WATERVILLE — While it is too early to predict what the proposed 2015-16 municipal and school budgets will be, officials are looking at what could be a significant increase in the school budget.

City councilors and members of the Board of Education met Tuesday night to discuss issues and challenges they expect to face in the upcoming budget processes. The annual joint budget meeting is required by the city charter.

The 2014-15 city municipal and school budget is $37.2 million, with $20.7 million of that going to schools. The city’s tax rate is $27.40 per $1,000 worth of valuation.

Eric Haley, Superintendent of Alternative Organizational Structure 92, which represents schools in Waterville, Winslow and Vassalboro, said Waterville is looking at three items that would increase the school budget to the tune of about $900,000 and over which the city has no control: $329,000 that must be put into Maine State Retirement that was not required in the 2014-15 budget; $293,000 the state would require the schools to pay, based on the city’s valuation; and $300,000 in estimated insurance increases.

“This is a bad budget year for schools,” Haley said.

City Manager Michael Roy said it is too early to cite a realistic proposed municipal budget amount for 2015-16.

“We need to spend quite a lot more time going through every department account, looking for savings,” Roy said.

The city does not know how much revenue sharing it will get from the state, but officials expect it will be about $1 million.

Roy said preliminary figures show the city is looking at a $354,710 increase in the municipal budget for 2015-16, with about one-third of that amount going to Maine State Retirement and the rest representing increases in wages, utilities and insurances.

The city has taken $1.4 million out of surplus each year for the last two years to help with operating budgets, but this year Roy is proposing to take only $414,115 our of surplus, a difference of $985,885.

The City Council’s policy is to keep the surplus at 12 percent, and he recommends using only $414,115 to keep it about that amount.

From now until June, councilors plan to hold budget workshops on the Tuesdays when regular council meetings are not held.

Roy said officials will look for savings in all city accounts and hope the state starts to return the amount of revenue sharing the city should be getting. Mayor Nick Isgro agreed with Roy about not using as much surplus.

“We can’t just keep destroying the surplus,” he said.

Early in the meeting, Roy said the budget figures “look a little scary,” but officials have a way to go to work on the budget.

He cited as challenges the fact that 27 percent of the city’s land area is tax-exempt and the population has declined. In 1960 it was 18,695 and in 2010, it was 15,722, he said.

“In addition to the population decline, I think even more significant is the decline in median family income,” Roy said. The city also is a service center whose population increases by 21,000 during the day when people come into the city to work and do other activities.

Fifty-one percent of housing in the city is rental property; and as a service center, the city generates sales and income taxes the state collects, according to Roy.

“Yet they’ve been refusing to give us our share as provided us by the law,” he said, referring to state revenue sharing.

He said the revenue sharing loss, averaging $942,000 annually for the last five years, has contributed to the city’s financial decline over that time.

On the positive side, the city has two hospitals, two colleges, “a strong collection of restaurants,” and the city is a perfect location for people wanting to go to the coast or larger cities such as Portland and Bangor, he said. Physically, it has a great Main Street as well, Roy said.

“I think that Waterville is trying to develop itself as the cultural and arts center. That’s a niche that I think a lot of people are looking at — and an important one.”

Amy Calder — 861-9247

[email protected]

Twitter: @AmyCalder17

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