The Portland city manager is proposing a $285 million general fund budget for next year that would contribute to an overall tax rate increase of 6.2% and pull nearly $9 million from the rainy day fund to account for potential federal and state funding cuts that have left the city in a tough position.

City Manager Danielle West presented her budget Monday night to the City Council, which voted unanimously to refer it to the finance committee for further review after little discussion.

The Portland School Board voted last week to advance a $171.1 million budget to the City Council that included a 5.3% increase in the school portion of the property tax rate. When combined with the proposed city general fund budget, that would mean a 6.2% overall increase in the tax rate.

The budget’s corresponding tax rate will not be clear until the city finishes its property revaluation in August and a new mill rate has been set. And the budget largely hinges on the state Legislature’s decision on whether to slash General Assistance reimbursement, so the proposed budget may shift in the coming months.

West said in an interview Monday afternoon that because the mill rate is expected to go down after the revaluation, taxes for the median homeowner are only expected to rise by 5.6% on the city side.

After West’s presentation on Monday night, Mayor Mark Dion spoke to the council about the need for more General Assistance reimbursement from the state and his hope that the use of rainy day funds might be minimized if the state doesn’t increase GA funding.

“I’m troubled by Augusta. They know all too well that we have delivered a state service,” said Dion. “It borders on immoral that they expect us as a community to meet that challenge, yet they deny us the very financial resources needed to meet that challenge.”

He went on to say that he anticipated there could be changes to the budget as the state considers action on General Assistance reimbursement.

“It’s a jump ball till June,” said Dion. He went on to call the state’s funding cuts an “assault on Portland taxpayers.”

FUNDING CUTS

West and Finance Director Brendan O’Connell said that, altogether, this budget accounts for a $12 million reduction in state and federal funding. He said if it weren’t for those cuts, the city would be reducing its tax rate this year by 4% with the same overall spending.

That federal loss includes a $3 million FEMA grant that had been used for shelter operations.

The draft budget West presented Monday would draw on $8.8 million from the city’s rainy day fund to fill necessary gaps if the state ultimately cuts General Assistance reimbursement, something lawmakers have been debating for months.

Without the use of rainy day funds, O’Connell said, the tax levy would have increased by 15.1%.

“We don’t want to use these funds for ongoing operating expenses; it’s actually concerning. We would much rather see changes at the state level,” West said.

General Assistance money is crucial to keeping the city’s shelter program open, which regularly houses 950 people on a nightly basis and includes the shelter for asylum seekers, the family shelter and the homeless services center. Of those people, 481 are from Maine towns outside of Portland, 203 are from out of state and 284 are from Portland, according to city data.

“We are bearing the brunt of a state problem here,” said West, who added that she will continue to work with Portland’s delegation in the state Legislature to advocate for General Assistance reimbursement until the session wraps in June or July.

Portland has already seen cuts to GA reimbursement over the last few years. In FY 2023, the state reimbursed Portland $30 million for GA spending. This year, the city expects to receive only about $10 million in reimbursement, though its social services have expanded.

West said the city has provided social services in a very “economical way.” West said the city’s homeless shelter operates on about $87 per bed per night, while other municipalities spend more than double that to run similar shelters.

POLICY CHANGES

West is also recommending a number of policy changes to cut spending and rely less on the rainy day fund in the future to make ends meet.

One recommendation is to reallocate opioid settlement dollars to help fund shelter operations rather than using it to build a new methadone clinic and day space on the peninsula.

Another policy change is to move individual asylum seekers from the shelter on 166 Riverside St. into other forms of housing and then operating the family shelter out of the space while closing the existing family shelter. West said that would mean losing about 10 full-time employees, but would save the city about $1.3 million.

The council would have to vote on both of these policy proposals separately from the budget.

West said that she was concerned about what impacts municipal social service cuts could have on life in Portland.

“If we have to rein in these services because we can’t continue to fund it without the assistance from the state and federal government, what does that mean? Where do the people go?” said West.

O’Connell said the city was able to close some of the gap in funding by reviewing projected revenue increases and upping some city fees.

The proposed budget includes a 5% increase in funding to the public library and the creation of a handful of new jobs in the Parks and Recreation department.

O’Connell said that in addition to proposed GA cuts, the cost of health care and county tax increases pose budget challenges too.

The budget will come before the council again in June after it has been approved by the City Council’s finance committee.

“We’ll be waiting to see what happens in Augusta and hoping to reach some sort of resolution with the state,” said West.

VISION ZERO

The City Council also approved a Vision Zero initiative Monday amid concerns over road safety in the city following a string of pedestrian deaths.

The plan, put together by the Greater Portland Council of Governments for the city to adopt, outlines steps the city can take to make the city safer and implements a new goal of having zero traffic deaths in Portland.

The plan includes recommendations to improve crosswalk visibility, to build protected bike lanes, and to conduct an analysis to identify areas with high crash risk.

“A resolve without intentional follow up is not enough to meet the moment,” said Andrew Zarro, director of the Bicycle Coalition of Maine, during public comment. He spoke in favor of the initiative but urged the council to keep momentum going after passing it.

The council unanimously approved the adoption of the plan with little discussion.

Councilor Kate Sykes spoke in support of the plan, calling it one of the most important things the council has done in years.