City will face serious challenges in year ahead
In the last week, property taxpayers in Presque Isle received the accumulation of the most frustrating budgeting exercise that I have seen during my 32 years in local government in Maine. The property tax rate went up by
$1.20; the first increase in the last four years. It was not supposed to be that way. When the budget was adopted in December, the Council delivered a budget that would not increase taxes.
Even the casual observer of local government knows that the entire increase on the municipal side was driven by state government. As a reminder, the city operates on a calendar year budget. The adopted city budget did not require a property tax increase. By the time the gavel rested in the Maine Capitol building, $458,533 of revenue sharing owed to you, the property taxpayers, was snatched away to be used to pay state bills. The Council went to work and reduced expenditures or increased other revenue projections to cover $333,533 of this state government grab. Deemed that further reductions would be harmful to service levels, the balance of $125,000 was reluctantly passed on in terms of a property tax increase of $0.25.
The State operates on a July to June budget year and requires school systems to do the same. In June, the voters of SAD 1 approved a higher education budget (mostly driven by state budget issues). In Presque Isle, City Hall will collect an additional $411,449.85 during 2013 (over the $5,379,470 collected in 2012) from property taxpayers this year. This increase resulted in the tax rate going up $0.82. The remaining $0.13 increase was due to a higher Aroostook County property tax bill (cities and towns collect that tax as well for the counties) and a drop in the total valuation of the city.
As frustrating as this process was, it is essentially behind us. While we still are working on some details the major task ahead is to focus on the 2014 budget process. The balance of this column focuses on that task.
The state adopts its budget for a two-year period. Communities across the state will have more information and time to consider budget alternatives for their next budget cycle now that the state budget is adopted. While this is helpful every community knows that once again, even more revenues intended for property taxpayers are being used to pay state bills in the second year. In Presque Isle, we will receive $220,000 less in 2014 than in 2013.
The mid-June resolution to the state reductions required quick decisions. As a result, a number of one-time opportunities were used to close the budget gap. In total, $231,815 of these approaches were used. In 2014, those will not be available.
Before even lifting a single pencil to start the budget process, it is known today that property taxpayers will be looking at $863,265 of increases ($411,450 in increased SAD 1 assessment, $220,000 in further reduction in revenue sharing, $231,815 of one-time solutions to the revenue sharing raid in 2013). Assuming a flat city budget, flat county budget and a flat school budget, the tax rate would have to go up another $1.69 in 2014.
Over the last few years, your municipal leaders have worked hard to keep taxes flat. We have eliminated 15 percent of full-time positions, creating a net savings of nearly $1 million annually in payroll and benefits. Those eliminations occurred at all levels of the organization, including three department head positions. We have sought organizational efficiencies and strive to find alternative ways of delivering services. With rare exception, the efforts have worked, keeping taxes flat for three years and seeing minimal impact in the service levels.
As we approach the budget preparation for 2014, it is unlikely that we will be able to reduce our workforce and maintain the services the community desires. We will not be able to find non-employee expenditures that will obtain the savings. Hence, the City Council will be forced to make decisions that will require the elimination of valued services in order to avoid or minimize the property tax increase outlined above.
There will be no right answer to the 2014 budget. Each of you have your preference regarding which services you desire and are willing to pay for. Each of you have a list of things that we do locally that you have no desire to pay for and would want eliminated. For every person that supports a program or service, there is another that would prefer it not be funded.
The budget challenge that awaits the City Council and community may define its reputation for many years. Will Presque Isle engage in this very difficult discussion created by the State of Maine with respectful and substantiate dialogue based on the issues and driven by the facts? Or will they spiral into an elevated series of personal attacks lacking pride, purpose and driven on misinformation? Time will tell but clearly the challenges will not effectively be resolved without the active, positive participation of many.
Martin Luther King, Jr. once said “the ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” Undoubtedly, we are facing challenging and controversial times. Presque Isle residents have a great deal of pride in their community and the love they feel for their hometown can stir passion when discussing issues. City staff and residents alike will have their measure tested many times over the upcoming budget season. As always, I will expect positive and factual discussion from our staff. If history is the predictor of the future, then I have little doubt that you will also expect the same from us as well as each other.
City Manager Jim Bennett can be reached at 760-2785 or via e-mail at jbennett@presqueisleme.us.
