SOUTH PORTLAND — South Portland city councilors got their first look at the $38 million school budget and, so far, seemed to like the numbers.
The council will dive into the budget in detail in future workshops, but according to a presentation by City Manager Scott Morelli, the proposed 2021 spending plan still meets the tax burden suggested by the council back in January. It even accounts for a loss of up to $50 million in business valuation, which Morelli warned might be a consequence of the coronavirus.
Those losses, he said, could push the potential tax hike from the combined city, school and county budget as high as 3.77%, which is still in range of the 3.75% rate increase that the council asked the city to stick to back in January.
The $38 million budget, Morelli said, equals an increase of 2.75%, or just over $1 million, over the current year. The combined municipal, school and county budget adds up to a total of $94.7 million.
As to how much will need to be raised by taxes, Morelli said the municipal budget will need to raise just under $19.9 million, an increase of 2.29%, or $411,869, over 2020. The combined tax burden for municipal, school, and county all add up to $68.5 million, an increase of just under 2.3%, or $1.5 million over 2020.
But Morelli did not calculate the impact of that increase on the tax rate in his presentation, because he urged the council to consider potential losses to valuations, particularly in the business community, due to possible economic fallout from the coronavirus. Finance Director Greg L’Heureux told the council that businesses may close permanently, and the city should be ready to take a hit from that. He suggested a potential citywide loss of $50 million in business valuation, but even that, he admitted, was only an estimate.
“We don’t know what that number’s going to be,” he said.
So Morelli’s calculation of the potential tax rate based on the current budget is based on an estimated rate increase of 3.77%, to accommodate for the potential loss of business tax revenue. Assuming that increase occurs, Morelli estimated a new tax rate of $19.82, an increase of 72 cents, or $180 for the owner of a $250,000 home. That still remains roughly in line with what the council asked for back in January, before the pandemic.
Like other officials in area communities, Morelli said he went back to revise his original budget of $38.9 million, which he presented on March 16, to account for potential economic disruption caused by the coronavirus. In particular, he noted the likely loss of revenue from excise tax, state revenue sharing, building permits, investment income, bus fare, cable franchise fees, parks and recreation and other areas. In total, he estimated the coronavirus could cost the city as much as $3.2 million in lost revenues, which he had not budgeted for on March 16.
“Obviously, that required some strategic budget changes,” he said.
Among the cuts, Morelli listed the elimination of several new positions, such as a police pipeline officer, public works equipment operator, and transportation finance assistant.
“I’m really impressed and pleased with where we’re at,” said Councilor April Caricchio.
Comments are not available on this story.
Send questions/comments to the editors.
