SOUTH PORTLAND — City Councilors on Jan. 4 decided to build a budget for the next fiscal year that does not increase the local tax rate.
Since non-property tax revenues are declining and operating costs are increasing, municipal and school services and staff, which accounts for more than 80 percent of the budget, will probably face significant cuts.
The council’s budget guidance was delivered at the end of a sometimes contentious, nearly two-hour meeting with the School Board. Much of the tension surrounded the council’s focus on school spending.
State law would allow the city budget to grow by as much as 2.75 percent next year. But councilors said the impact the economy is having on residents is too great to increase that burden with higher taxes.
Superintendent of Schools Suzanne Godin said that even under the best-case scenario, the schools could lose $1.4 million in state funding next year. Couple that with expense increases and positions temporarily funded by stimulus money and the district could face a $2.1 million to $2.3 million budget deficit to maintain the status quo, she said.
Godin said 20 to 30 School Department jobs could be at stake.
On the municipal side, City Manager Jim Gailey said the city would face a $1.3 million budget deficit next year if it wants to maintain the current level of services without raising taxes. Gailey said the city is also losing revenue from the state.
Meanwhile, insurance costs are expected to increase by at least 10 percent and the price of heating fuel is again inching its way up.
City Finance Director Greg L’Heureux told councilors that this year’s budget process will make last year’s difficulties, when the layoff of five employees sparked protests, look like “peanuts.”
“This year’s budget is going to be far, far worse than last year,” L’Heureux said. “We’re talking significant programming cuts.”
City Councilor Tom Blake was among those who advocated for no tax increases next year. Blake challenged municipal and school leaders to make tough cuts, while using surplus funds to fill any holes – a method that Godin and Gailey said would only create future budget deficits.
“Our municipal taxpayers cannot handle an additional burden,” Blake said. “When people are already dipping into their reserves, how can we ask them to dip in further?”
Blake said he hopes that the public will let him and other councilors know what programs and services they value early in the budget process.
“I understand completely what this will do to the community,” he said.
Tensions rose when some councilors focused on the schools, which account for roughly 65 percent of city spending.
South Portland taxpayers shoulder more school costs than many other communities, because the city has more elementary and middle schools than the state funding formula recognizes. The district also spends more than the state minimum on athletics and nurses.
Councilor Patti Smith questioned the nature of the current school budget freeze and whether professional development and conferences were included, while Councilor Rosemarie DeAngelis zeroed in on administrative and athletic costs.
“I’m going to have to step in here,” School Board Chairman Richard Carter said. “I don’t think it’s appropriate for the council to get that deep into the (school) budget.”
“It’s important for me to have the information,” DeAngelis replied. “I need the small pieces to put together the whole picture.”
Mayor Tom Coward tried unsuccessfully to convince the council to increase taxes. Coward argued that deferred maintenance of city infrastructure costs the city more money in the long run and further cuts would only make it worse.
“We need to make a down payment on catching up with some of this stuff,” he said.
Coward said it is “false economy” to cut the budget beyond what is sustainable.
Gailey said he would present councilors with possible budget cuts, but the council must decide what services to eliminate.
Once the guidance was set, Coward called upon his fellow councilors to be prepared to defend administrative officials once cuts are made and people are upset.
“What we went through last year laying off five people was nothing,” Coward said. “I’ll take the heat for laying people off and I think the rest of the council will have to as well.”
The council and the board said they want to meet again in February, in case the budget guidance must be adjusted.
Randy Billings can be reached at 781-3661 ext. 100 or firstname.lastname@example.org