AUGUSTA — City councilors unanimously approved a $58.1 million combined city and school budget Thursday which is expected to increase the property tax rate 2 percent.

While the budget is expected to increase the property tax rate, and thus the taxes owed on business and all other non-residential properties by 2 percent, most homeowners will see their property tax bills decrease.

That’s because of a partially state-funded Homestead Exemption program that allows homeowners to declare $15,000 of their home’s value exempt from property taxes if it is their primary residence. The state Legislature voted to increase the exemption from the current $10,000 to $15,000.

According to Ralph St. Pierre, finance director and assistant city manager, taxes will decrease for anyone in Augusta with a home valued at less than about $240,000. St. Pierre said fewer than 150 homes in the city are worth more than that, while more than 90 percent are worth less than that and will see tax decreases of varying degree due to the Homestead Exemption.

Homeowners with properties of lesser value will see variable tax decreases. The owner of a $22,575 home, which includes some mobile homes on leased land, will be billed for $150 in taxes, a 38.5 percent decrease. The owner of the average-valued home of $133,000 will see a tax bill of $2,335, a 2.1 percent decrease. The owner of a $200,000 home would see a tax bill of $3,661, a 0.68 percent decrease.

Homeowners with properties valued at more than $250,000 will see tax increases. The owner of a $309,000 home will be billed $5,800 in taxes on the home, a 0.3 percent increase, while the owner of the highest-valued home in Augusta valued at $491,000 will be charged $9,430 in taxes, a 0.95 percent increase.

“In my opinion this is a responsible budget despite all the challenges we’ve faced this year,” said Ward 2 Councilor Darek Grant. “I’m pleased we were able to drill down on the budget to ensure that tax relief will happen for most of our residents. I feel that is what the Legislature asked for, tax relief for Maine people. I’m proud, at the local level, we’ve been kind of able to help see that through, and most Augusta residents will not see an increase. And some will actually see a reduction. I think that is pretty significant.”

Property tax bills of owners whose property in Augusta is not their primary residence, such as business owners, would increase 2 percent next year.

The budget initially proposed by City Manager William Bridgeo would have resulted in a tax rate increase of 4.24 percent. Councilors directed Bridgeo, St. Pierre and school officials to make changes to come in with no more than a 2 percent increase.

City administrators and the Augusta Board of Education decided to reduce the tax impact of the budget primarily by taking more from the fund balance accounts of both the city and schools. Fund balance accounts are generally made up of money budgeted but unspent in previous years.

The $29.6 million school budget was approved by the school board in March.

But city councilors have the final say on the combined city and school budget. The school budget will also need to be approved by voters citywide in a budget validation referendum June 14.

Bridgeo said one of the primary drivers of the spending increase in the city’s $26.4 million share of the combined city and school budget is about $650,000 in increased wages and benefits for city employees.

While some of that increase in spending is the result of contractual obligations for existing city employees, a significant portion is caused by the addition of a full-time custodian’s position, two part-time staff positions at the library and a part-time code enforcement officer position.

Bridgeo said the additional library positions are needed to staff the expanded library, which will be well more than double its previous size when an ongoing renovation and expansion project is completed there late this summer or early fall. He said officials anticipated additional positions would be needed for the larger library before funding for its construction was approved by voters in 2014.

The city budget includes about $25,000 in funding for a new, part-time code enforcement officer position. Bridgeo said the position is needed because the city’s two code officers are already over-extended and a new property maintenance ordinance will likely place more demands on them. He said the city had three full-time code officers until cutting back to two in 2008 for budgetary reasons. He also said the city’s aging rental housing requires more staff time to help make sure it is safe and sanitary.

Keith Edwards — 621-5647

kedwards@centralmaine.com

Twitter: @kedwardskj

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