n-statebudget-011509 State budget puts pressure on towns
Towns are facing grim financial realities under the governor's budget proposal for fiscal years 2010-2011.
After cutting $80 million in state spending in November for fiscal year 2009, Gov. John Baldacci continued the cuts and accounts for a revenue decline of $140 million in his 2009 Emergency Supplemental Budget.
Under his proposal, in fiscal 2010, the majority of these budget changes have been extended.
In Freeport, Town Manager Dale Olmstead said the town could lose from $225,000 to $230,000 in state reductions based on the new budget.
Olmstead said the loss in revenue sharing to Freeport would be nearly $175,000 of the $635,000 the town receives. With 10 percent cuts in tax rebate programs, state park fees, state road aid and other state programs, he said the total loss will reach $225,000.
"Our options include increasing the tax rate or absorbing these cuts," he said. "There are a large number of unknowns."
The formula to cut funds for education will affect Freeport and neighboring towns with high property values, he said.
"Freeport sends tens of millions of dollars to Augusta and receives a return of little to none of that to the town," he said. "The state is either unwilling or unable to deal with tax reform."
In Yarmouth, Superintendent of Schools Ken Murphy said one way to balance a $360,000 curtailment in state aid is to stop all spending.
"We can get half of the money by stopping spending, and the other half will have to come from reserve funds, special education funds and retirement reserves," Murphy said.
He said it is unprecedented to hear of such massive cuts during the middle of a school year.
"We usually can plan ahead, but this leaves us with few options," he said. " When the budget is passed, we'll have a better idea. Things can always change."
Cumberland Town Manager Bill Shane said "revenues for road funding will be reduced, and we expect revenue sharing will be reduced as well, which is a significant source for us."
Cumberland generally gets about $780,000 through revenue sharing; every $70,000 cut has a 1 percent impact on the town's operating budget, Shane said. If the town doesn't make any changes to this year's budget and uses it for next year, it's looking at a 5 percent increase in costs, primarily because of lost revenues from excise taxes and building permits. That cost increase doesn't take revenue sharing into consideration.
But the town never budgets that full $780,000 since the Legislature often cuts it, he said, "so we already buffer in a cushion."
Shane said he conservatively expects $50,000 to $100,000 less from revenue sharing, but said he won't know the exact amount or its impact until the Legislature passes the budget.
"We expect it to get worse before it gets better," he said.
In Falmouth, Town Manager Nathan Poore said he and Finance Director John McNaughton hadn't yet finished going over the possible impact the governor's budget would have on the town.
"But based on an assumption of a straight 10 percent reduction without any other factors, there will be an $85,000 loss in revenue to Falmouth," he said.
On the school side, although much is still uncertain, there is a feeling that it could have been worse, Falmouth Superintendent George Entwistle III said.
"We were very nervous that things were going to be quite terrible and unmanageable; anything short of that is probably good news," he said. "We've tried not to panic and to know that we do a good job managing the resources we have and we continue to seek out efficiencies."
• Inside: Cumberland faces a nearly $282,000 budget shortfall, while North Yarmouth's is in good shape. Page 4.