AUGUSTA — A series of budget adjustments has reduced the property tax increase needed to fund the proposed budget for the city and its schools from 5.4 percent to 4.4 percent.
If councilors want to bring that increase down to less than 4 percent, however, as some have expressed a desire to do, administrators warned that could come at the expense of a plan to add two police detectives to fight drug abuse, cuts to schools, or other difficult choices.
Councilors also are considering using $225,000 in one-time savings from the recent refinancing of pension debt to soften the hit on taxpayers further. The money was part of the financing plan for the renovation and expansion of Lithgow Public Library. But some worry that could lead to a perception that city leaders broke their pledge that the work on Lithgow won’t increase property taxes, because the $225,000 won’t be available the following year and could force a tax increase.
Councilors on Thursday began wrapping up their work on the budget but were unable to resolve several outstanding issues. Councilors need to finalize the city and school spending plans by the end of the month so the school portion of the budget can go to voters in a June 9 referendum.
Even without answering the remaining difficult questions, the budget’s effect on taxpayers is down from the projected 5.4 percent increase City Manager William Bridgeo included in his initial budget proposal.
The net result of a series of budget adjustments made by Ralph St. Pierre, finance director and assistant city manager, decreases expenses in the budget by $162,000, which is enough to reduce the property tax increase to 4.4 percent — $19.50 for every $1,000 of property value. The initially proposed budget would have resulted in a tax rate of $19.67. The current rate is $18.67.
Some councilors said they want the tax increase reduced to less than 4 percent.
“Personally, I’d like to go below 4 percent, if we can, but I don’t have the answer to that,” Ward 2 Councilor Darek Grant said. “I want to weigh my options. Using that one-time money versus the new positions in the budget, … I might be fine at a (4.4 percent increase) after the discussion.”
The proposed budget includes three new positions. One is a public works position, budgeted, with salary and benefits included, at about $40,000. The other two are new police detectives, to help address a council goal of fighting drug abuse and, more specifically, eliminating heroin in the city. The new positions would add $130,000 to the budget.
Cutting those new positions out of the budget is among the options councilors are considering. Other options include cutting city or school expenses in other areas.
Mayor David Rollins said councilors, if they want to make cuts, shouldn’t consider just the new positions. He suggested city and school administrators both be asked to provide potential budget cuts of about $100,000 each for councilors to consider.
“If we’re going to see what the effect is of (cutting the three new positions), I’d like to see, both on the municipal and school sides, proposed areas where they could cut,” Rollins said. “It doesn’t mean we’re going to do it, just that we want to look at it.”
Ward 1 Councilor Linda Conti expressed a desire not to cut funding for schools or police. She said when people are considering moving somewhere, they’re looking for good schools and a safe community.
“I’m not interested in cutting the school budget,” she said. “I don’t want people to move away because of property taxes, but I think people will move here for a good school system. I also think people aren’t going to move here if they don’t feel safe. We need the best police department and best education we can have. Then we’ll get more taxpayers here, to spread out” the tax burden.
Bridgeo’s initial budget proposal would use the $225,000 in savings from refinancing existing employee pension debt to help fund future capital improvement projects, which include items such as paving and major building improvements.
Some councilors expressed interest in using those funds, instead, to reduce taxes. Adding those $225,000 in funds as revenue to the budget would drop the tax increase to 3.64 percent.
However, it could have the indirect effect of leaving the appearance, when it comes time to consider the fiscal year 2017 budget, that the Lithgow expansion resulted in a property tax increase. That’s because the $225,000 will be needed to cover increased operating and maintenance costs when the newer, much bigger Lithgow Public Library opens.
And councilors, the mayor and administrators pledged, in advocating for passage of bonds for the Lithgow project, that the project would not require a property tax increase.
But officials wonder whether the use of the $225,000 this year to offset taxes, then next year to pay for the increased operational and maintenance costs at Lithgow could be perceived by some as a tax increase for the library.
St. Pierre said that’s a policy decision to be made by councilors.
The following year’s budget, for fiscal year 2017, already is shaping up to be ugly. St. Pierre said the city will lose $250,000 in excise tax revenue from Central Maine Power Co. because of a change in state law that has been approved by the Legislature and is awaiting the signature of Gov. Paul LePage. The bill changes where utilities pay excise taxes on their vehicles.
Also, St Pierre said, many city employees are due for 3 percent cost-of-living raises that year, at a cost to the city of $300,000. Combined with an increase in debt interest of $186,000, the excise and cost-of-living increases are expected to add $736,000 in expenses to the fiscal year 2017 budget, which would require a 2.5 percent tax increase.
Councilors are scheduled to work on the combined city and school budget next on Thursday, May 21.