Scarborough Town Manager Tom Hall on Friday proposed a municipal budget to the Town Council that would raise the property tax rate by 18 cents while trying to overcome a projected $657,000 revenue loss.

Hall’s budget proposes to raise property taxes to $12.33 per $1,000 of valuated property. That’s up 1.48 percent from last year’s rate of $12.15.

At $27.8 million, Hall’s overall municipal budget is 1.06 percent higher than last year’s $27.5 million budget.

Going into this budget season, the Town Council had asked Hall to keep the tax rate flat. That was before the town lost $657,000 in revenues thanks to declining property values, permit fees and excise taxes, Hall said.

“The recent economic downturn presents challenges and constraints to the municipal budget,” Hall said.

In 2008, Scarborough residents faced a 35-cent increase to their property taxes; in 2007, it was a 32-cent increase.

Town Council Chairman Michael Wood said he would like to see the tax rate hold steady, but lauded Hall for what he calls a responsible budget in an ailing economy.

“What the council wanted was a well-thought-out and responsible budget,” Wood said. “If this were any other year he would’ve probably found a 5 percent tax decrease, but these are some very difficult times.”

Hall is estimating that property values will rise only about $30 million this year, compared to an average of $60 million for each of the past three years.

“Still, that’s pretty good,” Wood said. “I think a lot of towns would take that scenario.”

Hall’s budget does not propose cutting staff, programs or services.

The town’s 157 full-time employees, including police and dispatch, earlier this year voluntarily gave up their annual cost-of-living raises of 3.5 percent. That saved the town about $259,000, Hall said.

The police and dispatch employee unions elected to forgo the raises in year two of their three-year contracts. The Fire Department union’s contract is up and it is currently in contract talks with the town.

“I applaud the workers,” Hall said. “It’s not a an easy decision to make, but they did it because they understood the circumstances the town was facing.”

The finance committee will get its first look at Hall’s proposed budget on Friday during department budget presentations. It will decide April 17 on a final budget to send to the Town Council.

There will be a special Town Council meeting for the first reading of the budget on April 23 at 7 p.m., and residents will have a chance to speak at a public hearing on April 29 at 7 p.m.

While Hall is not proposing staffing cuts, he is diverging from the original staffing plan and will not propose adding to the public safety department.

Wood said the finance committee, as well as the Town Council, will still try to keep the tax rate flat.

“There will be a lot of massaging to this budget,” Wood said. “Tom’s been doing this a long time and I am sure his proposal left some room for improvement. Our goal is to still keep the tax rate flat, but I am really impressed with what he was able to come up with in his proposal.”

The Town Council and finance committee will also discuss the proposed $35.5 million school budget. Residents will vote on the final proposed school budget in a May 12 referendum.