As mayor of Portland, I have a duty to call out the financial costs that underscore residents’ expectations of city services – and the potential tax consequences of preserving these levels of service or adding new services and resources.

While we all want more and better, the stark reality of the city and school budget is one of great concern. Which forces me to ask: Can we continue, financially, to be all things to all people? Unless city taxpayers are willing to assume substantial property tax increases, I don’t think we can.

Municipal budgets are complex, hard to understand, and they don’t attract as much public attention as they should. But it’s critical for taxpayers to realize that a budget reflects the city’s priorities. A budget is a service contract with our residents, which is why it’s so important for the public to engage in the process to review and approve a proposed budget.

This year, Portland faces many financial strains that are either fully or partially out of our control. At the top is a potential decline in Portland’s share of General Assistance funding from the State of Maine. Last year, the city received a $7.4 million “one time” payment from Augusta to help offset the significant costs resulting from the increased demand for municipal social services.

Our capacity to maintain a viable community safety net, to address the needs of the unhoused, the chronically mentally ill and individuals trapped by substance use disorder, is at risk. Absent the Legislature’s support for added General Assistance dollars, the potential shrinking of that safety net has a predictable budget outcome. A loss of $7.4 million in state funding represents a 50-cent increase to our municipal mill rate. I cannot ask Portland taxpayers to continue to respond to these emerging social service needs and the resulting tax burden alone without a continued commitment by Augusta to appropriate an equitable investment of state dollars into our municipal budget equation.

A city budget has to anticipate and then react to the terms of a school budget.

In the a recent address, the chair of the Board of Education announced the school budget was facing an estimated deficit of at least $10 million due to the expiration of one-time COVID-19 relief funding, lower state education aid and debt service from the four schools’ renovation bond. These budget questions and possible solutions will be addressed in joint meetings between city and school finance committees, beginning in March.

The financial shadow of COVID also remains with the City Council, as we consider the consequences of the expiration of one-time American Rescue Plan Act funding which helped us recover municipal revenue losses during the height of the pandemic. Adding to deliberations will be the hard reality of increasing health insurance costs, which are trending above 50% through the first six months of this fiscal year. Last year’s costs rose 10.3% and if the FY25 health insurance budget rises by another 10%, that would be an approximately $2 million increase to the tax levy.

Further complicating Portland’s financial position is the increased State of Maine valuation of our residential and commercial properties, rising from $14.79 billion in 2023 to $16.48 billion in 2024, an 11.5% increase. While it’s exciting for many to see Portland’s growth, this expansion of economic value has tangible negative fiscal impacts on our budget – our share of Cumberland County tax increases, we receive less state education subsidies and less in expected revenue-sharing from the state.

If it were not for the City’s Tax Increment Financing (TIF) programs, our state valuation would be significantly higher, which is why it is essential to continue to carefully manage the City’s three TIF districts to ensure we shelter increases in the value of targeted property from being captured by the state valuation process.

Other budget pressures also include continued debt service on our 2001 pension obligation bond, which will rise $1.25 million in FY25, as well as continued city staffing vacancies, which triggers overtime costs, and rising labor costs.

While I recognize my role is to provide guidance in the preparation of the budget, I need residents to engage in the process of helping shape the budget by providing input and feedback.

There is a political saying that announces we get the government we deserve. Apathy has consequences. Without public participation in the budget process, we might all get the government we cannot afford.

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