Portland city manager’s proposed budget includes 6% increase in municipal tax rate

Portland’s interim city manager is proposing a $261 million general fund budget that includes a 6.1% city tax rate increase.

Danielle West unveiled her budget to the City Council on Monday night, and the council voted unanimously to refer it to the finance committee.

Interim City Manager Danielle West

“This was an extremely difficult budget year,” West said in an interview before Monday’s meeting.

She said the city was facing a potential tax rate increase of more than 14% heading into budget planning, but that she and staff have been working over the last few months to bring the proposal down to a 6.1% increase, which falls within the range provided by the council.

“We wanted to make sure we met that goal of the council and maintained core municipal services while also recognizing that it’s tough for staff right now,” West said. “We have 250 vacancies (out of a workforce of about 1,400). We’re trying to do more with less, so what we’ve tried to do is make little shifts or additions where we could to address council goals.”

The $261.3 million budget is down about 3% from the current budget of $269 million, but still includes a tax increase due to budget challenges that include a loss in state revenue and a reduction in federal COVID-19 relief funds.

The general fund budget, which is the basis for the tax levy, does not include another $71 million for self-funding enterprise accounts, such as the Portland International Jetport, and sewer and stormwater operations, which bring the proposal for total city spending to $332.8 million, not including school spending.

The 6.1% municipal tax rate increase, when taken with the proposed school budget, would result in an overall tax rate increase of around 5.9%.

The school board has approved a $143.8 million budget that the district previously said would add 6% to the school portion of the tax rate, but school board Chair Sarah Lentz said Monday that the tax rate increase on the school side has been revised down to 5.7% because of an update to the city’s property valuation.

Together, the total increase from the city and school district would be 80 cents on the current tax rate of $13.61 per $1,000 of assessed value, or $300 on a home valued at $375,000.

BUDGET CHALLENGES

In a letter to Mayor Kate Snyder and the council on Monday, West noted challenges that included inflation, staff vacancies and the large number of asylum seekers who continue to arrive in the city.

The city also is facing a reduction in revenue, including the loss of $7.4 million in one-time funding from the state last year to help cover General Assistance costs and an estimated loss of $1.7 million in state revenue sharing dollars.

In addition, the city has less American Rescue Plan Act funding to rely on this year, with $4.75 million included in the proposed budget compared to $5.5 million in the current budget and $8.75 million the year before.

Cumberland County’s tax assessment on the city is expected to increase by over $1.6 million, which accounts for 11 cents on the tax rate.

West’s proposed budget notes that there are several bills before the Maine Legislature that seek to increase the state reimbursement rate to municipalities for General Assistance.

The city’s budget assumes that either the reimbursement rate will increase or the state will make available more one-time funding, and West said that if those things do not occur, the city will be looking at a higher tax increase or having to make cuts.

“We are continuing to advocate for those needs in Augusta to help address the homeless population – whether it’s asylum seekers or the chronically homeless,” West said. “It’s just a need we have here in the city of Portland, and it’s a dire need. It’s just something we constantly face, and we need more help in the region and at the state level.”

NEW SPENDING ON REFERENDA, DEI

The budget doesn’t include a lot of new spending, West said, but there are some additions that have been made to address council goals, as well as the needs of legislation passed by the Charter Commission and citizen-initiated referendums.

The city clerk’s budget includes $290,000 in new funding for a clean elections program, and the city is adding four positions in its permitting and inspections department to respond to an increase in workload driven largely by citizen-initiated referenda.

West’s budget also includes money to hire an associate director to work under the city’s new director of justice, diversity, equity and inclusion, and $50,000 in new funding for the council to use for the creation of a Martin Luther King Jr. Memorial.

The proposal calls for a 53% increase in spending on dispatch services, one of the areas of the city hardest hit by staffing shortages. The $1.2 million increase in that department will allow the city to work with a contracting service and hire a deputy director to address the staffing challenges, West said.

The city’s proposed health and human services budget is down considerably from $80 million last year to $55 million, in large part due to the city no longer relying on hotel rooms for emergency shelter. But it’s still above the $35.9 million budgeted in 2021-22.

West said the city’s budget for the new Homeless Services Center is more than twice that of the old Oxford Street Shelter, at $10.7 million, and the Family Shelter budget also is up.

“It’s a very dire situation,” West told the council Monday night. “As we’ve talked about here, we recently opened the Expo (as a shelter) and reached capacity within a week. Our Family Shelter is full, and the brand-new Homeless Services Center is also at capacity.”

The budget is expected to come back to the full council for a first read and public hearing May 15. Public hearings on the school budget are scheduled for May 1 and 15, with council action expected May 15 and a referendum on June 13.

CLEAN ELECTIONS POSTPONED

The council also voted on Monday night to postpone action on a proposed ordinance establishing a clean elections program to allow for municipal funding of candidates in city races. The establishment of the program was approved by voters in November following a recommendation from the Charter Commission that charged the council with establishing specifics.

The council’s discussion Monday focused on the amount of funding candidates will be able to get and on what timeline.

“This is a ton to go through and try to wrap your brain around,” Councilor April Fournier said. “I’m excited to run as a clean elections candidate. I think it’s a great program, and I’m glad we’re spending time on it. … I don’t think we’re there yet on numbers, but I think we’re getting closer.”