FALMOUTH — While the School Department is asking for a 6.3 percent increase in taxes to cover the first interest payment on the new elementary school bond, the municipal budget will not contribute to a proposed increase in property taxes.

Town Manager Nathan Poore unveiled his $10.7 million municipal budget this week. It represents a 2.6 percent increase over last year.

The increase is offset by an increase in revenues, including an additional $70,000 in state revenue sharing, and a reduction in expenditures, meaning the proposed budget would not impact the tax rate.

Poore’s proposal includes a 2.5 percent pay increase for municipal workers. Town employees received a 0.5 percent pay increase last year and a 1.5 percent increase the year before, but have seen the cost of their contribution to health insurance coverage increase by 2.5 percent at the same time.

Thanks to a reduction in requests for general assistance, Poore’s budget contains a cut of $20,000 in that program, which has grown significantly the past five years.

“We’re seeing the caseload drop, particularly on the housing side,” Poore said, adding that the decrease in requests for rent assistance was primarily responsible for the lower general assistance budget.

“It’s trending down,” he said. “Overall, that’s generally good news.”

The town will also have to take over maintenance of the Plummer-Motz and Lunt school buildings when the School Department vacates the buildings this summer. That boosts the town’s expenditures by $75,000, the largest increase in the budget.

That increase, in addition to a $20,000 increase to cover the cost of street lights that were removed, then added back to this year’s budget, are offset by an overlay from taxes collected last year and added valuation of homes.

The schools’ $26.2 million budget calls for a 43.8-cent increase to the tax rate, despite a $70,000 decrease to the total operating budget. The first interest payment on the new elementary school bond is responsible for the proposed tax increase. A proposed all-day kindergarten program, projected increases in fuel costs, and a $1.3 million reduction in state general purpose aid are all offset by reductions in personnel and other cuts.

“We’ve reduced budgeted operating expenditures nearly $600,000 in the past three years, but the loss of state revenue this year we simply could not absorb again without severely impacting programs,” Finance Director Dan O’Shea said.

The school has seen a more than $2.1 million reduction in state aid in the past three years and has not requested a property tax rate increase since 2007-2008. The municipal budget has not had a mil rate increase since fiscal 2009, when it went up by 5 cents.

While the school budget will go out to a referendum vote on June 7, the Town Council will make the final decision on the municipal budget. A public hearing on both of the budgets will be held April 25.

Emily Parkhurst can be reached at 781-3661 ext. 125 or eparkhurst@theforecaster.net. Follow her on Twitter: @emilyparkhurst.