WATERVILLE — Residents fearful about a potential tax increase in the 2017-18 municipal and school budget urged city and school officials Monday to trim costs or face losing more population, saying people will eventually be priced out of their homes.

But with less money coming into the city; rising insurance, salary and benefits costs; and possible changes in state funding for essential programs and services for schools, officials have a budget battle on their hands.

Educators, business people, parents and school administrators packed the council chambers for a first budget meeting of the City Council and Waterville Board of Education. The budget process is just beginning, and officials said that revenues are not yet known — particularly school revenues — and numbers are sure to change.

Waterville school Superintendent Eric Haley said school revenue numbers will not be known until the state Legislature decides whether to approve all or some of Gov. Paul LePage’s 48 recommendations for changes to the essential programs and services funding model.

One of those recommendations is to change the student-to-teacher ratio from 16-1 to 17-1, which would mean Waterville schools would get $554,338 less than it received for the 2016-17 budget, and the teacher aide, or educational technician-to-student ratio, which would cost the schools another $92,645 for a total decrease of $646,983. Changing the ratio means the state will reimburse schools less money.

“When you think statewide, that’s a huge number,” Haley said.

Another recommendation is to decrease the number of superintendents and superintendent offices in the state, which is intended to force regionalization, but Haley noted that Waterville, Winslow and Vassalboro are already part of Alternative Organizational Structure 92, a regionalized district.

“I’m still fighting that battle; I’m hoping we’ll win that battle,” Haley said. “I’m not holding out hope but that is one of the issues facing us.”

Residents wanted to know what savings would be realized if the Albert S. Hall School were closed and students moved to the junior high school and high school, but Haley said those numbers have not been determined and a long process would precede any school board vote to close or keep the school open.

Scott Rivard, head of the math department at the high school, said it is critical that people look at not the money to be saved from closing a school, but what is best for the students. Like everyone else, he does not want to see taxes increase, he said. “But we’ve got to really look at what it affects. It affects the children.”

Children in elementary, middle and high school are educated differently, and if junior high students are moved to the high school, the two would not blend well in the building, which is not large enough to hold another 200 students, Rivard said.

“We really need to take it easy, slow down and take a hard look at this,” he said.

Resident Julian Payne said his two children got an excellent education in Waterville schools, but increasing taxes will push people out of the city and people looking at Waterville will not move here. School Board member Pam Trinward said, however, that Waterville schools spend less per student than surrounding communities and people look at that when they decide where to live.

Jon Ramgren, a chemistry teacher at the high school, made an impassioned plea not to cut teachers. He said doing so will decrease the quality of education, force people to move out of the city and make the schools less attractive to people wanting to move here. He said he teaches a range of students and he enjoys teaching all of them, but the nature of the school would be very different if the top students move out.

Haley said last week that the proposed 2017-18 school budget is $22.4 million, a 6 percent increase, or $1.3 million, above the current $21.1 million budget approved last year. Haley called the budget outlook “about the worst I’ve ever seen” and “deep and dark,” saying the increase is driven largely by insurance, increased wages and benefits and costs for other items. Also, about $500,000 was targeted from surplus last year for the budget, so school officials are looking at possibly being behind substantially at the outset.

City Manager Michael Roy issued a written budget memo to Mayor Nick Isgro and city councilors that says the proposed 2017-18 municipal budget includes an increase of $928,261 in expenses, including $742,500 associated with capital improvements and road paving. Without the capital improvement and paving expenses, the increase in the budget would be $185,761 or 1.1 percent more than last year.

The major problem with revenues is the loss of state revenue sharing funds, according to Roy’s memo. The average annual revenue sharing the city received from the state was $2.54 million for the five-year period of 2005-09, but the average annual amount for 2010-16 was $1.43 million, an average loss of $1.11 million a year, it says.

“As we know, this annual shortfall was replaced by using our surplus funds, raising the tax rate, delaying capital improvements and reducing money for road improvements,” Roy wrote in the memo. “As a consequence, we have watched our fund balance (fall) from $10.7 million in 2008 to $6.2 million in 2016.”

The city’s policy is to maintain a fund balance, or surplus, at 12 percent of the budget approved the previous year. Roy says in his budget statement that in keeping with that policy, the proposed 2017-18 budget includes only $400,000 from surplus. Last year at this time, the city was able to use $900,000 of surplus, he said.

“Taken all together, this proposed budget represents a net demand on taxes of $1,676,941 more than last year. This represents a 2.2 increase in our mil rate. If we could use the same mount of surplus as we did last year, and we had $1.1 million more in revenue sharing, our budget picture would look a lot better.”

The city’s tax rate is $22.80 per $1,000 worth of valuation, so someone whose home is valued at $100,000 would pay $2,280 in property taxes.

Roy says the reduction in the city’s surplus account has serious repercussions for Waterville’s capital improvement needs. The city had to borrow money in 2011, 2013 and 2015 for necessary capital and road improvements, whereas in the past those items were paid for from surplus funds, he said. At one time, all the city’s major capital needs were paid for using surplus funds.

Roy reiterated in his budget message what he has said in recent months — that downtown revitalization, an interchange at Trafton Road/ Interstate 95 and the end of a 20-year tax increment financing program for Elm Plaza will mean more for the city in tax dollars. The TIF for Elm Plaza ended Jan.1 this year, so this is the first year in 20 years that the city will not be making an annual $400,000 payment, Roy said.

“While the picture may seem bleak at this time, we know that the revitalization of the downtown, the end of the Elm Plaza TIF and the promise of a new development at Trafton Road all bode well for the future,” he wrote.

Meanwhile, school budget discussions will continue Wednesday at a community educational forum at 6 p.m. at Trask Auditorium at the high school. The school board will host the forum, designed to help people understand what school budget funds are used for.

Amy Calder — 861-9247

acalder@centralmaine.com

Twitter: @AmyCalder17