HALLOWELL — City officials may decide to delay this year’s budget proceedings due to uncertainty with state revenue figures.

That was the consensus of the Finance Committee, a subcommittee of the City Council, at a meeting Wednesday night. Councilors spoke about the effect of increasing school and county budgets on the city’s budget next fiscal year and a lack of guidance on state revenue sharing and other income.

Back in March, State Treasurer Henry Beck wrote in an op-ed that “municipalities should begin planning for a decrease in revenue sharing receipts immediately.”

“State government should expect a decline in general fund tax receipts, which will result in a decrease in monthly revenue sharing with Maine’s towns and cities,” Beck wrote.

Ahead of the meeting, a draft revenue budget dated May 29 showed $919,907 in municipal revenue, an 8.59% — or $86,408 — decrease over the current fiscal year’s municipal revenue of $1,006,315.

The decrease in revenue in next fiscal year’s draft budget shows a few high-profile anticipated decreases, including $85,000 less in excise tax payments, from $425,000 to $340,000; a $44,000 decrease in state revenue sharing, from $219,996 to $175,996; and a $23,377 decrease in homestead exemption, from $116,883 to $93,506. 

A large increase in the revenue budget is down to a new TIF revenues line, which injects $100,000 from the city’s TIF district into the budget. That funding can only be used on certain projects, some of which include cleaning the City Hall, legal services, a flood gauge and funds for outside organizations such as the Kennebec Valley Council of Governments and the Kennebec River Rail Trail.

Councilor Kate Dufour said the city was not “near being able to determine the amount of revenue” it will collect in the next fiscal year. While the city planned on finalizing budget proceedings sometime in mid-July, she suggested waiting a bit longer.

“We need to see what July looks like at a minimum,” she said, referencing the need to review revenue figures from that month before finalizing a budget. “I think it would be to our benefit to slow the train down. We’re slowing the train down because we want data.”

Further, Dufour said, without that data the city could make the mistake of not collecting enough money through property tax.

According to a chart comparing excise taxes collected by the city, anticipated excise tax revenues have increased from $282,375 in fiscal year 2010 to $425,000 in the current fiscal year 2020. Many years the city actually collects more excise taxes than budgeted, like in fiscal year 2019 when $432,064 was collected and $365,000 was budgeted.

The city has only collected 82.8% of anticipated excise tax revenues in the current fiscal year, leaving $74,000 of $425,000 uncollected. Dufour said during Wednesday’s meeting that she was less concerned with excise tax funds, because that funding will be collected “eventually.”

Councilor Maureen Aucoin said she would support a budget reading in June to get City Council input on larger expenditures. Many changes could be made to the expenditure and revenue budgets before they are made official after three readings at separate City Council meetings.

A draft expenditure budget dated May 29 showed $6,471,027 in expenditures, a 2.94% — or $184,989 —  increase over the current fiscal year’s expenditure budget of $6,286,038.

Some increases in the expenditure budget include a $46,015 — or 11% — increase in the insurance category and a $7,950, or 94.8%, increase in general assistance.

The city’s payment to Regional School Unit 2 is increasing by $149,312 — or 4.88% — from $3,062,505 to $3,211,817, according to the draft. Finance Committee Chairperson and Councilor-at-Large George Lapointe said that number had been pared down from a $222,000 increase, but the $149,312 still represents an additional 66 cents on the city’s property tax rate.

County taxes are also on the rise in the draft budget, from $266,560 this fiscal to $277,099, or 3.95%. Representatives from the Kennebec County government are expected to attend Monday’s City Council meeting to discuss the county budget. Councilor Kate Dufour said officials from the county government and the school have a responsibility to explain to Hallowell citizens why those portions of the budget are on the rise.

A number of lines in the expenditure budgets have decreased, like the community services budget, which has been cut to $26,533 — or 63% — from $72,087 in the current fiscal year.

A large increase in the revenue budget is down to a new TIF revenues line, which injects $100,000 from the city’s TIF district into the budget. That funding can only be used on certain projects, some of which include cleaning City Hall, legal services, a flood gauge and funds for outside organizations such as the Kennebec Valley Council of Governments and the Kennebec River Rail Trail.

Hallowell City Manager Nate Rudy said at Wednesday’s meeting that the City Council should consider a 10- to 15-year plan for deferred capital expenditures. He said that deferments were “beginning to rack up,” adding that some originated from before he became city manager in 2016. Lapointe said the committee will take up a capital spending plan at its June 17 meeting.

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