It’ll be a “dance,” says one Scarborough official, but the town is hoping to come up with a new budget that keeps property taxes flat and services sharp despite a downturn in revenues and maybe a bigger one to come.

Among the possibilities: freezing municipal wages, limiting business trips and laying off employees.

“We’re doing everything we can to control fixed costs,” said Scarborough Town Manager Tom Hall. “My mandate from the Town Council was to not have an increase in the mil rate, and to do that is going to be a challenge.”

The town does not have any figures for next year’s budget and does not know if it will be facing a deficit, Hall said. The current municipal budget is $21.5 million.

But one thing appears certain: The town will be hit with a loss of excise tax. In the face of uncertain state and national economies, Mainers are registering older and less expensive cars, Hall said.

In 2008, Scarborough generated about $4 million in excise tax. Officials don’t know yet how much the town could lose, Hall said.

Spending cuts look inevitable.

“There’s only two ways to really make a difference,” Hall said. “You can either increase your revenue, which isn’t very popular, or you can reduce your costs. Now is the time I think we need to be part of the solution and not to worsen the problem. The best way we can do that is to not raise taxes.”

Scarborough has seen steady growth in its excise taxes during the past 10 years, Town Council Chairman Michael Wood said. That source of revenue is the second major source of town revenue besides property taxes, Wood said.

The town will look at cutting services to make up for the revenue loss, Wood said. What services will be cut is not known yet, he said.

“We are hoping to maintain the status quo, but it’s bad out there,” Wood said. “The council wants to respond in a matter that’s responsible and is reflective of the challenges we are facing.”

Also throwing a wrench into the budget process is a possible November referendum that proposes cutting the excise tax by up to 40 percent, Wood said.

The citizens’ initiative needs 55,087 valid signatures; legislative officials said they believe the petition has more than 70,000. Deputy Secretary of State Julie Flynn expects the certification process to be complete by Feb. 23.

On a new vehicle, the excise tax rate is $24 per $1,000 of value based on its list price. The tax drops as the vehicle depreciates; for cars six years old and older, the tax is $4 per $1,000. All 492 Maine municipalities collect 100 percent of the excise tax received in their town, Hall said.

Without knowing what voters will do in November, Scarborough is trying to create a budget that could be hit harder come January, Wood said.

“That’s difficult,” Wood said. “That’s going to be a dance and that’s going to be hard.”

Cape Elizabeth was already expecting a $175,000 loss in excise tax revenue as it braces for an overall $500,000 budget deficit for 2009-2010, Town Manager Michael McGovern said.

He said he understands what Scarborough leaders are facing and that a loss in excise tax revenue of any size would hurt the maintenance of roads and snow removal for any Maine municipality.

“If the excise tax decrease passed, it would be devastating,” McGovern said. “It limits flexibility to address the dollars to the things that are really higher priority for citizens. Excise tax is the equivalent of paying for all the work we do on the roads.”

Hall said he is anxiously awaiting more details about President Barack Obama’s $827 billion stimulus package over which U.S. Senate leaders are currently haggling.

Maine could receive hundreds of millions of dollars from the bill that could trickle into local municipalities, temporarily aiding their potential budget problems, Hall said.

“It could help, but the word of caution is that it may put the finger in the dike and there could later be a reckoning day,” Hall said. “My attitude is that we need to be real cautious on how we use those short-term fixes.”

Hall said there is some good news facing Scarborough budgeteers: a potential surplus at the end of the current budget year.

“We’re going to make budget for this year,” he said. “We’re right on budget for this year and part of that is (former Town Manager) Ron Owens and the council last year were appropriate in understanding the revenue challenges that were waiting.”

Hall said he hopes to have more concrete numbers ready for the public by mid-March. The Town Council will hold a public hearing about the budget to ascertain residents’ priorities in spending and revenue cuts, Hall said.

The council is expected to have the first budget reading on May 6.

“We still have five months on this year,” Hall said. “We are closely tracking our revenues and with equal vigilance looking at the expenditures side. We have control on how much we spend.”