SOUTH PORTLAND — With COVID-19 impacting several facets of the city’s budget, the challenge moving into fiscal year 2022 will be keeping tax rates down, city councilors said on Jan. 5.

City Manager Scott Morelli is planning on presenting a budget proposal to city council on March 15, he said during the fiscal year 2022 budget guidance workshop.

The pandemic has impacted a variety of variables for the budget, Finance Director Greg L’Heureux said. In April of 2020, the city had planned to complete a property reevaluation but due to shutdowns, the process was delayed a year.

He said that one of the most concerning factors in the upcoming year is the anticipated impact of the tax shift. The current commercial and industrial side represents 44 percent of total valuation, and residential represents 56 percent.

“The COVID dynamic is essentially weakening the commercial side and strengthening the residential side,” L’Heureux  said. “That essentially magnifies the impact of the tax shift.”

The negative impact will be concerning to some taxpayers, he said.

“Some very modest income taxpayers are going to see pretty significant increases because of the increase in value of their homes, and we have no other means to alleviate that with the exception of looking at the budget and being as thrifty as possible in the development in our budget for the coming year,” L’Heureux said.

Other impacts on the budget include new debt on projects approved by voters, L’Heureux said. These include a new Cash Corner Fire Station, improvements to public safety and pedestrian and traffic improvements.

The two biggest impacts to the city’s economic revenues are excise tax and state revenue sharing, he said. Revenues for fiscal year 2021 excise taxes decreased by $1.74 million, and the city used its fund balance to make up the difference.

Looking at fiscal year 2022, L’Heureux said that revenue is anticipated to offset the fund balance as it begins to return upward.

For the school’s portion of the budget, the school board has a budget presentation scheduled for March 22, said Superintendent Ken Kunin.

“We don’t see this as just a tough one year budget, but we do see it as the beginning of several challenging years,” Kunin said. “As we’ve talked about over the years, we still have a need to build stronger fund balances and reserves to meet things we will have to spend on.”

Councilors said that they want to honor the voter-approved debt and make sure to keep property taxes low.

While not easy, the council will need to try and find areas to trim in order to accomplish this, said Councilor Katelyn Bruzgo.

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