PORTLAND — The Finance Committee was expected Tuesday night to forward a $189 million city budget to the full City Council for approval.

The committee instructed city staff to find $137,000 in cuts to the budget City Manager Joe Gray proposed earlier this month, in order to keep the tax rate, now $17.74 per $1,000 of assessed valuation, from increasing. City spokeswoman Nicole Clegg said some of the $137,000 will be realized from a drop in borrowing costs.

The School Department has been asked to cut $137,000 from its budget proposal, too.

While the proposed city budget includes laying off six employees each in the fire and police departments, residents haven’t expressed concerns to the council during public hearings.

The Peaks Island Council did send a letter to Gray on April 22 asking him to restore $25,000 to a fund set up for transportation and other projects to benefit the island. The fund in 2009 was $50,000, but is proposed to drop to $25,000 in 2010.

In the letter, island council Chairman Michael Richards said the Peaks Island Council Cost-of-Living Task Force is in the process of determining how much more expensive island living is than mainland living. So far, Richards said, the information gathered shows the higher cost of island living is “staggering in both scope and amount” due to transportation and parking costs.

Richards also said in the letter that the $55,000 provided to islanders in the first two years of the fund is “frankly a small fraction of what islanders need, and justly deserve … ” from the city, which “told the Legislature the islands are so indispensable to its future, they cannot be allowed to govern themselves, as the other year-round Maine islands have done successfully for years.”

Richards is referring to an unsuccessful Peaks secession bid two years ago.

City Councilor John Anton said Tuesday morning he thought the Finance Committee would discuss restoring the Peaks Island fund. He said the committee may also add about $20,000 to Creative Portland Corp. funding. 

Anton said he thought those additions to the budget could be made without raising the tax rate.

The committee was scheduled to hold a public hearing and vote on the budget Tuesday evening. The full City Council is scheduled to vote on the city budget May 18.