SCARBOROUGH — The Town Council on Wednesday unanimously approved the first reading of a $68.5 million municipal and school budget for fiscal 2011.

But councilors indicated they are still likely to make changes in the spending plan. They scheduled a public hearing on the budget for April 28 at 7 p.m.

The proposed budget represents a 5.2 percent decrease from this year, despite a 4.5 percent increase in taxes.

If the council approves the budget at a second reading in May, municipal employees will receive a 2 percent cost-of-living salary increase.

The school budget includes the elimination of 34.8 jobs, and institutes a pay-to-play athletic and extra-curricular program.

“This is just the first reading. The Finance Committee has not yet completed their review,” Councilor Judith Roy, chairwoman of the Finance Committee, warned. 

The Finance Committee will continue to review the town manager’s recommended budget, meet with department heads, and make a recommendation to the full council about where changes can be made before the final reading on May 5.

“I’m looking to see the 4 1/2 percent (tax) increase come down,” Councilor Michael Wood said. Several other councilors agreed.

Some residents asked the council to consider a zero percent increase.

“No one raised my wages this year,” said Dave Green, of Beech Ridge Road. 

The council also unanimously approved a collective bargaining agreement that Town Manager Tom Hall negotiated with the Scarborough Police Benevolent Association. The contract includes a 3 percent wage increase in fiscal 2011 and a 3 percent raise in 2012.

It also includes a no-layoff clause, which would prevent the council from laying off police union members in 2011. Each 3 percent increase equals approximately $60,000. 

“Frankly, the town didn’t have much leverage,” Hall said.

He explained that the Police Department went without a wage increase last year, and that a 6 percent increase was originally included in the budget. The union was willing to spread that over two years in exchange for the no-layoff clause.

While several councilors expressed concern that agreeing to this would tie their hands when it’s time to make budget decisions and pushed to table the measure, Hall said he could not guarantee the deal he was presenting would be the same in several weeks.

“It would violate the spirit of this,” he said. 

The 3 percent wage increase is figured into the draft budget presented Wednesday.

The municipal budget also includes $441,000 for road rehabilitation and improvement, including culvert replacement at Martin Avenue and Broadturn Road. It also eliminates the annual free large-item drop-off day at the transfer station. The transfer station will still take large items for a fee.

Hall also proposed that $150,000 from the Scarborough Economic Development Fund be used to fund the Scarborough Economic Development Corp. During a Finance Committee meeting last week, SEDCO Executive Director Harvey Rosenfeld said the organization had been instrumental in bringing the Maine Health Project to the former Orion Center, and emphasized that maintaining the separation of the town and SEDCO is vital in gaining the trust of businesses that may be considering moving to the area.

“The confidentiality is important. We don’t come under (Freedom of Information laws). We can do encouragement very quietly. We’re working for both the developer and the town without working for either of them,” Rosenfeld said.

SEDCO would have been funded for the next 20 years by proposed development along Haigis Parkway, however when that development fell through, so did the organization’s financing.

If the council approves the appropriation, there will be $45,000 remaining in the fund, not enough to cover SEDCO’s expenses next year.

Emily Parkhurst can be reached at 781-3661 ext. 125 or eparkhurst@theforecaster.net

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