The Gardiner City Council will hold a public hearing Wednesday on a budget that proposes a smaller than expected tax increase.
The proposed municipal budget would raise taxes by 1.5 percent. A revised budget outlook presented last week showed the city will end this fiscal year with a surplus. The council will take public comment and conduct a first reading of the budget at 7 p.m.
Voters approved a school budget June 10 that will increase property taxes in the city another 2.5 percent.
If approved, the city budget would increase the tax rate from $19.90 per $1,000 of assessed value to $20.70 and add $117 to the tax bill of the median home valued at $147,000.
The council is scheduled to hold a second and final public hearing for the budget at its meeting July 2. If the budget is approved then, it will go into effect July 12. The council already passed a continuing resolution to allow the city to spend money at current levels once the new fiscal year starts July 1.
City Manager Scott Morelli said councilors can change the budget Wednesday and still send it to the final public hearing the week after. He noted that if the proposed budget passes, it would be the first time in three years with a tax increase and the second time in five years the city’s share of the budget has increased taxes. Still, one resident at the Wednesday meeting urged councilors to not raise taxes at all.
The proposed increase is substantially down from an original budget proposal that would have raised taxes a total of 7.5 percent with the school and county budgets and added $220 to the median home’s bill. Morelli returned to the council May 28 with a proposed budget that would have led to a 3 percent increase from the city’s portion.
However, he presented councilors with a financial update Wednesday showing the city won’t need to use the $175,000 from its reserve fund councilors approved last year for the current fiscal year, ending June 30. On top of the unused $175,000 from the reserve fund, the city is projecting a $280,000 surplus this fiscal year, although $183,000 of that will be rolled forward for projects that weren’t completed this year, Morelli said.
“I doubt it will happen next year, but we’ll certainly try,” he said of the surplus.
Morelli said the surplus is the result of conservative budgeting and good financial management. Some of the largest savings or revenue increases were more than $60,000 in savings from not paying as much as expected for health insurance and not filling a Police Department position for half a year, and $37,000 more in licensing and permits, largely from natural gas pipeline permits.
The council was already planning to use $90,000 from the city’s reserve fund for next fiscal year’s budget, but councilors directed Morelli to increase it to keep the tax increase from the city’s budget to 1.5 percent.
Councilors also requested Morelli add back in the full-funding requests from the Boys and Girls Club of Greater Gardiner, Gardiner Main Street, Johnson Hall Performing Arts Center, Chrysalis Place food pantry and Mount Hope Cemetery. Morelli had proposed reducing the contributions to those first four nonprofit organizations by 5 percent and cutting the funding for the cemetery in half.
The budget that will go to a public hearing Wednesday includes $204,000 from the reserve fund.
Morelli said it’s a larger amount than he would like to see taken from the fund, but with the surplus and not using the $175,000 budgeted for the current fiscal year, the account is still expected to increase next year. There is roughly $1 million in the fund that isn’t designated for specific uses, Morelli said.
“In terms of financial health, I think we’re still in good shape with our fund balance, even by using this amount. Again, it’s always the kind of thing we go to last,” he said.
“It’s a Band-Aid fix,” Morelli added. “Next year, if we don’t have a fund balance to dip into, there’s a $204,000 hole in our budget you look to cutting by that amount or raising taxes by that amount.”
Paul Koenig — 621-5663
Twitter: @paul_koenig
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