Augusta city, school budget proposal would increase property taxes 4.7%

AUGUSTA — The Augusta City Council is expected to vote Thursday on a proposed $79.7 million city and school budget for 2023-24 that would increase property taxes by 4.7%.

As first proposed, the budget was expected to raise taxes by 9.3%, but a series of changes reduced the projected tax increase. The changes included direction from city councilors last week that 1% be cut from the school budget’s tax impact and 1% from the city’s tax impact.

For the owner of an average-valued, $129,400 house in Augusta, the budget would mean a tax bill of $2,970, an increase of $134.

At a lengthy council workshop last week meant to wrap up the budget, councilors were locked in a 4-4 vote in an informal straw poll about what to direct City Manager Susan Robertson to target for a tax increase — either 6.7% or 4.7%. Mayor Mark O’Brien’s vote — for the 4.7% increase — broke the tie.

The vote does not bind councilors to vote similarly when the appropriation order goes to them for a vote at their Thursday meeting, which is to include an opportunity for public comment.

Councilors who supported the 4.7% tax increase directed that 1% should be cut from the school budget, however the Board of Education sees fit to come up with the 1% shift.

In Augusta, the Board of Education approves a budget that is then incorporated into the total city and school budget. The spending plan must then be approved by city councilors. However, councilors can — and often do — direct that cuts to be made. School officials then decide what changes to make to get to the bottom line sought by councilors. The Board of Education is next expected to meet May 24.

The city’s 1% cut to the budget’s tax impact will likely come mostly by increasing the use of the fund balance by $329,000. The fund balance is an account made up of money left from previous years, which generally serves as a source for funding emergencies, should unexpected, unbudgeted costs arise.

Taking $329,000 more out of the fund balance is expected to bring the city’s fund balance down to $6.69 million. That amount would be slightly less than the 8.33% of the budget the city charter recommends be kept in the account, but more than the required minimum of 5% of the budget. Robertson said that would bring the fund balance down to the second lowest amount it has seen over the past 10 years.

Ward 4 City Councilor Eric Lind said taking an additional $329,000 out of the fund balance would leave it at 8.16% of the budget, only slightly less than the recommended 8.33%. He said he does not view that as significant or anything that would affect the city’s bond rating, which is a factor in the interest rates the city must pay when borrowing.

“I was prepared for the 6.7% (increase), but changed my mind,” Lind said. “I reconsidered my approach because I do think people are hurting. And I think it sends a message we did the best we could to keep taxes down.”

Robertson said if the city were to cut $329,000 from the budget, instead of taking it from the fund balance, it would affect city services.

At-Large Councilor Courtney Gary-Allen said she is OK with the additional money coming from the fund balance, but warned that depletion of the fund this year will have an impact next year.

“Next year, when we’re all sitting around this table, we’re not going to be able to fill the budget hole we’re creating,” she said. “We’re going to find ourselves in a position next year that there is going to be a tax increase, unless something dramatically changes.”

Much of the reduced tax impact — from 9.3% to 6.8% — came from corrections and other changes to the budget that Robertson initially proposed in April. The changes include savings from fuel bids, which came in less than projected, and $115,000 in salary and benefits for the information technology director incorrectly included in the city budget in addition to the school budget.

Also, Lisa Morin, the city’s director of assessing, has increased Augusta’s valuation, or total taxable property value, to $1.67 billion, up from the $1.64 billion projected in April, at the start of the budget process. The increase is expected to increase tax revenues.

The city’s property tax rate also increased last year by 4.7%, the first hike in five years.