Saco’s preliminary $38.6 million municipal budget proposal for the 2027 fiscal year represents about a 10.6% increase over this year’s spending plan but will not require a local tax increase, city officials say.

The proposal, $3.7 million more than this year’s budget, would not change the mill rate for the city’s portion of the budget, even though the county, school and city budgets have all gone up, City Administrator Ryan Pelletier said.

Pelletier pointed to other changes to within the property tax equation — namely, rising state and local valuations of Saco properties — for the steady mill rate.

If the plan is adopted as presented, the new mill rate would be $14.20. That means that the owner of a home priced at the median $486,000 would pay $6,901 in taxes annually.

The municipal budget is still in the early stages, Pelletier said.

“This is just the start,” he said. “We have quite a bit of work throughout April and May to finalize the budget.”

COMBINED BUDGET OVER $88 MILLION

The combined operating and non-operating budget proposal is $88.2 million, a $7.7 million, or 9.6%, increase over this year’s budget.

The operating budget funds the city’s direct day-to-day expenses, while the non-operating budget includes other obligations, such as local tax revenue needed for county taxes and the school department, debt service and capital funding.

The local share of school costs in the non-operating budget is $36.2 million, Pelletier said. The overall school expenses are not reflected in the combined budget because the schools also have their own revenues that partially cover their expenses.

SALARIES, NEW POSITIONS DRIVING INCREASE

The largest cost drivers for the budget include salaries, cost-of-living adjustments and new positions, Pelletier said.

Other impacts include software maintenance, general assistance, solid waste disposal, and property and liability insurance premiums.

The budget process is ongoing, Pelletier said. Throughout the month of April, the City Council will hear budget presentations from local organizations and entities, and in May, a public hearing will be held ahead of the budget adoption by the council.

“Public participation is a really important part of this process,” Finance Director Samantha Bryant said.

Councilors did not discuss the budget during Monday’s meeting, but Councilor Tricia Huot expressed her approval.

“The mill rate staying the same is excellent,” she said.