WATERVILLE — The city council passed its revised $66.8 million municipal and school budget proposal in its second first reading Tuesday.

While four out of six present city councilors voted to pass the spending plan, which balances funding city positions with rising public safety costs, others and Mayor Michael Morris called it a “smoke and mirrors” proposal that ignores larger problems.

City councilors unanimously voted down the city’s budget proposal June 2, after disagreeing on use of undesignated funds. Following that rejection, City Manager Nick Cloutier recommended increasing revenue estimates, moving two positions to full time and using an additional $250,000 in undesignated fund balance — unspent taxpayer money — to pay for expenses.

These changes reduced the tax levy by $78,185 compared to the previous proposal and would make the property tax rate $17.84 per $1,000 of assessed value. That is just under a 5% increase on the current tax rate of $17 per $1,000.

At Tuesday’s meeting, former mayor Nicholas Isgro and state Rep. Cassie Julia, a Democrat who represents House District 65, said high taxes in Waterville are keeping the city from growing and attracting new residents, while they price out current residents.

One mobile home park resident said she cannot sell her trailer, which doesn’t come with any land, because the taxes on it are almost $2,000.

Morris and councilors Brandon Gilley, D-Ward 1, and Samantha Burdick, D-Ward 3, said the spending plan will mean Waterville is in a similarly difficult position with next year’s budget, and said they didn’t want to use undesignated funds to cover ongoing expenses.

“We’re just deferring these decisions. It’s going to make it so much harder down the road,” Burdick said. “We did not really achieve any savings through cuts, we achieved it through increasing revenue projections … and drawing down our fund balance.”

The city has reduced its municipal budget proposal by $1.37 million since the preliminary proposal in March. It now totals $9.8 million, which is still a 9.56% increase from the current year’s budget total. The school budget will increase by 5%.

Councilor Rebecca Green, D-Ward 4, said in her first years on the council, Waterville did not raise taxes.

“Maybe that was a mistake,” Green said. “We are a city that’s poised for growth. I really do understand what people are saying. We have to keep our taxes in check. But this level of increase is not out of line with what other communities are seeing as well.”

Councilors Green, Scott Beale, D-Ward 6, and Cathy Herard, D-Ward 7, said they trusted the city manager to balance the councilors’ guidance and residents’ interests. Beale asked the council to give Cloutier, who started his position in January, a year to increase revenue and cut expenses for the fiscal year 2028 budget proposal.

Green and Beale pointed to the four new firefighting positions in the spending plan as a large expense contributing to the tax increase. Green said residents asked the council not to make cuts to public safety.

Some conversation focused on Waterville’s role as a service center. The city offers services to people from nearby rural areas and experiences high daytime traffic. Councilors and residents suggested city officials need to find a way to capture revenue from that, through parking and traffic enforcement.

Gilley and Burdick voted no on the budget proposal, maintaining that the tax increase is too high, and Green, Councilor Spencer Krigbaum, D-Ward 5, Beale and Herard voted yes on the budget proposal’s second first reading. Councilor Flavia DeBrito, D-Ward 2, was absent.

Earlier in the meeting, the council approved emergency funding for city and school operations and declared an emergency to preserve public health and safety because the budget process will continue when the current fiscal year ends June 30.

The council plans to vote on the second reading of the budget proposal at 6 p.m. July 7 in the City Hall Annex at 46 Front St.