AUGUSTA — The proposed $53.5 million city and school budget would result in a 6.1 percent property tax increase.
And the budget, as proposed by City Manager William Bridgeo, relies on a plan to draw money from the city’s reserve funds to prevent what would be a larger tax increase.
The budget, which city councilors often modify, would require an additional $1.6 million from taxpayers. Council members received the budget proposal late Thursday night.
Of the $1.6 million increase, $758,000 is from Bridgeo’s proposed $24.2 million city budget and $823,000 is from the $27.9 million school budget, which the Board of Education approved March 19. City councilors, however, have the final say on both the city and school portions of the budget and can direct school officials to make cuts.
Proposed municipal spending is up 2.5 percent, a $583,000 increase; while school spending is up 1.6 percent, or $443,000.
Bridgeo said revenue from the state for the city and schools are both down. Next year the city expects to get $1 million in revenue sharing from the state, down by $626,000.
While state school subsidy levels have not been set, a state funding report released earlier this month projects Augusta’s schools will receive about $400,000 less in state subsidy, dropping from $13.6 million to $13.2 million.
“As was the case with last year’s budget, I am quite frustrated with my inability to provide you with a financial plan for the coming year that holds the line on property taxes while maintaining the level of municipal services I believe you and our residents support,” Bridgeo said in his budget message to councilors. “A number of factors contribute to this dilemma including reduced state aid, escalating fixed costs, virtually no earnings on investments, and the costs associated with keeping our workforce compensation fair and competitive.”
Bridgeo recommends taking an additional $1 million from the city’s reserve fund, which generally consists of money unspent in previous years and reserved for emergencies. Bridgeo said using that $1 million from reserve over the next three years would bring the reserve account to the city charter’s recommended level of 8.3 percent.
The fund now totals about $6.8 million, which is 13 percent of the total city and school budget.
The proposed budget already uses $497,000 in city reserve money, so next year the budget would rely on about $850,000 in reserve money to avoid a larger tax increase.
The school budget also uses about $1 million in reserve money to limit the effect on taxpayers.
Ralph St. Pierre, finance director and assistant city manager, said if no city or school reserve money was used to help balance the budget, taxpayers could be facing a tax increase of 13 percent.
Bridgeo said 76 percent of the city’s budget goes to fixed costs such as utilities and bond payments, and the police, fire and public works departments.
The budget contains no city staff additions or staff cuts. A few years ago, the city underwent major staff cuts, eliminating some 30 staff positions.
“We’re trying to maintain the status quo in the delivery of our services,” St. Pierre said Friday. “We’re at the point where a reduction in the workforce is going to result in the reduction of a service. That’s really a policy decision for council.”
The city’s share of Kennebec County’s budget is up by $38,000, or 2.7 percent, to $1.4 million.
The city’s tax rate of $18.15 for every $1,000 of property value would increase to $19.25.
The owner of the average, $128,000 home in Augusta, if the budget were approved as proposed, would be subject to a tax increase of $141, from $2,323 to $2,464.
The value of property citywide is projected to remain at $1.4 billion, because of a lack of growth, such as the addition of any large new tax-paying entities.
Also, because of low interest rates, the city’s investment income is projected to be down $164,000, to only $102,000, next year.
Bridgeo said that in the past, when interest rates on city funds on deposit were higher, the city could count on hundreds of thousands of dollars in revenue from that source; but these days the city is lucky to get any interest even though, at certain times of the year, it has millions of dollars deposited.
St. Pierre said that situation isn’t likely to change until the national economy improves.
Spending in the Public Works Department is budgeted to increase by $175,000, or 5.2 percent, to $3.5 million. It includes an $80,000 increase in construction materials primarily, Bridgeo said, for pothole patching supplies.
The budget details are on the city’s website.
Mayor William Stokes said councilors need to schedule budget review sessions, which will include opportunities for public comment. Last year councilors approved the budget in June.