Portland’s newly proposed education budget may have the school district on a collision course with the City Council.

Earlier this year, councilors established a goal of limiting any citywide property tax increase to 2.5 percent in the fiscal year that begins in July. But Tuesday night, Portland Superintendent Xavier Botana proposed a school budget that would increase the education portion of property taxes by 6.5 percent.

The school board will review the education budget, and the council must approve the overall spending level.

The fiscal 2018 budget discussion opens as the school district also is asking the council to send a $64 million bond to voters to renovate four elementary schools. If the bond is put to voters and approved, debt payments would not begin until fiscal 2019.

Mayor Ethan Strimling, who strongly supports the bond, said the proposed $107 million school budget should be considered outside of the context of the bond even though bond payments would be included in future education budgets.

“The school bond has no impact on that (budget proposal),” Strimling said. “People are trying to connect those two. It’s not accurate.” City Councilor Nicholas Mavodones, who chairs the council’s Finance Committee, believes the opposite.

Mavodones has been the only elected official to cast a vote against the full school bond, citing concerns about impacts on future operating budgets and the need for state funding to offset the cost to city taxpayers. Mavodones is skeptical that a 6.5 percent increase in the school budget would pass the council, which sets the bottom line for school spending.

“This is why when I talk about my concerns about large debt service expenditures, you have to look at it in the context of operating budgets,” said Mavodones, who estimated that 75 percent of Portland’s budgets are personnel costs. “This is something where the school board is going to have to roll up their sleeves to look at, and I think they will.”

Councilors Justin Costa and Jill Duson also expressed concerns about the proposed tax increase.

“That’s certainly a very high number,” said Costa, who serves on the Finance Committee. “We’re going to have some tough questions about why the school district feels the need for that.”

It’s not yet clear what City Manager Jon Jennings will propose for municipal department spending.

City Hall Communications Director Jessica Grondin said Jennings was not available to comment because he was in back-to-back budget meetings Wednesday. She said Jennings is focused on building a budget that meets the council’s guidance.

Grondin also noted that the city manager and superintendent did not meet before the school budget was presented, something she said had been routine in the past.

NOT TOLD TO LIMIT TAX INCREASE

Botana was hired in May and this is his first budget proposal for the Portland school district, which is the largest in the state and serves about 7,000 students.

The superintendent presented his budget to the school board Tuesday. It represents a 3.3 percent increase in education spending, but an anticipated drop in state funding means the tax revenue needed to cover the education budget would go up 6.5 percent. The property tax collected by the city is split roughly 50-50 between the school district and the city.

The education spending proposal  would increase the school portion of Portland’s property tax rate by 67 cents per $1,000 of valuation, adding an estimated $167.50 to tax bill of a home valued at $250,000.

Botana said in an interview Wednesday that he was not aware of the council’s goal of limiting property tax increases citywide to only 2.5 percent.

The school board, which directly oversees Botana, did not instruct him to limit property tax increases in his budget proposal, said Stephanie Hatzenbuehler, the board member who chairs the school finance committee. Instead, members told him to submit a budget that would further the school district’s educational goals, she said.

“I believe Xavier did what we asked him to do,” Hatzenbuehler said. “Now it’s our job as a finance committee and as a board to look at that to see if we need to ask the city for that amount or if there are other places we could look at for cuts or reorganization.”

She said the committee could forward a recommendation to the full board as soon as next Wednesday.

Strimling also said he asked Botana to build a budget that meets the needs of students and that he did not tell him about the council goal of limiting property increases, because Strimling believes the state will provide additional funding to offset any projected tax increase.

“I feel very confident this is going to come down as the Legislature does its work,” Strimling said.

Last year, an interim superintendent proposed a 4.5 percent tax increase, but additional state funding lowered the actual increase to 2 percent. However, that budget only included a 0.8 percent increase in expenditures, while Botana’s budget has a 3.3 percent increase.

Even with the increase proposed by Botana, the school district is expected to eliminate positions.

According to a budget summary provided by the district, 94 percent, or $3.2 million, of the $3.4 million budget increase is due to contractual pay increases and retirement costs. The district also plans on rolling out $1.2 million in reductions in salaries and contracted services to keep expenses down.

Botana said those savings would come through the elimination of some positions. He said it was too soon to tell whether there would be layoffs and he did not detail the positions targeted for elimination.

The district said the budget “takes positive steps to realize the district’s educational goals while responding to the potential drop of more than $2 million in state aid.”

The budget maintains current class sizes, advanced courses for high school students, world languages and extracurricular activities. It also implements new priorities, such as adding resources for English language learners, student mentoring programs, professional development in “trauma-informed” programming, parent engagement and adult education.

Botana’s budget also assumes that Gov. Paul LePage’s budget recommendations, which include sweeping changes to the state education funding formula, will be approved by the Legislature, even though many doubt that will be the case. Those proposals would reduce state education aid to Portland by $2 million, according to the district.

Even if LePage’s proposals are not adopted, the schools could stand to lose $1 million in state aid because of declining enrollment and an increase in the city’s overall property valuation, Botana said.

Without changes in other portions of the budget, the property tax increase would still be 5.2 percent, the district said.

Strimling said Portland’s budget pressures emphasize the need for the Legislature to fully implement a measure passed by voters in November to place an income tax surcharge on higher-income residents to generate more money for schools. LePage has proposed income tax cuts aimed at offsetting that initiative.

Strimling said Portland could gain around $10 million in new revenue if the measure is implemented. He said Botana’s budget is “too conservative” because it does not take into account additional funding that could result from that question being passed by voters.

COMPARISON TO OTHER COMMUNITIES

Both Strimling and Botana also seemed to downplay concerns about property taxes by arguing that Portland’s property tax rate is comparable – if not lower – to other communities.

“While this is a significant increase in the tax rate, our tax rate compared to neighboring communities is very comparable,” Botana said. “We think we’re a reasonable value for the services our student gets.”

Strimling agreed.

“If you look at our mil rate compared to other communities, we’re actually pretty low,” he said.

However, numbers from the Maine Revenue Service tell a different story. Portland’s mil rate of $18.76 was the highest in Cumberland County, which had an average mil rate of $15.64, according to a compilation of full-value tax rates for 2015, the most recent data available.


Note: Strimling said on Thursday that he was referring to a comparison of tax rates for education, not overall tax rates.

The city recently calculated what the tax rate would be in seven other  Cumberland County towns if only education spending is included and all other spending is removed from the budget. Portland has the second lowest education tax rate among that group, according to that analysis.

Strimling’s school tax rates are not equalized, or full-value tax rates, as the state’s figures are, making them difficult to compare. There is no regional or statewide breakdown of comparable full-value school tax rates.

Randy Billings can be contacted at 791-6346 or at:

[email protected]

Twitter: randybillings