FAIRFIELD — Town officials are proposing a property tax increase to pay for a $5.4 million municipal budget, the first tax hike to cover town expenses in five years.

Personnel costs, particularly related to health coverage, have a lot to do with the budget spike, town officials said.

The town council and budget advisory committee are also suggesting a $900,000 borrowing package to pay for road work and structural repairs at town buildings.

Voters will decide the budget at annual Town Meeting at 7 p.m. Monday in the Community Center on Water Street.

The proposed budget is almost $166,000 more than last year’s spending plan and will mean a property tax increase of 44 cents, taking the town’s tax rate to $20.69 per $1,000 worth of property.

The town budget doesn’t take into account School Administrative District 49 and Somerset County budget increases.

“I think most people are understanding of it, especially where we have had flat budgets for five years,” said Council Chairman Robert Sezak Friday. “They expect a tax bump at some point.”

Most of the increase is because of personnel costs like health, unemployment and worker’s compensation insurance. New employees at the fire and police departments who take family health coverage have largely spurred those increases, according to Town Manager Josh Reny.

The fire department’s budget is going up by $35,340, which includes a $10,000 increase in capital reserve funding, and the police are set to receive $34,546 more than last year.

A timing issue also gives the impression of increased wages. In a memo to the budget committee, Reny noted that there will be 53 paydays in 2015, compared to 52 in typical years. The scheduling creates an “artificial increase” in wages and associated line items of about 2 percent, Reny said.

Officials are also recommending using $300,000 from the town’s fund balance, $50,000 more than last year, to offset tax increases.

In his memo, Reny called using fund balance a “prudent recommendation” because the town continues to have increases in its fund balance year over year.

“We anticipate the use of these funds will slow the growth in fund balance, rather than decrease it,” Reny said.

While the budget committee and council recommended the same funding for town expenses, they differ in the amount the town should provide to some independent social service agencies. The amounts recommended by the town council are lower than those proposed by budget committee members.

The budget committee, for example, proposes to give $6,600 to the Child and Family Services program at the Kennebec Valley Community Action Program, while the council is proposing $2,500, less than half that amount.

The council is also recommending smaller amounts for the Mid-Maine Homeless Shelter, Spectrum Generations and Hospice of Waterville.

Sezak said the council’s recommendations keep agency funding at the same level it was last year. “We just flat-lined everything we could” in an effort to limit the tax increase, he said.

A proposal that is expected to draw attention from voters is a $900,000 borrowing proposal to fix roads and structures in town.

Most of the money, about $800,000, would be directed to investing in an intensive road repair project, according to Reny. The town has been “weak” on investing in its roads over the past decade and has fallen behind on road repair, he said in an interview Friday.

While it should be on a 20-year road repair cycle, Fairfield is currently on a 50-year cycle, Reny said. Borrowing money while the town continues to invest in its summer roads account will allow it to play “catch-up” to where it should be on its roads, he said.

The remaining $100,000 of the borrowing would go to pay for a roof replacement at Lawrence Public Library and repairs at the police station. The historic library’s slate roof leaks when it rains and staff have to deploy buckets to catch the rainfall, Reny said.

The town estimates that it will pay about $123,750 on the loan using a 2.5 percent long-term interest rate, but Reny said the town may be able to secure better terms. The town’s debt payments totaled $312,000 this year, according to Reny.

The budget also reflects changes in the way the town budgets its sewer enterprise account. The town’s sewer district runs on a separate budget from the town, but the town has typically included sewer maintenance costs within the municipal budget and then had the sewer enterprise reimburse the town.

Rather than continue the practice, the town’s auditor recommended keeping the maintenance expenses within the sewer budget, Reny said. The change clarifies the process, but it also makes it appear like the town’s expenses and revenues are down compared to other years, he said.

Peter McGuire — 861-9239

[email protected]

Twitter: @PeteL_McGuire

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