The budget going to Gray residents at the annual town meeting May 2 would use $471,000 in reserve funds and drop the tax rate by 11 cents.

Residents will also decide whether to spend $146,000 on a police deputy that would patrol the town full time.

As town councilors finalized the $5.6 million spending plan this week, they said the proposed budget would help correct some past oversights while putting the town in a position to draw new development.

Residents will vote on the budget and other warrant articles at the annual town meeting, set for Saturday, May 2, at 9 a.m. at the Gray-New Gloucester Middle School cafeteria. The budget approved at town meeting will then have to be ratified at the polls June 9.

The budget, which makes up for the loss of revenue, including excise tax and state revenue sharing, by using reserve funds and curtailing all road paving and repair for the year, would push the tax rate, now at $14.30 per $1,000 of valuation, down 11 cents, with the help of rising property values, Town Manager Deborah Cabana estimates.

Councilors on Tuesday added to the budget a $115,000 culvert construction on McConkey Road, where a pipe broke this week, forcing the town to do work now or risk higher costs down the road. But those funds will be taken from a dedicated account for bridge repair as well as from surplus, and will not impact the amount needed from property taxes, Cabana said.

The budget would use $471,473 in reserve funds and includes $546,053 in debt services payments to pay for the Public Works/Transfer Station and Pennell Institute renovation projects, as well as the leases for six town vehicles. Both aspects of the budget have been targets of criticism by the few residents who spoke at public hearings on the budget.

On Tuesday, resident Wade Trudel said the town is being irresponsible by putting off essential projects like road reconstruction while moving forward with plans for a new town hall, a $2.4 million project that will place town offices in the historic Pennell Institute. He also said the budget is being supported by the use of reserve funds, which are likely to run out in the next few years, leaving the town without a way to offset spending.

“We’re running on false pretenses here, and the budget backs that up,” Trudel said.

Cabana told Trudel the budget maintains the correct level of reserve funds, which is determined by policy to mean enough to cover two months of town operations. Under the proposed budget, that amount would remain, plus around $400,000. Councilors Peter Gellerson and Tracy Scheckel said the bonding is being used for projects that have been approved by residents and will ultimately benefit the town.

By taking out the bonds, the town is taking a chance that the projects will improve the quality of life and operation of the town, drawing more people and businesses to Gray, Scheckel said. Hopefully, the projects will help build a broader tax base so they will pay for themselves, she said. It is a risk worth taking, Scheckel added.

Gellerson said the town has for too long put off dealing with both its municipally-owned buildings and the Pennell Institute, which he said is worth saving because of its long ties to the community and its place in Gray’s history. The town needs a bigger town hall, he said, and the time is right to move forward with plans.

“The Town of Gray is playing catch up,” Gellerson said.

He did, however, warn that tough decisions may be ahead for residents, even as soon as a year from now, when the 2010/2011 budget will be debated. With budgets getting tighter with each passing year, he said, there is less and less money to carry forward, meaning there may not be money to offset taxes as there has been in the past. Eventually, Gellerson said, the town is going to have to decide to either raise taxes or cut services.

In addition to the proposed budget, residents will decide whether to hire a contract deputy from the Cumberland County Sheriff’s Office to patrol the town 40 hours a week. The contract would cost the town an additional $146,000 next year, increasing the tax rate by 20 cents per $1,000 of valuation, unless an equal amount was cut elsewhere in the budget.

The $146,000 would pay salary, benefits, and the cost of equipment and a cruiser for the deputy. The town would oversee the deputy and have the ability to adjust the patrol schedule as it sees fit, after consulting with the patrol commander.

The council had also considered forming a police department in Gray, but they felt it would be too costly and open the town to liability problems. Fire Chief Ricky Plummer looked into creating a regional police force with Raymond, Casco and Naples, but found those communities are not interested because they don’t have enough police calls.

The council made the decision after hearing about the strain placed on law enforcement by the high volume of calls originating from Gray – the largest community in Maine not to have a municipal police force. Through the first six months of 2008, almost half of the service calls handled in Cumberland County by the Maine State Police originated in Gray.