SOUTH PORTLAND — City Manager Jim Gailey is scheduled to present his preliminary budget to the City Council on Monday, Feb. 8, at the South Portland Community Center.

Gailey said he is still working with department heads to finalize the proposal, so he didn’t want to release details prior to the workshop.

However, Gailey said his preliminary budget is about $1.4 million smaller than this year’s municipal budget of $29 million.

Passage of a new budget is expected to be much more difficult than last year, when five veteran employees were abruptly laid off in February, sparking months of protests at City Hall.

In a meeting last month, Gailey estimated the city would have to raise an additional $1.3 million in revenues, most likely from property taxes, to maintain its current level of services, since non-property tax revenues are declining while operating costs, like heating fuel and health insurance, are rising.

Although state law would allow South Portland’s budget to grow by 2.75 percent, councilors balked at increasing taxes at a time when many families are struggling to make ends meet.

Instead, they directed Gailey and Superintendent of School Suzanne Godin to produce fiscal 2011 budgets that would not include a tax increase.

Gailey said he will present councilors with three different options for producing a balanced budget. Ultimately, it will be up to the council to decide which programs to cut.

Gailey said the city is not in a position this year to offer early retirement incentives to veteran employees, as it did last year.

But city employees, he said, also do not have to worry about abrupt layoffs this month.

Instead, Gailey said there has been a citywide hiring freeze for non-essential positions over the last three months, which he hopes will limit job cuts in the next budget.

“We have preplanned this year and we have a number of positions that are vacant,” Gailey said, “so it’s given us greater flexibility.”

Randy Billings can be reached at 781-3661 ext. 100 or [email protected]

This story was updated to correct budget information.

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