Rainy day funds used to dull tax spike in proposed Concord city budget

Leaning heavily on reserve funds to cover debt on capital projects and operational expenses, the $156 million proposed Concord city budget for 2027 is expected to carry a 5.5% property tax increase.

While overall spending would fall next year under the proposal from City Manager Tom Aspell – because of fewer new major capital projects on the docket – the operational budget would rise nearly 8% to $93.8 million. Debt payments are rising fast, climbing $2.4 million or about 28% from last year, as bonds approved for major city projects over the last few years stack up, including a new police station and clubhouse at Beaver Meadow Golf Course.

Pay and benefits, the overwhelming majority of city operating costs, are up $2.2 million. This is a slightly smaller climb than last year, but still sizeable after new union contracts with annual raises of four and five percent went into effect for city employees in 2026. Health insurance rates are up just under 10%.

If residents are feeling the impact of uncertain economic times, so is the city. But Aspell said the city is well-positioned to weather the storm.

“Cities and towns across the state and the nation face challenging economic environments, with slowing revenue growth, economic uncertainty at both state and national levels, and rising costs,” he wrote. “Despite these challenges, Concord remains in a position of strength, with an AA+ bond rating, strong reserves, and a long history of consistent and responsible fiscal stewardship.”

New capital projects are scaled back in the proposal from Aspell. Councilors approved $78 million in investments in the 2026 budget, after $41 million for police station construction was approved mid-year. This year’s proposal would bring the number down to about $23 million, with little major construction included. No money is allocated for renovations at Memorial Field, which is facing an accelerated timeline while a new middle school is under construction. Councilors could add it mid-year.

The property revaluation underway complicates calculations for what this budget will mean for taxpayers. If a home’s value held constant at $400,000 year over year, the tax increase would equate to an additional $224 per year for the city portion of residents’ tax bills. Along with the tax increase included in the Concord school budget, the same home is facing a $950 increase in its annual tax bill before any state and county changes.

The city has leaned on its rainy day fund for the last several cycles to shave down the draw on property taxes, including around half a million in the approved budget last year. But Aspell’s proposal to put $850,000 in the unassigned fund balance towards operational spending is the largest use of reserves to blunt the impact on taxpayers in years.

The budget proposes to use another $4.5 million in reserves to cover other costs. If that was added to the operating budget total, it would increase taxes by another 7.4%, Aspell wrote.

While Concord maintains robust reserves, largely from accrued surpluses over the years, Councilors have been wary of overusing them on recurring annual expenses.

Aspell’s letter acknowledges this, noting that the rainy day fund use does not meet the council’s first stated priority of fiscal responsibility.

“Action will be taken to reduce this use in future budgets,” he wrote.

Typically, the council approves additional dips into the rainy day fund throughout the budget year – this past year it did so to cover a revenue deficit when growth fell short and to buy a plot of land from local developer Steve Duprey.

Aspell’s plan would also put $500,000 in community improvement reserves toward the $1.6 million in debt payments on the police station and $245,000 in recreation reserves toward the golf course clubhouse.

City leaders point to growth as the best way to prevent major increases in property taxes: if there’s a greater pool of assets to draw on, existing ratepayers don’t have to shoulder as much increase. After lagging growth last year, this proposal assumes flat growth year over year.

Notably, though, with a property revaluation underway, the city’s overall valuation and amount of growth will be built on placeholders and financial assumptions throughout the budget-setting process.

For example, the $10.18 projected tax rate will not be what appears on tax bills next year. The rate will change when the revaluation is complete, as will the assessed values of properties across the city.

It means individual residents won’t know exactly what the approved budget will mean for their tax bills. For many residential property owners, especially those in manufactured homes, condos and other in-demand types of housing, the overall tax increase will be larger than what is projected.

The full budget is available on the city website.