With uncertainty on revenue it will get from the state, Ellsworth lurches into budget season

Posted May 24, 2013, at 5:18 p.m.
Last modified May 25, 2013, at 12:28 p.m.

ELLSWORTH, Maine — An initial budget proposal for the city has remained unchanged through four City Council workshops in the past month, stuck in a holding pattern while the city awaits word on revenue sharing and school funding from Augusta.

“The state hasn’t made any decisions about cuts to schools, funding to municipalities, the homestead exemption, excise tax,” City Manager Michelle Beal said on Friday. “So much of what we do depends on other people’s budgets.”

Gov. Paul LePage proposed a biennial budget in February that would end revenue sharing for towns and cities, and targets also have been drawn on Maine’s Homestead Tax Exemption and school subsidies as a way for Augusta to balance its budget.

Because the state government has yet to pass a budget, municipalities are looking at huge variables in balancing their own accounts. Deep cuts at the state level could have a big impact on town revenues — Gary Fortier, chairman of the Ellsworth council, estimates that LePage’s plan would mean a $700,000 reduction in Ellsworth’s piece of the revenue-sharing pie.

So the council waits, with Beal’s April budget proposal in hand. The city must pass a budget by July 1 or else adopt a “continuing resolution” to fund city government at fiscal year 2013 levels until a decision is made in Augusta.

Excluding capital improvement projects — which are most likely to be cut by councilors in an attempt to minimize a potential property tax increase — Beal’s first pass at a budget sets municipal appropriations for fiscal year 2014 at $8.8 million. That’s about $240,000, or 2.8 percent, higher than last year, although a portion of that increase will be funded by grants that cover three firefighter positions.

Much of the remaining increase is simply a result of the increased cost of government each year, such as rises in the price of property insurance and raises for unionized employees.

Nearly every city department flatlined its budget, Beal said, with the exception of capital improvement project requests. The proposed budget line for capital improvements is $1.08 million, up from the approved $828,000 last year.

Nearly half the capital improvement request is for road improvement, for which Beal’s budget requests $500,000. Ellsworth decreased the road improvement fund last year and has taken on additional responsibility for state roads within city limits.

There also is a capital improvement request of $130,000 for the library, which would allow for an expansion and new security system, as well as refurbished furniture and upgrades to the heating and cooling system.

If the councilors accept the budget as proposed — which Beal said is unlikely — it would mean a property tax rate increase of 43 cents per $1,000 of property, from $15.45 to $15.88, according to Beal’s figures. For the average home in Ellsworth, worth about $150,000, that’s a tax increase of about $65.

However, this initial budget proposal was crafted before Ellsworth’s expected contribution to Regional School Unit 24 was known. The RSU has bumped up the city’s share of education by $375,000, pushing Ellsworth’s appropriation for the district to more than $10 million.

The City Council will meet next to discuss the budget on June 6, although until the Legislature decides the fate of state revenue sharing and other state budget lines that affect municipal planning, the city will be left calculating with unknown variables.

Fortier said that while there are a lot of questions, he’s not pulling his hair out just yet.

“I’m not frustrated,” he said Friday. “I’ve been here since 1992. I know the process in Augusta. Let’s not worry until they make a decision. We may have some very tough decisions to make at that point, but we can’t worry until something gets done in Augusta.”

“We’re just sitting back and waiting,” he said.

Follow Mario Moretto on Twitter at @riocarmine.

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