WATERVILLE — City councilors Tuesday night will consider a proposed $39 million municipal and school budget for 2015-16 that Mayor Nick Isgro says represents an “absurd” increase from the current $37.2 million budget.

If the proposed budget were approved, the tax rate would increase from $27.40 per $1,000 worth of valuation to $29.90 — a hike of $2.50. With that tax rate, a person who owns a house worth $100,000 would pay a $250 increase in taxes. A homeowner with a $300,000 house would pay $750 more.

“I can tell you that if there’s a budget in front of me I don’t think people have worked on and shows more than a one mill-plus increase, I will veto that budget,” Isgro said Thursday. A mill is $1 per $1,000 valuation.

The city’s finance committee recommends cutting the proposal by $200,000 by eliminating a police cruiser, some public works and paving projects and funding to outside agencies. The committee also recommends taking $400,000 from surplus for a total reduction of $600,000.

The meeting will be at 7 p.m. in the council chambers at The Center downtown.

City Manager Michael Roy said Thursday that the $39 million proposal councilors would vote on Tuesday does not yet include that $600,000 reduction, but the council could decide to cut the proposal by that amount before voting on it.

Councilors must take three votes on the proposal and could take one or two votes Tuesday and the third later in June, or they could postpone voting on Tuesday.

The city’s fiscal year ends June 30 and the state has not yet issued final numbers to the city and schools as to how much money they will receive — and those figures likely will not be issued until late June.

If councilors decide to reduce the proposed $39 million by $600,000, the increase in taxes would be $1.50 per $1,000 worth of valuation. In other words, a homeowner whose property is worth $100,000 would pay an increase of $150 in taxes.

Both Isgro and Council Chairman Fred Stubbert, D-Ward 1, think anything over $1 per $1,000 is too much.

“I think it should be below $1,” Stubbert said Thursday. “We were hypothetically talking about a half mill (increase).”

Stubbert said he thinks the council should vote on the proposed school and municipal budgets separately.

“The city budget shows no spending increase over last year,” he said. “There’s a revenue decrease but no spending increase. But the school budget has a significant increase over last year, both in spending and with a revenue decrease, and I agree with Nick that we can’t approve any kind of a tax increase like that.”

Budget increases in the $39 million are from insurance, salary and benefit increases that are contract-driven.

Isgro said more than 100 city employees are to receive 2 percent salary increases, and school employees are to receive 3 percent increases. Administrator increases are tied to teacher contracts, he said. The contracts already have been negotiated and approved.

“We expect flat-line revenue sharing,” Isgro said.

He said he does not think any councilors support a $2.50 increase per $1,000 worth of valuation.

“That said, I’ve been working with school officials and with Mike (Roy) and his department heads, trying to continue to look for either increased revenues or where we can cut spending,” Isgro said. “I haven’t had any suggestions since the last budget meeting from any councilor on where they think they can cut.”

Isgro said the city is bound by contracts, but it is not bound to keep all the positions represented in the contracts.

He wondered aloud if it makes sense to negotiate contracts with guaranteed increases when officials have no idea what a budget is going to be.

“I think we need to have a discussion as a community about how we do business in general,” he said.

The issue is not about people being unsupportive of schools and teachers — it’s about having to make up for depleting revenue sources, according to Isgro.

“When families who are paying all these taxes are at home, they’re not thinking about what’s fair or what they like to have — they have to live within the reality of their budget,” he said.

If Isgro does not approve of the final budget councilors pass, he will veto it, he said. Overturning his veto would require a vote by five council members.

“We talk about change happening on a local level. We need to show we’re being as responsible as we can be before we put our hands out and ask for more,” he said.

Isgro added that if voters repeal the pay-as-you-throw trash collection system in the June 9 referendum, the chances of securing a smaller tax increase are not very good, as the program saves the city more than $400,000.

Amy Calder — 861-9247

[email protected]

Twitter: @AmyCalder17