BREWER, Maine — The total combined draft budget is going up less than 1 percent, but a reduction in the tax base and increased costs for education and county taxes means a projected property tax increase, city officials are predicting.
“It’s a very unusual year,” Finance Director Karen Fussell said at the start of a Friday meeting in the office of City Manager Steve Bost, held to explain the high points of the city budget that will be presented to the City Council on Monday.
“When you consider the school’s budget request, the county tax increase of 3.7 percent and the city’s reduced tax base, you end up with a need to increase the mill rate by $2.06, based on the budget that will be presented on Monday,” Fussell said.
After a decade of no property tax increases, the mill rate increased by $1.04 this year to $18.99 per $1,000 in assessed property values. Under the proposed fiscal year 2013-14 budget, the tax rate would increase to $21.05.
Brewer’s proposed municipal budget for fiscal year 2013-14 is approximately $12.19 million, about $61,880 or 0.5 percent less than this year’s budget, and the county budget is $878,532, an increase of $31,042. The first reading of the $20.3 million preliminary school budget, with an increase of $315,489 or 1.6 percent, was presented last week.
School leaders, who have presented a “ worst case scenario” budget, have announced they plan to cut 14 teachers and that they need approximately $7.4 million from residents — an additional $1.2 million or 20.5 percent more compared to this year — to pay for education.
The school department’s budget request increase is actually higher once tax increment financing, or TIF, funds are added in, Bost said.
The city is contributing around $71,100 in TIF funds for the public stage at the Brewer Community School for fiscal year 2013-14, which means the school department is asking for slightly more, he said.
“We’ve tightened, consolidated and restructured [to create savings for the city],” Fussell said.
A city position was eliminated last year and when the fire chief retired, the police chief took over the reigns and became the public safety director for both departments. That saved the city about $40,000, Bost said.
The city did see a $10 million decrease in its taxable property base, due to a couple large abatements, a $4 million error by a taxpayer last year that has been corrected this year, and the Ellen Leach Home gaining tax exempt status, the city manager said.
The combined city, school and county budget is $33.1 million for next year, about $284,651 or 0.90 percent more than the 2012-13 budget.
Dramatic revenue cuts and cost increases included in Gov. Paul LePage’s biennial budget that are yet to be settled in Augusta have stymied the budget process, Fussell said.
The city decided to only include one element from the governor’s plans — the shift in teacher retirement costs — in their projected fiscal year 2013-14 budget, and will make adjustments as legislators finalize the state’s budget, she said.
“It’s very challenging trying to figure out how to proceed given the uncertainties,” Fussell said.
Brewer would lose approximately $1.28 million, broken down into $898,000 in revenue sharing funds; $106,344 from BETR; $23,733 in tractor-trailer excise tax revenues; and increased teacher retirement costs of $255,000, if the governor’s budget is approved as is.
If those cuts are made in Augusta, city leaders would need to reassess the budget, Fussell said.
“The worst case scenario is significant,” she said. “It’s 10 percent of the city budget — that’s drastic.”
Both the school board and city budgets will be presented Monday at the annual joint meeting, which begins at 6 p.m.
The second reading of the school budget will take place at the panel’s June 3 meeting, school department finance director Gretchen Gardner said Friday.
“Because things are so up in the air with the city of Brewer, we’re just talking about the budget on Monday,” she said. “We may walk away from that meeting and they may ask us to make changes to our budget.”
If the school board is asked to make changes, “that will be up to the council,” Bost said.
The school budget must be approved by the council, and then by residents by referendum vote in order for them to be made final.