SKOWHEGAN — The proposed budget for Maine School Administrative District 54 will swell by 7.5%, in large part because of a bond payment that comes due on a new elementary school.

Even so, school officials say there should be little impact on residents’ tax bills.

MSAD 54 Superintendent Jon Moody gave an overview of the school budget during a Select Board meeting Tuesday. The spending package stands at $41.8 million, up from $38.9 million.

Moody said much of that increase is due to a bond payment of just more than $1.5 million that must be made in spring 2024 for the new consolidated school at 40 Heselton St. in Skowhegan.

Moody said the school will be called the Margaret Chase Smith Community School. That’s in honor of the town’s former resident and U.S. senator who was a Republican presidential candidate in 1964 and became the first woman to be placed in nomination for the presidency at a major party’s convention. A town library and bridge are also named after Smith.

The community school construction, which totals $75 million, is 94% funded by the state and will consolidate three elementary schools in Skowhegan: the Margaret Chase Smith School, Bloomfield Elementary School and North Elementary School.

Even though the state is covering nearly all the cost of the construction, the school district still must incorporate the expense into its budget. Moody said the bond payment will not affect local taxpayers.

Similarly, the district’s career and technical center has been allocated an additional $337,209 in state funding, which pads the budget but requires no additional local dollars and does not increase local taxes, he said.

The rest of the budget increase was mostly driven by rising costs such as in health insurance, and a change in the state’s valuation of the district.

Residents in the towns represented by MSAD 54 — Canaan, Cornville, Mercer, Norridgewock, Skowhegan and Smithfield — will have the opportunity to ask questions about the budget at a meeting scheduled for Wednesday, May 24, at 7 p.m. at Skowhegan Area High School. A referendum will then be held Tuesday, June 13, for people to vote on the budget.

After hearing Moody’s presentation Tuesday this week, the select board went on to approve the warrant for Skowhegan’s annual Town Meeting scheduled for Monday, June 12.

Residents at the annual meeting will vote on whether to approve a municipal budget of $17.5 million, which is an increase of about $1.6 million, or 11.3%, over the current spending plan, Town Manager Christine Almand said Wednesday.

It’s difficult to determine what the impact will be on the tax rate, she said.

“It’s really too early to tell because until the assessors have figured out what the increased property values are, I can’t factor that into the equation,” Almand said.

Another complicating factor in determining the property tax rate is that Skowhegan annually receives a large amount of its revenue from the state’s Business Equipment Tax Exemption program, she said. The town received almost $6 million in revenue from Sappi paper mill’s involvement in that program, but it’s too early to say how much the town may receive this year, she said.

Almand did say she anticipates the tax rate will increase from the current $17.48 per $1,000 of assessed value.

“I’m not expecting it to go higher than our historical figures,” she said, referencing when the rate peaked at $20 per $1,000 in 2018. “I’m confident that we’ll be able to keep it under that point.”

The town manager, the town’s budget committee and the select board all are recommending the town use all of its available surplus — about $1.4 million — to lower taxation this year.

Significant increases to the budget this year were driven by projected hikes in the cost of utilities, contracted services, wages and benefits, Almand said. Increases to wages and benefits include adding three positions to town government: two police officers and an assistant town manager.

If approved, the police officer positions would be mostly covered by a federal grant, police Chief David Bucknam said at an April budget meeting. The town would fully fund the assistant town manager, which Almand explained at that April meeting is necessary to her office in order to effectively manage department heads and better handle communications.

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