond to unanticipated costs. Nathan told the council that $1.675 million in reductions or additional revenue would be needed to lower the projected tax impact from the proposed 4.88% to about 3.5%.
Budget mechanics and debt: Nathan said the general fund budget incorporates a net reduction of 9.06 full-time equivalents across departments and that $1.9 million in new bond payments is included after recent April bonding and an $8.1 million refunding that is estimated to save $417,000 in interest over the life of the refunded debt. He noted the fireboat shown in the CIP has no FY27 operating impact; if authorized later it would be bonded and its debt service would begin in FY28.
Contingencies and next steps: The draft budget contains a $460,000 contingency to cover unsettled collective-bargaining agreements involving five of 15 unions; Nathan said those contingency dollars will be transferred to department salary lines as agreements are approved. He also reiterated an important unresolved cost: the school-care assessment of $1.57 million, which staff said is a current liability but is not budgeted in FY27; the city intends to find those dollars through year-end savings if needed.
What happens now: Councilors and staff agreed to continue work between the May 28 session and the council meeting on June 8, when the council expects to consider adoption and any amendments. Staff committed to follow-up detail on department-level loaded costs, updated parking and inspection revenue realizations for May, and more precise estimates of options to trim the tax-change projection.
