WATERVILLE — City councilors got a first look Tuesday night at a proposed $18.2 million municipal budget for 2016-17 that represents a $704,000 increase from the 2015-16 budget.

They also got to see a proposed $21.8 million school budget, which represents a 2.85 percent increase over the current $21.1 million budget.

It was a first meeting of municipal and school officials this year to review proposed budgets, and both sides said the numbers will change — that the budgets are in their preliminary stages.

“This is a draft,” said Councilor Dana Bushee, D-Ward 6. “We are not raising the mill rate 1.5 mills. This is a draft, and over the next couple of months there will be many changes.”

Mayor Nick Isgro noted that budget review meetings will be held over the next several weeks.

“These are public meetings and we welcome the public to come, and we encourage the public to come and take part in those discussions,” he said.

City Manager Michael Roy presented officials with a budget message to the council and Isgro showing a graph of the city’s revenue-sharing history and the significant decline over the last several years in the amount of money the city receives from the state.

“The fact of the matter is, it’s been constant every single year, with an average loss of a little over $1 million,” he said.

Last year, councilors approve a $37.4 million municipal and school budget for 2015-16, increasing the then-tax rate of $27.40 per $1,000 worth of valuation to $27.80

Of the $704,000 increase in the proposed 2016-17 municipal budget, $332,000 is for an increase in debt service and $40,000 is reflected in additional retirement costs for the Police Department, according to Roy.

Eric Haley, superintendent of Alternative Organizational Structure 92, which includes Waterville, Winslow and Vassalboro schools, spoke only about the Waterville school district budget Tuesday.

Proposed increases in the school budget are reflected in two major items — a projected need for five new special education teachers, which would cost $272,036; and a $543,286 increase in insurances for the schools, according to Haley.

“Special ed numbers are going through the roof,” Haley said earlier Tuesday.

He said that out of 1,800 students in the school district, just shy of 1 in 4 are special education students.

“Part of it is because there are more categories of identification now,” he said. “We have a very needy population.”

At Tuesday’s meeting he and the district’s new special education director, Heidi O’Leary, said Waterville has many students with multiple disabilities and emotional and mental health problems. Ten students have missed 30 to 70 days of school this year, seven have missed 20-plus days, and if a student misses 10 consecutive days, a special meeting must be held, according to federal law, with teachers, family and others, according to O’Leary. More programming is needed for behavioral students, and without them, the community is placed at significant risk, she said. She is working to develop programs.

“The school district is in a critical need right now,” she said.

One teacher at Waterville Junior High School has a caseload of 37 special education students, which constitutes a violation of state law, both she and Haley said. He said the schools are hiring social workers now instead of guidance counselors because so much counseling is needed to keep mental health problems under control.

Board of Education Chairwoman Sara Sylvester, who is administrator at the Oak Grove Center in Waterville, added that many students have needs typically seen in care facilities.

“You have to remember a lot of these kids have to be toileted, fed. It’s like a nursing home or a hospital. It’s really way above what you would think being in a public school.”

Haley also noted that at the end of the year last year, about 70 students in AOS 92 were listed as homeless.

“I don’t think the numbers are quite as high right now,” he said.

The position of a three-quarter-time nurse at Albert S. Hall School will be increased to full-time as part of the proposed budget increase, according to Haley. He said the Cottage Program, a behavioral program cut out of the budget last year, would be reinstated; and the district technology budget is up $111,000, as the district used to pay for technology through a reimbursement program funded with money from the federal and state governments, but that program as been downsized. The program is designed to provide municipalities and schools with connectivity, Haley said.

In the proposed school budget, $482,948 is identified as the total needed in local taxes to support expenditures.

The proposed municipal budget includes a code enforcement position. A public works position has been deleted from the proposed budget, and 1.5 proposed new positions in the police budget were not included in the budget Roy presented Tuesday.

In past years, the city used surplus to help fill the budget shortfall. It also raised the tax rate, delayed capital improvements and refrained from adding new positions, Roy said in his budget memo. Consequently, he said, the city has watched its surplus drop from $10.7 million in 2008 to $5.9 million in 2015.

The city had to borrow money in 2013 and 2015 for necessary capital improvements, whereas such items once were funded with surplus money. The city’s fund balance is now at 12 percent of the city’s total expenditures, he said. The city has a policy of keeping that surplus at 12 percent of the approved budget.

In keeping with the city’s fund balance policy, the 2016-17 proposed budget does not include surplus funds; instead, Roy estimates $500,000 will be left over in the current budget to help fund the 2016-17 budget.

“Taken all together, this proposed budget represents a net demand on taxes of $963,000 more than last year,” Roy says in his memo. “This represents a 1.5 increase in our mill (tax) rate. If we could use the same amount of surplus as we did last year, our increase would be 0.8 mills. While the picture may seem bleak at this time, we know that the property revaluation, the revitalization of the downtown and the end of the Elm Plaza TIF all bode well for the future.”

Roy said at Tuesday’s meeting that there is real hope for the future in that the city’s ongoing revaluation will bring property assessments up to 100 percent, while it is only at 80 percent now. The revaluation will alter tax payments for many people. Council Chairman John O’Donnell, D-Ward 5, noted that not everyone will see a change, however, in their taxes.

“Some will go up; some with go down,” he said.

Roy said downtown revitalization is coming, with Colby College, as well as private owners, renovating properties that will affect the city’s tax base. Also, the tax increment financing district for Elm Plaza, adopted 20 years ago, is about to expire.

“That’s a very positive development, because all of a sudden $472,000 we’re not sending out the door every year,” Roy said.

The Trafton Road interchange at Interstate 95 will be built, prompting development of land in the area and the possibility for increased value. The owner of the former Seton Hospital has submitted a plan for redevelopment of that building, and another developer is interested in working on the former Marden’s Industrial building, which is part of the Hathaway complex, according to Roy.

The city will hold budget review meetings at 6 p.m. the next three Tuesdays in the council chambers. On March 29, information and technology, health and welfare, planning, code enforcement, economic development and the Fire Department will be discussed; on April 12, library, police, airport, outside agencies, revenue and capital improvements; and on April 26, parks and recreation, public works, human resources and schools.

The council is scheduled to take a first vote on the proposed municipal and school budgets at the council’s 7 p.m. meeting May 17. The council is scheduled to take a second and final vote on the proposed budget June 7.

The dates of the council budget votes have been corrected in this story.

Amy Calder — 861-9247

acalder@centralmaine.com

Twitter: @AmyCalder17

Related Stories