Facing state funding reductions and revenue shortfalls in what the town manager described as the “worst economic climate in 70 years,” selectmen made their first review of the recommended $41.3 million town operating budget for 2010 on Aug. 31.

According to Town Manager Jonathan Sistare, officials were already looking at a roughly $1.35 million shortfall in expected revenues and state aid even before they began work on the budget.

Motor vehicle permit fees were down by approximately $500,000 in 2009, accounting for an adjustment of 2010 revenue estimates by the same figure, while interest income estimates were decreased by $267,000 due to a reduction in earned interest on the town’s cash holdings, according to Sistare. Coupled with a $371,000 cut in shared revenue from the state and a reduction in Concord’s retirement contributions to 25 percent by July 1, 2010, the loss in aid and revenue represented a 34 cent increase to the tax rate right off the bat, Sistare said.

“Even before we start, we have 34 cents added (to the tax rate) when we have not done a thing,” Sistare told selectmen. “We would have had to either cut expenses and reduce services, add burden to taxpayers or take a combination of both. We took a combination of both.”

According to Sistare, with the exception of ordering a set of new doors for the District Courthouse, all other supplemental items proposed were rejected. A request of $100,000 for replacement pay by the police department was also reduced by $50,000, putting that line item on par with the fire department, Sistare said.

Another roughly $150,000 was cut from annual contributions to outside agencies and events, including funding for human services and the Memorial and Veterans Day events, though selectmen indicated that they would restore some of those funds if it was requested by the veterans groups in town. Voters could also seek to restore the funding for the outside agencies through a citizens petition at the Town Meeting in March, Sistare said.

Overall, the general fund rose .48 percent over last year and expenditures increased 3.31 percent, according to Sistare. Heading into 2008, the proposed budget in its current form would represent a 28 cent increase to the tax rate at $5.08. Were selectmen to aim for a zero-based budget, they would have to cut a little more than $1 million further from the budget, according to Sistare.

“With the efforts of many, the town tax rate is quite reasonable and kept to a bare minimum increase,” Sistare said.

Though Selectman Patrick Hargreaves indicated he had found more areas where he believed reduction in costs could be made, Selectman Elizabeth Roth cautioned that cutting the budget to the bone could create problems down the road for the community.

“If (we’re) not flexible, we’re going to end up as a town that cannot recover from the cuts that are made today,” Roth said. “We cannot just be committed to slicing our budget to the bare bones without keeping our eye to the future. What might appear to be a good reduction on the budget today might not be something in the long term. This year is going to be more challenging than others.”