Because of cuts in state aid, Portland faces a $10 million gap and needs to raise property taxes by 2.9 percent.

Portland’s Acting Manager Sheila Hill-Christian is proposing 13 layoffs to help close a $10 million hole in next year’s municipal budget largely caused by reductions in state funding for public assistance.

Ten city positions that are now vacant also would be eliminated and an additional 12 firefighter positions could be lost if a federal grant is not renewed.

Despite the cuts and the use of $500,000 in city reserves to soften the blow, the proposed municipal and school budgets total $278.3 million,  which would result in a 2.9 percent tax increase. Residents also could see a 35 percent increase in the cost of city trash bags, from $1 a bag to $1.35.

Hill-Christian and Finance Director Brendan O’Connell provided the Portland Press Herald with a preview of the recommended budget for the fiscal year that begins July 1. The proposal will be presented to the full City Council on Monday night and is expected to be referred to the council’s Finance Committee for further review.

City Councilor Nicholas Mavodones, who heads the finance committee, credited city staff for dealing with what he said are probably the most difficult budget circumstances Portland has faced since the onset of the recession in late 2007.

“It’s always troubling when you have to look at a reduction in the workforce,” Mavodones said. “We always say it will be a difficult year, but this year is probably more difficult given the uncertainties in Augusta.”

CUTS DRIVEN BY GA CUTS

The proposed budget cuts are mostly driven by General Assistance changes. The LePage administration recently informed the city it would no longer reimburse for the total cost of operating its homeless shelters, nor would it continue to provide benefits to certain categories of immigrants, including those who have expired visas and are seeking asylum.

All told, the GA cuts are estimated to be roughly $5 million for the coming year and will force the city to re-evaluate whether it can continue to be a social service center for the entire state.

“We’ve served a very specific role for a very long time and the governor has changed that dynamic,” Hill-Christian said in an interview Thursday. “We’re in a position now where we have to sit at the table with all of the involved stakeholders and ensure we minimize the negative impacts on the vulnerable populations that will be affected.”

The city’s budget situation could become more complicated if other LePage proposals are approved by the Legislature, including a proposal to change the formula for General Assistance reimbursements to cities and towns, and another to end municipal revenue sharing.

Mayor Michael Brennan said he would comment on the budget after it is presented to the council. The council will be holding two additional public meetings and offering an online survey to get feedback from residents about what the city’s priorities should be, he said.

HELP FOR THOSE LOSING SERVICES

The proposed budget includes some short-term assistance for residents who become ineligible for state-funded aid.

Hill-Christian has included roughly $350,000 in transitional funding to help those affected by the General Assistance cuts, among them an estimated 400 immigrant families that will lose food and rental vouchers. She is also directing $90,000 in additional federal Community Development Block Grant funds to help social service agencies meet an expected increase in demand at homeless shelters, soup kitchens and mental health programs.

“The bottom line is these are families and individuals that we’re talking about,” Hill-Christian said. “We’re providing for a period of transition, but at some point someone will come for services and there will be no funds available to assist them.”

Currently, 70 percent of the people availing themselves of General Assistance have recently arrived in Portland from outside the city, she said.

Hill-Christian said, over the next year, the city will be re-evaluating the social services provided by its Health and Human Services Department. Portland now offers a wide range of services not offered by other municipalities, including homeless shelters, a nursing home and a needle-exchange program intended to prevent infections and diseases among drug users.

“I think we have some critical conversations we’re going to have to have over the next year and it’s going to have to involve all stakeholders, including the state,” she said.

GA AND HEALTH STAFF AFFECTED

The proposal would reduce the taxpayer-financed portion of the budget by $1 million primarily by eliminating 23.8 positions, 13 of which are currently filled. The city employs more than 1,400 people and about 1.7 percent of municipal positions would be eliminated under the budget.

The layoffs would affect General Assistance staff and non-grant funded public health staff. City unions and affected employees were notified about the layoffs Friday.

An additional 12 firefighter positions may also be cut if a $1 million federal Staffing for Adequate Fire & Emergency Response Grant is not renewed. Finance Director O’Connell said the city will know about the grant in October. If it is not renewed, Hill-Christian said, the positions would likely be absorbed through turnover in the department.

The city will also have to pay nearly $3 million in wage and benefit increases associated with union contracts.

The cost of blue trash bags would increase from $10 to $13.50 for a 10-bag bundle. O’Connell said the new price is more in line with surrounding communities – Biddeford residents pay $15 for 10 bags, while Windham residents pay $13.50, he said.

Some of the financial pressures facing Portland also are affecting the current budget.

O’Connell said the city may also need to use surplus funds to balance the budget for the fiscal year ending in June. Winter operations were $1 million over budget, he said, and the state has only provided $900,000 in GA reimbursements through the end of October. The city planned on receiving $1.5 million, he said.

Also, the city is nearly $650,000 short of its projected Emergency Medical Services revenue of $3.4 million.

BRIGHT SPOTS NOTED

Despite the budget challenges, Hill-Christian highlighted some positive developments.

The city will begin planning for sea level rise, with the $100,000 in costs likely being paid from the Bayside Tax Increment Financing district. That means the costs will be absorbed by new development revenue in that area, not citywide property taxes.

The budget also includes $600,000 to establish a housing safety office that would be funded by fees assessed on local landlords. The office, which will include fire safety inspectors, is being created in response to a fire that killed six people on Noyes Street in November.

Hill-Christian also allocated $75,000 from her contingency fund to finance park improvements that will be determined by the Parks Commission.

During the 2014 calendar year, the city approved more than $100 million in new development, while loans from the Portland Development Corp. have created or retained 33 jobs in the city. Also, the city recently sold its first parcel in the Portland Technology Park, as well as a small parcel on Hanover Street that will allow Bayside Bowl to expand its business.

“I think Portland continues to be a great city,” Hill-Christian said. “There’s a lot of good stuff going on.”