A proposed Hallowell city budget that would keep property taxes flat is heading toward passage after clearing an initial hurdle last week.

The $2.4 million municipal budget, down 3 percent from last year, would absorb an increase in funding for Regional School Unit 2, the district that also serves Monmouth, Richmond, Farmingdale and Dresden. It passed the Hallowell City Council in an initial vote on June 8 and faces a final vote at the council’s July meeting.

City Manager Michael Starn projects that $224,000 in increased revenue should help to keep taxes at $17.60 per $1,000 of property in the city in the fiscal year beginning this July.

“We feel we’re in good shape to pay all the bills, so we think we can keep a flat mill rate and do that,” Starn said.

The budget funds two main construction projects — a $100,000 reconstruction of Mayflower Road and $100,000 in paving and culvert work on Central Street. A part-time, $15,000 custodial position soon to be vacated after a retirement was eliminated with officials estimating that they can contract for cleaning services for $10,000.

However, this year’s budget was aided by a one-time transfer of approximately $175,000 in Maine Public Employees Retirement System surplus funds that the city has been paying retirement costs with in recent years. Those costs will now be a recurring expense for the city.

Still, the budget mitigated an increase in funding from RSU 2 in a budget that voters passed last week. The budget was up by approximately 2 percent, requiring roughly 4 percent more in property taxes from each member community.

External events could affect Hallowell’s long-term budget scenario. A compromise state budget negotiated by Senate Republicans with Democrats in the Senate and House would add $50 million in statewide K-12 education funding, but it’s tied up in a fight with House Republicans, who want to see income tax relief. If the aid comes, Hallowell will put it toward cemetery loan debt.

Councilor Mark Sullivan, chairman of the council’s budget committee, said keeping taxes flat was a main goal this year in Hallowell, where they increased by 3 percent last year and 8 percent in 2013.

“We were cognizant of the pain that people have gone through because of the increases through the years and really made an effort and I think it paid off,” he said.

Michael Shepherd — 370-7652

[email protected]

Twitter: @mikeshepherdme

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