HALLOWELL — City Council members passed the final version of a $3.2 million municipal budget Thursday that cuts city spending by about 15% and lowers the city’s property tax burden by about 5%.

The fiscal year 2026 budget, approved unanimously by the council, uses several hundred thousand dollars specifically saved from last year’s budget to lower this year’s property tax burden. City-level spending also dropped substantially, but Hallowell’s Regional School Unit 2 and Kennebec County obligations kept the tax reduction smaller than some residents had hoped.

Hallowell’s total spending this year, including for RSU 2 and the county, adds up to about $8.5 million — about $500,000 less than last year.

The new tax rate will likely fall about $18.90 per $1,000 of assessed value, down from about $19.90 last year, although that number won’t be finalized until taxes are officially committed later this month. The owner of a property assessed at $250,000 could see a $250 reduction in taxes this year, after seeing a 20% increase last year.

Larry Davis, a resident who helped lead a petition effort to overturn last year’s budget and has long demanded the city reduce taxes by at least 10%, said during public comment on the budget Thursday that he had hoped to see a bigger tax reduction. He said many seniors on fixed incomes — like Nancy Jacobs, who told councilors last August that she might not be able to stay in her home because of the tax increase — simply cannot afford their tax bills.

“As a city council, you owe the taxpayers — especially the seniors, the low-income homeowners and the new homeowners — at least a 10% cut,” Davis said. “You owe Nancy Jacobs a 10% cut. You need to correct the outrageous tax increase from last year’s city council.”

Scott Cooper, who as a newly elected at-large councilor and finance committee member has encouraged the city to be frugal with taxpayer dollars, said this year’s budget marks progress for Hallowell.

“We hear you,” Cooper told Davis as he returned to his seat in the audience. “It’s a step in the right direction.”

The approval came one year and two days after city councilors voted to reverse their fiscal year 2025 budget approval. Residents like Davis had demanded a re-do of last year’s budget, which unexpectedly raised taxes by about 20%.

But that vote, as the city council learned almost a quarter of the way through the budget year, was illegal; tax commitments cannot be undone, and tax rates cannot be easily changed mid-year.

That news led the council to direct former City Manager Gary Lamb to freeze about $239,000 in spending to roll over to the 2026 budget and reduce its property tax burden. Mayor George Lapointe said at the time that it was “most unfortunate” that the council could not move forward with its original plan to cut more spending more immediately.

Lamb left city staff last month, and new City Manager Ross McLellan’s first city council meeting was July 1.

While councilors agreed last fall to save that $325,000 total for lowering the 2026 budget’s tax burden, the actual savings fell well short of that number. Council members nevertheless agreed last month to carry forward $325,000 — or about 60% of the city’s fund balance — using funds saved up from previous years.

About $100,000 in additional savings came with councilors agreeing not to fund a fifth officer at the Hallowell Police Department.

Meanwhile, councilors chose to add a new part-time city clerk position to help reduce city staff burden, as well as a brand-new police cruiser.

Echoing comments from last month, Lapointe said after the unanimous budget approval that this year’s process was much better than previous years primarily because of increased engagement from the public in the budgeting process once the finance committee began meeting in January.

“I want to give my thanks to the finance committee and the members of the public who came to a lot of council meetings and finance committee meetings, and other council members and staff,” Lapointe said. “You all put in a ton of work to put this budget together.”