BANGOR, Maine — City Manager Edward Barrett has asked all of his department heads to draft two scenarios that would decrease their proposed budgets for next year by 2.5 percent and 5 percent.
As they continue discussions over the 2010 fiscal year budget, Bangor city councilors face increasingly difficult choices, particularly as the amount of revenue sharing from the state continues to drop.
When initial budget talks began last month, Barrett anticipated a 10 percent decrease in revenue sharing from the state. The most recent economic forecast out of Augusta, however, suggests that drop will be closer to 15 percent.
That reality, combined with a majority of councilors’ wishes to keep the city’s tax rate flat at $19.05 per $1,000 of assessed property valuation, has created a hole.
“We’re planning ahead,” Barrett said of his request to departments to trim their budgets. “Each department knows best where potential cuts can be made, however difficult it may be.”
The city will not officially vote on the 2010 budget until early June — which would be after the state completes its budget — but cuts almost certainly will be made. It’s just a matter of where.
“There has never been an economy like this in my lifetime,” Councilor David Nealley said. “We’re so dependent on state and federal programs and funding; it doesn’t leave a lot of flexibility.”
Barrett presented councilors early last month with the first draft of the 2010 budget, which showed an overall increase of about 3 percent, mostly due to cost-of-living and insurance increases for staff members.
That proposal would have raised the city tax rate from $19.05 to $19.60, something councilors agreed was not acceptable. While some supported a small increase, up to $19.30, most wanted to keep the rate as close as possible to the current number.
Since the proposed budget included almost no additional program or personnel cuts, the only way to make up the gap seems to be with personnel, Barrett said.
At a meeting last month, Councilor Geoffrey Gratwick addressed what he called the “elephant in the room.” Why not forgo cost-of-living increases?
Nealley brought the idea up again at a budget workshop last week, after councilors were told that would create an additional $750,000 savings.
“It should be an area to consider,” he said.
The potential deal-breaker to that idea, Barrett explained, could come from unions. The city works with numerous labor groups on salaries and benefits for employees. In order to freeze wages, Bangor would need the support of its unions.
The city manager also has cautioned that more than two-thirds of municipal employees are in the police, fire or public works departments — three areas that no one wants to see reduced.
A 2.5 percent cut across all municipal departments would save about $600,000, and a 5 percent cut would free up more than $1 million.
However, Barrett said, the city also needs to seriously prepare for the possibility that a citizen-led referendum seeking to cut the state’s automobile excise tax in half might pass.
If voters approve the excise tax referendum in November, the law would go into effect in January, or halfway through the 2010 fiscal year. The city has projected an annual loss of $1.8 million in excise tax revenue under the proposal.
Councilors have said that if the referendum were to pass and the excise tax were halved, the city would have to make up the difference through personnel cuts or higher property taxes.