PORTLAND — City Manager Joe Gray proposed a budget Friday that would eliminate 40 jobs, raise fees for trash disposal, kill a popular parking ticket forgiveness program and eliminate the Fourth of July fireworks.

And for the third year in a row, there would be no funding increase for the city’s library system. Library officials told the staff Friday that they would close the Munjoy, Riverton and Reiche branch libraries.

Despite the personnel cuts for the year starting July 1, Gray’s $196 million budget increases spending by $7 million and requires $900,000 more in property taxes.

When combined with the proposed school budget and county taxes, it would add 23 cents — 1.3 percent — to Portland’s tax rate, raising it to $17.97 per $1,000 of valuation. The owner of a $200,000 home would pay $46 more in the coming year.

For three years, the city has struggled to maintain services while dealing with unprecedented revenue losses caused by the downturn in the economy, Gray said. It has eliminated more than 100 positions, and last year most employees agreed to a one-year wage freeze. Gray said it’s harder now to find savings and avoid cuts in services.

“To bring this budget in with a $900,000 tax increase means that sacrifices need to be made by both residents and employees,” he said in a written statement.

Gray’s budget would eliminate 40 positions, 25 of which are filled. The targeted positions are in all departments, with the cuts proportional to the department’s size.

In the Fire Department, two administrative positions would be eliminated. The Police Department plans to use new federal grant money to avoid layoffs.

Gray’s budget would increase the cost of the city’s blue trash bags, by 25 cents for each small bag and 50 cents for each larger bag.

City crews would plow fewer sidewalks, saving $115,000, according to the budget proposal.

Eliminating the fireworks would save the city as much as $45,000. Gray said he hopes to find a sponsor to pay for the show. He said he could not justify funding fireworks when people are losing their jobs and residents are struggling to make ends meet.

Steven Scharf, who heads the Portland Taxpayers Association, said he is disappointed that the city and school budgets call for tax increases.

“We should be at zero (increases) for both, especially in these recessionary times,” he said.

City Councilor Jill Duson, who chairs the City Council’s Finance Committee, said councilors are telling her that they want a combined school and city budget with a “zero or close to zero” tax increase.

She said she was “dismayed” that the School Committee approved a budget Wednesday with a nearly $800,000 tax increase. The committee decided to spend $829,000 of the additional $1.6 million in state aid the district received after superintendent Jim Morse presented his budget March 3.

“It adds to the water we have to carry,” Duson said.

The council will be under pressure to add items back to the city budget.

Downtown business owners will likely advocate for the restoration of a city program that allows motorists to tear up one parking ticket every six months. Merchants also want the city to keep its policy of giving motorists one free hour to park at the city garages on Elm Street and Spring Street.

Eliminating the ticket forgiveness program would give the city an additional $520,000, according to Gray’s budget. The policy change at the garages would bring the city an additional $140,000.

Joe Redman, who owns Joseph’s, a clothing store in the Old Port, said the parking programs help downtown merchants compete with shopping areas that offer free parking.

Redman, who chairs the parking committee for Portland’s Downtown District, said the programs are popular with the public and help people feel good about spending their money in the city.

“If you eliminate friendly gestures, you will in the long term eliminate revenue flows,” he said.

On Monday, the School Committee will present its $90 million budget for 2010-11 to the City Council. The school budget would eliminate 64 positions and create 15.5 new positions.

The council’s Finance Committee is scheduled to make a recommendation on the city budget April 27. The City Council will hold a public hearing on May 3, and a public hearing and a final vote on the combined budgets on May 17.

Staff Writer Tom Bell can be contacted at 791-6369 or at:

[email protected]