Budget Cap

Summary: Sets limits on how much the city can increase property taxes each year to match inflation. Requires the portion of the city budget funded by property taxes to not exceed the new limit. It allows the Council to override the limit when needed with a two thirds vote.

(Francis Casale writes) Vote for the cap because:

The Budget Cap amendment was developed in response to resident concerns about unsustainable tax increases and they are calling for tax relief. The City budget is funded by property taxes and revenue such as user fees. This alone will not fix the unaffordability Lebanon is facing but does direct elected officials to be more constrained and strategic in spending and revenue decisions. Most NH cities have a form of budget limitation in their charters but Lebanon does not. Lebanon DOES NOT combine its school and city budgets; this WILL NOT affect the school budget

The cap acts as a budget guard rail:

  • Allows city tax increases guided by cost of living and inflation (3-year average CPI)
  • Predictable taxes for homeowners planning their budgets
  • Encourage efficiency in operations and alternative revenue sources
  • A safety net allows the Council to override the cap by a 2/3 majority vote

The Cap DOES NOT: require cuts to services nor limit the amount of tax revenue collected from the commercial sector

(Mayor Douglas Whittlesey writes)Vote against the cap because:

  • The CPI-U does not reflect the City’s cost increases for the services our residents expect, which often rise differently than CPI.
  • The cap does not include increases for growth in the City and is rigidly tied to the prior year’s budget, so the City won’t be able to grow services to meet the increase in demand.
  • The savings, when removing the effects of the State-mandated property revaluation process, would be $42.28 per year on a $400,000 house while limiting the services the City could provide.
  • The tax cap would push the City to budget to the cap to meet both current and future needs. The City would, out of prudent long-term financial planning, lose the flexibility to budget below inflation, such as in 2026 when we budgeted for 0.7%, well below the 3% expected inflation rate.

This proposal oversimplifies a complex responsibility and risks long-term impacts to infrastructure and services for limited savings.

Do you want to submit a public argument against this measure? Contact us with your argument; no more than 1000 characters.

Proposed Charter Amendment (Limitation on Budget Increase):

“Shall the City approve the charter amendment summarized below?”

Amend the Lebanon City Charter, Article VI, Financial Management, §C6.05 Budget Procedure, to include a limit on annual budget increases in the amount to be raised by taxes in the City, as follows:

A. Limitation on budget increase.

1. Recognizing that final tax rates for the City of Lebanon are set by the New Hampshire Department of Revenue Administration pursuant to RSA 21-J:35,1, the Manager of the City of Lebanon shall develop an annual budget proposal and the Mayor and City Council shall act upon such proposal in accordance with the mandates of this section.

2. Override Provision: Budgetary restrictions described in any part of this §C6.05 may be overridden upon a vote of two-thirds (2/3) of all the councilors elected. Such override expires following adoption of the annual budget. Subsequent budgets or supplemental appropriations require additional two-thirds (2/3) override votes, or the limitations expressed in this section will apply.

3. In the Manager’s proposed budget submitted to the Mayor and City Council, the estimated amount of local taxes to be raised for the fiscal year shall not exceed the local taxes raised for the prior year, subject to adjustment as provided herein.

(a) If the local taxes raised for the prior year were reduced by any fund balance brought forward from previous years, the amount of such reduction shall be added back and included in the amount of taxes raised for the prior year.

(b) The estimated amount of local taxes to be raised for the fiscal year shall be increased to account for inflation and changes in the City’s population, according to the following formula:

This year’s base = (Last year’s base) x (1 + CPI-avg).

“Base” means the local taxes raised for the year. “CPI-avg” means the rolling three-year average of the annual percentage change of the Consumer Price Index-Urban (CPI-U) published by the U.S. Bureau of Labor Statistics as of October 1 preceding the date of the budget adoption.

4. The mayor and city councilors shall assume estimated local tax revenue only in an amount not to exceed the local tax revenue due to be collected during the prior fiscal year, increased by the rolling three-year average of the Consumer Price Index-Urban (CPI-U) published by the U.S. Bureau of Labor Statistics as of October 1 preceding the date of the budget adoption. If the CPI-avg is negative, then there shall be no assumed increase in local tax revenue.

B. Total budgeted expenditures.

Total budgeted expenditures for any given budget year shall not exceed the adjusted estimated amount of local taxes pursuant to Paragraph A.3. herein, increased by the other revenues generated by the City, subject to the Paragraph A.2. override provision. Supplemental appropriations following adoption of the annual budget shall be per §C6.08

Per RSA 49-B:6, IV, if approved by a majority of voters at the March 10, 2026, municipal election, this charter amendment shall become effective on the first day of the next succeeding municipal year (January 1, 2027).