SOUTH PORTLAND–Spending is down by almost $1.9 million in the proposed new South Portland $67 million city budget, but taxes would increase by 1.26 percent.

That’s because the city and the schools will receive less in revenue while grappling with higher expenses in the new fiscal year.

City Manager James Gailey handed the proposed 2010-2011 city budget to the City Council on Monday night. Councilors then voted to set April 5 as the date for a public hearing on the budget.

The $67 million city budget proposal is made up of three parts: the $27.1 million municipal budget, the $37.9 million school budget and more than $2 million in county taxes.

The total city budget as proposed would raise the current tax rate of $14.70 per $1,000 of assessed value by 19 cents, to $14.89. That would translate to an additional $38 per year added to the tax bill of a $200,000 home.

Gailey made no formal presentation on the municipal budget on Monday. He will do that on April 5. The Board of Education also will present its budget to the council on April 5. The council sets the bottom on the school budget.

Gailey’s $27.1 million muncipal budget is $322,156, or 1.17 percent less, than this year’s budget of more than $27.5 million.

To cut spending, it calls for such measures as the elimination of 7.75 full-time city positions that currently are vacant. Those would include two police and two firefighter positions and half of a children’s librarian position.

The city manager’s budget also calls for a .93 percent tax increase – which would translate to an extra 4 cents on the tax rate.

Gailey said there are two reasons why municipal spending is down but taxes are up in his budget: a decrease in revenues and an increase in fixed costs.

“This is my fourth budget as manager and by far the most difficult,” he said in his written budget message to the council.

For example, state revenue sharing to South Portland will be down an estimated $270,000 or 13.85 percent in the new fiscal year. Automobile excise taxes will be down $298,000 or nearly 7 percent.

And fixed costs will climb. Those include payments to Maine State Retirement, which will increase by $145,850 and health insurance costs, which will climb by nearly $111,000. Gas, oil and heating fuel expenses are expected to be nearly $98,000 more.

A majority of city councilors in January said they wanted to see little or no increase in the municipal and school budgets for the new fiscal year. City taxpayers couldn’t afford any increases in the economic recession, they said.

Gailey said Tuesday that if the council still mandates a zero tax increase, he will be looking at ways to cut $151,000 more from the municipal budget over the next few weeks as the council deliberates on it.

The proposed new 2010-2011 school budget of $37.9 million is nearly $1.6 million or 4 percent less than the current school budget of $39.4 million. The school board approved the school budget last week.

However, that budget also would result in a tax increase, due to the addition of more than $500,000 in the budget to start a savings account to pay for proposed improvements at the high school and the city’s two middle schools.

The $37.9 million school budget is divided into two parts: a $37.4 million operating portion of the budget and the $506,623 capital reserve savings account.

Because of a large deficit in the operating budget – largely due to a reduction in state aid of more than $1 million – the new budget eliminates 25 positions, ranging from teachers to a truck driver. Many of the jobs are currently filled, so the cuts would entail layoffs.

By itself, the operating budget would result in no tax increase.

However, the addition of the capital reserve account would boost taxes, adding 14 cents to the tax rate. On a home valued at $200,000, that would translate to an additional $28 per year in taxes.

Taxes to Cumberland County will be more than $2 million in the new fiscal year, an increase of more than $24,000. That will add 1 cent to the tax rate.

The school budget must be approved by city voters at a referendum that likely will be held in early May.

The City Council will deliberate on the budget during the next few weeks. It is tentatively scheduled to give final approval to the total city budget on May 24. The budget takes effect July 1.


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