GARDINER — Councilors voted unanimously Wednesday night to initially approve a $9.13 million budget that would raise property taxes 4 percent, with the city portion leading to a proposed 1.5 percent increase.

City Council is holding a second public hearing at its meeting Wednesday of next week, but it’s likely the budget won’t change before final approval.

If approved, the city budget, along with the school and county budgets, 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 city’s portion of the increase would be 30 cents and the school’s would be 50 cents.

A public hearing in April after an originally proposed budget included an 8 percent increase drew more than a dozen residents, several of whom told councilors to keep taxes flat.

But at the public hearing Wednesday, only two residents — Bryan and Maureen Blanchard, of Dresden Avenue — spoke out against the smaller proposed tax increase.

“If you raise the rate, you are pushing people of this town that I love. It does not fit your goal,” Maureen Blanchard told councilors.

Her husband, Bryan, presented a list of objections to the budget, including the $123,000 the city is proposing giving to nonprofit organizations.

More than $100,000 of that would go to the Boys & Girls Club of Greater Gardiner, Johnson Hall Performing Arts Center and Gardiner Main Street. The city manager proposed cutting funding to those groups and Chrysalis Place food pantry by 5 percent, but councilors wanted to restore it.

Maureen Blanchard also voiced objections to the city not cutting back on those donations to nonprofits. She said any tax increase will be difficult on people with fixed incomes.

“Even if it goes up $117, that’s $117. Think about it. I’m asking you to make it zero,” she said. “Think about the people driving around in a rusty car, owning a house that might not be able to afford that tax bill.”

The 8 percent tax increase in the first budget proposed by City Manager Scott Morelli in April, which would have added $220 to the median home’s bill. Following a request from councilors to lower the tax increase, 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.

Then last week, he delivered a financial update last week showing the city won’t need to use the approved $175,000 from its reserve fund this year. On top of the unused reserve fund money, the city is projecting a $280,000 surplus this fiscal year, which ends June 30. However, $183,000 of that will be rolled forward for projects that weren’t completed this year, such as paving.

Councilors also wanted to increase the amount taken from the city’s reserve fund to prevent a higher tax increase. The proposed budget would used $202,200 from the reserve fund, which is more than double the $90,000 Morelli first recommended.

Morelli emphasized 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.

He also pointed out that although there is about a $173,000 increase in the city’s operating budget, city spending is down $84,000 without including a shift of employees from the ambulance service to the city’s operating budget and about $177,000 of retirement costs no longer being covered by a city credit with the state’s retirement program.

The city moved about $81,000 from its ambulance service to cut costs for the six other communities to prevent any of them from leaving.

If the budget is approved Wednesday, 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.

Residents in the four communities in Regional School Unit 11 approved the $22.4 million school budget by a 967-482 margin on June 10, and Gardiner voters approved it 441-208. The budget increased the amount Gardiner will pay by roughly $147,000. The city assessor rounds tax rate increases up to 10 cent increments, so the tax increase from the school’s budget is the same as if it raised what the city will pay by $175,000.

Morelli said the extra $22,500 in property tax revenue from the rounding would make up most of the city’s overlay account, which is used to cover unexpected shortfalls in tax revenue.

Paul Koenig — 621-5663

[email protected]

Twitter: @paul_koenig

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