The South Portland City Council got an earful Tuesday from residents worried their tax bills will spike 30% or more this year despite a proposed city budget increase of less than 1.5%.

Residents urged the council to do something to prevent the impacts of a city-wide revaluation that City Manager Scott Morelli has warned could cause the tax rate to soar even with a flat city budget.

“If the council fails to act, you are making it impossible for your neighbors to stay in their homes,” said Eve Raimon of Angel Avenue. “It’s that simple.”

Morelli on Tuesday presented his $38.8 million 2021-2022 budget, up 1.36% over this year’s $38.2 million budget. The proposed school budget of $54 million represents a 0.72% increase over the previous $53.6 million budget. After adding in the proposed county budget of $3.1 million and accounting for non-tax-related revenues, Morelli said, the final proposed combined 2022 budget stands at $69.2 million, an increase of $985,444, or 1.44%.

Not counting the city-wide revaluation, Morelli said his proposed budget translates to a tax rate of $20.03, per $1,000 of assessed value, an increase of 28 cents. That would mean a $56 increase to the tax bill for the owner of a $200,000 home.

But it is the city-wide revaluation that has residents concerned. Because home sale prices in the city have far outpaced current assessed values, the revaluation will likely mean residential property values will go up citywide, in some cases by a large margin, no matter how small the city’s budget increase is.

“There will be a property tax shift that takes place. In other words, property value growth on the residential side will outpace growth on the commercial side and as a result, residential property owners will bear more of the property tax burden,” Morelli wrote in his letter.

“It will not be uncommon for residential property owners to see tax bill increases of 10%, 20%, 30% or more even if the city budget were to remain flat,” Morelli wrote.

Assessors have finished gathering data, but are not expected to know the results until June. In the meantime residents, many of whom are longtime homeowners, pleaded with the council Tuesday to take further action.

Claire Holman, a Jefferson Street resident, asked the council to consider the human element amid the frenzy to buy property in the city.

“Housing is a moral issue,” she said. “It’s not just a business proposition.”

“It’s going to be hard to take another tax hike,” said Susan McNamara, a retired, 30-year resident of Willard Street.

David Cekutis, who did not disclose his address, criticized the timing of the revaluation, given that the city and the nation as a whole are still in the middle of a pandemic. He said he understood the state would cut off reimbursements such as the homestead exemption if the city does not conduct a revaluation, but he urged the council to speak to state officials about the requirements.

“We are reassessing values at the worst possible time for property owners,” Cekutis said, “… our leaders have to push back against that.”

Councilors said they heard the cries for help, with Councilor Jocelyn Leighton pledging to do what she could to prevent longtime residents from losing their homes.

“It’s heartbreaking to think that might change,” she said.

Morelli said the city already has $1.1 million in the tax rate stabilization fund, which he said will help blunt the impact. He also noted that the city is expected to receive funding from the federal American Recovery Act, but the exact amount will not yet be known for several weeks, nor are officials sure whether they can use that to offset the tax hike.

Councilors also noted a proposed new state law, LD 1247, sponsored by Rep. Chris Kessler, D-South Portland, that, if enacted, will call for a moratorium on revaluations until the pandemic crisis is over. A public hearing on the proposed law is planned for Wednesday, April 14 at 9 a.m. in Room 127 of the statehouse in Augusta.

City and school officials will hold a series of workshops on the budget on April 10, April 13 and May 4 before another public hearing on May 18. The school referendum will go before voters June 8.

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