State budget cuts
could result in increased taxes
By Kathy McCarty
Staff Writer
PRESQUE ISLE — City councilors got a glimpse of how Gov. Paul LePage’s recommended cuts meant to balance the state’s budget — involving revenue sharing, Homestead exemptions and other measures — will impact local taxpayers during a presentation Jan. 23 by City Manager Jim Bennett. If all of the governor’s cuts take place, Presque Isle could be in for a $1 million shortfall of its own.
Bennett said municipalities should have a “pretty good idea how things are shaping up toward the end of February or first of March,” because by that time legislators will have had time to consider LePage’s proposals and their own ideas on balancing the state’s budget. Until that time, Bennett said communities needed to keep in mind cuts to their own budget might be inevitable but that it was just a waiting game at this point.
“At that point (a few months from now), we’ll understand the kind of moves needed to be made within our own budget. Tonight I’m offering a worst case scenario,” explained Bennett. For the purpose of discussion, Bennett based his figures on an average home valued at $80,000.
Using a handout Bennett detailed how LePage’s various cuts in funding would impact municipal finances. Among the items that would directly impact the city would be the governor’s plan to hold commercial excise tax money in Augusta rather than return it to the communities for such use as road maintenance, which would result in a loss of roughly $572,300 over a two-year period, from 2013 to 2015.
“The impact on the average home would be a tax increase of $44.88 per year,” said Bennett.
The loss of revenue sharing funds would create the largest hole in the city’s budget, with a loss of $1,672,634 for 2013-14 and $1,761,334 for 2014-15.
“This would result in a tax increase to taxpayers of $262.33 the first year and $276.24 the second year,” he said. “This could eliminate whole departments (within the city) and not even touch (the shortfall).”
No specific figure overall was provided for what the loss of the Homestead exemption would result in, since not all taxpayers would be affected.
“Veterans and citizens over 65 would still receive the exemption; all others would lose it,” said the city manager.
The Homestead exemption currently provide an average $10,000 deduction off the top for homeowners from a qualified property’s value prior to taxation. If the deduction is eliminated, the average homeowner could see an increase in their taxes of $223.25 per year for the period 2013-15.
“Every home that gets a break would see an increase of $223.25 in taxes. If that part went through, there’s literally nothing the Council could do to cushion for taxpayers. There’s been a proposal to increase the Homestead for veterans and seniors over 65. In some cases, someone under 65 and not a vet would see taxes increase by $223.25, while a senior citizen could see a $500 reduction,” said Bennett.
Benett advised councilors they might be in for a rocky road ahead.
“There’s not a million in little fluffy stuff to remove (from the municipal budget). But you shouldn’t start looking at all the what-ifs just yet. It’s not fun and has caused chaos before, but you should be prepared for what the legislature will do. We should know more in 45-60 days,” said Bennett.
Bennett recommended contacting elected officials as soon as possible.
“We should communicate whatever stance we take with local elected officials. We should be concerned about what the potential impact could be. We should communicate — have on record — that this is not a great idea. If that’s something you want to do, I can prepare something for the February meeting,” said Bennett.
Bennett told councilors he had not included information on the governor’s proposed cuts to the circuit breaker program because it was “hard to calculate.”
Councilors discussed the matter a bit more before authorizing Bennett to draw up something to present to elected officials advising them of how the governor’s proposed cuts will affect Presque Isle and its taxpayers.
In other business, councilors:
• Held the first of two public hearings on amending Chapter 16 — Land Use and Development Code Section XXII — residential office zone (ROZ) – (B) permitted uses and (D) standards and to rezone portions of Academy Street from suburban resident zone (SRZ) to residential office zone (ROZ), with a second public hearing slated for Feb. 4;
• Tabled an appointment to the Sewer District Board of Trustees;
• Heard a request by the Star City ATV Club to authorize connecting to the Fort Fairfield Route, traveling from the CP rail trail, cutting across Parkhurst Siding Road, then traveling up the Johnson Road, across the Ashby Road and along the Ginn Road. Councilors were concerned about the length of road ATVs would be traversing and a dangerous corner on one of the roads and subsequently scheduled the matter for public hearings, with the first on Feb. 4;
• Agreed to support the Star City ATV Club in the application of a municipal grant for $35,500;
• Approved a request to display paintings, currently hanging at City Hall, at the Mark & Emily Turner Memorial Library. The farm-themed murals originally were hung at Northern National Bank;
• Approved figures for overspent budgets for various departments, the most notable being increased costs at the Northern Maine Regional Airport that resulted when Colgan Air filed for bankruptcy; and
• Approved the minutes of the December Audit Committee meeting.
The next Council meeting will be held at 6 p.m. Monday, Feb. 4, at City Hall. For information, call 760-2785 or log onto www.presqueisle.govoffice2.com.
