SOUTH PORTLAND — The City Council on Monday approved a $87.3 million budget for fiscal 2010. 

The council also amended five Maine Mall-area Tax Increment Financing Districts and allocated $300,000 towards a tax stabilization fund. 

The $87.3 million budget for the fiscal year starting July 1 is up more than $983,000, or 1.18 percent, from the current budget. The property tax rate is expected to increase 4 cents, to $14.04 per $1,000 of assessed value, or approximately $9 for a home valued at $220,000. 

The budget includes $27.5 million in municipal spending, $39.5 million in school spending and a $2 million contribution toward the Cumberland County budget. While municipal and school spending decreased by $340,000 and $498,000, respectively, the city’s contribution to the county increased by $35,000. 

There was little public comment Monday about the budget. One resident spoke in support of the city’s efforts to keep spending in check, while a handful of others asked the council to rehire five employees laid off in February, most notably a young adult librarian.

Councilor Jim Soule made two attempts to amend the budget, including a motion to allocate $360,000 from the city’s undesignated surplus, which is expected to be $9 million at the end of June, to reinstate the positions. That motion failed for lack of a second and was not discussed.

Soule also tried unsuccessfully to remove health insurance for councilors, which currently costs $70,000. Axing councilor health plans was opposed by Mayor Tom Blake, who said he puts in up to 40 hours a week as councilor. Blake speculated that not properly compensating elected officials would “endanger the quality candidates.”

“I think you would get less quality candidates who do it for the pay,” Soule responded. “I didn’t do this for the pay; I did it for the community.”

The budget also includes a commitment to hire a future storm-water coordinator for the Long Creek Watershed. Seventy-five percent of the approximately $50,000 salary would come from TIF funds and the remaining 25 percent would come from sewer user fees. In addition to the Long Creek Watershed, the coordinator could also tackle storm-water issues for other impaired watersheds in the community. 

The council unanimously supported a $300,000 commitment over the next three years to create a tax stabilization fund, which could be used to either reduce tax increases or be tapped to cover unexpected shortfalls. A $150,000 payment is included in next year’s budget, $100,000 in fiscal 2011 and $50,000 in 2012. 

During budget workshops, it was discovered that a new state program, the Business Equipment Tax Exemption, did not properly account for TIF districts. City officials realized that the state reimbursement was being funneled into the general fund and have since worked with the state to develop a better system for reimbursement.

The council amended five Maine Mall-area TIF districts to account for the new program. City Finance Director Greg L’Heureux said Wednesday the policy adopted by the council created a $594,000 hole in the next year’s budget that was closed largely by allowing the Cummings Road TIF to expire, putting another $390,000 back on the tax rolls.

Another $135,000 in savings were realized by eliminating cost-of-living raises for most employees and $150,000 in designated surplus was used.  

Monday’s council action also allowed the city to shift nearly $45,000 in general fund expenses to TIF funds.

With all of that, the budget still didn’t get Soule’s support; he cast the dissenting vote in the 6-1 decision, describing the spending plan as “fraught with a lack of transparency.”

Other councilors, meanwhile, complimented city staff for providing a budget with only a 0.29 percent tax increase. 

“Given the state of the economy, I think our staff did a tremendous job,” Council Maxine Beecher said. “This is a lean budget and next year is going to be that much harder.” 

 

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