HOULTON, Maine — Town finances have been on the minds of municipal officials for several months, especially since the revenue the town counts on as part of its budget has decreased while a nationwide recession seems to persist.
Last month, Town Manager Doug Hazlett said that even though the town was spending well below what it had budgeted, the municipality still saw a significant drop in revenue because of the poor economy.
At the time, Hazlett suggested making spending cuts to its 2009 budget. Town Councilors agreed and made $75,000 in reductions.
Town officials also say they are concerned about potential decreases in state revenue sharing to towns in the future.
That concern prompted Hazlett to give councilors and residents an update on the municipality’s fiscal forecast during a meeting earlier this week.
The manager said 88 percent of the town’s revenue comes from sources such as property and excise taxes and revenue sharing. He added that revenue sharing and excise taxes are heavily affected by the economy.
At this point, Hazlett said, the town is seeing a decrease in finances through revenue sharing but a slight increase in money generated through excise taxes.
While the town’s spending is under budget at this point, revenue sharing is expected to decrease next year. Hazlett said that the town could lose between $500,000 and $600,000 in revenue.
He noted that many factors, including the price of winter fuel oil, could affect the coming budget.
The biggest “wild card,” he said, is “what voters want to do with the excise tax” referendum question. It will appear on November’s ballot for a statewide vote.
The question seeks to cut excise taxes on newer and energy-efficient vehicles. If approved, it would essentially cut the rate of the municipal excise tax by an average of 55 percent on motor vehicles less than six years old. It also would exempt hybrid and other alternative-energy and highly fuel-efficient motor vehicles from sales tax and three years of excise tax.
Excise tax is an annual tax that must be paid when registering a vehicle, in the town where the owner lives. The town that collects the tax can use it as revenue toward the annual town budget.
While Hazlett acknowledged that “people want extra money in their pockets,” he felt that voting to approve the excise tax question would “take money right out of our community.” He reiterated that the town relies on excise tax money as part of its budget.
Losing such revenue, he said, would be a huge setback for town government.
“It could do serious damage to our revenue and our ability to provide services,” said Hazlett.
Councilors also expressed concern about the impact of the Taxpayer Bill of Rights referendum, commonly referred to as TABOR II. If approved, it would set limits on state and municipal budgets.
Hazlett said that the town will continue to monitor the revenue situation and the potential impact of the referendum questions.