Budget Committee 3/18 Meeting Summary

The Budget Committee meeting on March 18 began with a summary of the budget by City Manager Steven Buck and Superintendent of Schools Matt Nelson. The Committee had asked for a tax rate calculation sheet, showing the change in the proposed 2021-2022 budget as opposed to last year’s, with the percentage as well as dollar amount change.

Since the assessors’ work is not finished yet, Mr. Buck used what he described as “a very conservative number” of $80 million increase in the city’s total property valuation to make his calculations. This would represent a 4.93% increase in valuation over the prior year. The York County budget has not been set yet either, so at this point the amount Sanford will pay is assumed to be the same as last year.

Appropriations

Municipal appropriations were broken down into four categories. By far the largest category is Municipal Services, which accounts for more than 90% of city appropriations. Mr. Buck said the proposed 3.64% increase in this category is almost entirely due to personnel costs. Two other categories, Libraries and Outside Agencies, are not proposed to increase from last year’s budget. The final category, Debt Service, will see a 56.5% increase. This is due to the bond for road construction that was passed by voter referendum in 2019. In total, proposed municipal appropriations will increase 5.79% over the 2020-2021 budget.

On the School Department side of the budget, there are three categories. Education includes salaries, building operating costs, supplies, transportation and more. This category accounts for 79% of the department’s appropriations. It is proposed to increase by 2.31% this year. Adult Education represents only 1% of the school budget, and is proposed to increase by 2.36%. These increases are somewhat mitigated by a decrease of 2.57% in the Debt Service category, resulting in an overall proposed increase in school appropriations of 1.3%.

The amount set aside for Municipal Capital Reserve is proposed to increase by just over 20%. More than half of that increase is due to road construction. After the 2019 referendum, the City Council agreed to put $500,000 a year into Sanford’s roads, which analysis showed is the minimum amount needed to keep road conditions trending in a positive direction. The School Department’s Capital Reserve is proposed to increase by 3.71%.

Total proposed appropriations of Municipal and School combined are $91,073,257, representing a 3.43% increase over last year’s budget.

Revenues

Revenue Sharing, which is money that comes to Sanford from the state, is expected to increase by 9.13% this year, due to higher than anticipated state revenues. Mr. Buck said that number may increase even further. Other Municipal Revenue, which includes fees, licenses and permits, is expected to increase 6.53%. Together these account for an expected increase of 7.08% on the municipal side of the budget.

The School Department has a number of sources of revenue. The lion’s share is EPS (Essential Programs and Services) funding from the state. This is expected to increase .33% for 2021-2022. Other revenue sources include state contribution to Debt Service, Adult Education, tuition from Acton students – which are all expected to increase slightly – and Miscellaneous Revenue, expected to decrease by 25%. Over all, school revenues are expected to increase by .59%.

Total revenues for municipal and schools combined are expected to be $54,868,149, a 2.2% increase over last year.

Taxation

Subtracting expected revenues from proposed appropriations leaves a balance of $36,205,108 to be raised by taxation. The city is expects to use $850,000 of undesignated funds toward this, as was done last year, leaving a net amount to be raised by taxation of $35,355,108. This represents an increase of 5.48%, and results in a minimum tax rate of $20.78.

After other adjustments, which include the Homestead Exemption, BETE, Overlay and TIF accounts, the final mill rate is anticipated to be $20.27, an increase of 11 cents.

Public Participation

Lance Hoenig, a resident of Springvale, asked about using the $2.12 million in American Rescue Plan funds that Sanford is slated to receive to offset taxation. “Reducing our tax burden in a significant way would be the best use of the funds,” he said. He also questioned why Biddeford is set to receive $10 million, and Sanford far less. Mr. Buck explained that Biddeford is considered an entitlement community, and Sanford is not. There is hope, however, that Sanford will soon get this designation, which will be a positive thing resulting in more money flowing from HUD to the city; but if so, it will be too late to affect the ARP distribution. With regard to how ARP money may be spent, he said there are extensive stipulations that make it very difficult to utilize any of the funds to offset net taxation. However, he believes there may be creative ways in which this can be accomplished, including reimbursing the city for money that has been spent for pandemic-related expenses that were never reimbursed by the Federal Emergency Management Agency (FEMA).

Mr. Nelson added that the School Department is being wary of “the cliff” – using federal money to pay for things like new positions, that then have to be funded locally once the federal money is gone. He explained that right now the focus is getting all students back to school full time, by expanding out with temporary space and staff, so as to not create a cliff in the future. “A sustainable budget, year over year, is most important,” he said.

Mr. Buck added that York County is slated to received over $40 million from the American Rescue Plan, but there is no word yet what will be done with those funds.

Dianne Connolly had a number of questions and comments for the Committee. She questioned how much money the Sanford Library Association (Goodall Library) is receiving from leasing land to Con Edison for a solar project on Route 4, and asked why the Economic Growth Council’s budget is increasing by $100,000.

Mr. Buck responded that he is unaware of the details of the lease agreement between the Library and Con Edison, but said it may be the reason they have not asked for a budget increase in recent years. He said the $100,000 in the Growth Council’s budget will be transferred to the Administration budget, and that it will fund a full-time marketing position for the city.

Further Discussion

Fire Chief Steve Benotti said he has requested two additional firefighter/paramedic positions for the past two years, as well as this year, and funds have been cut. He said the positions were part of an agreement the City Council made in 2014 to improve the department. The original program would have added 12 positions over six years. “The workload that is being done is reaching a capacity that these positions are very important,” he said. He added that the city is paying excessive overtime to cover all shifts and that the city’s insurance rating is also suffering by having less than adequate fire protection. He also pointed out that the department’s revenues will be increasing this year.

Sanford Seacoast Regional Airport Director Allison Navia spoke about the two airport projects that will be paid for by bonds through the solar TIF district. One will extend Presidential Lane and add utilities so that new hangars can be built and leased to increase airport revenue. The first phase of the project will enable two new hangars to begin generating revenue for the later phases. The other project is a reconstruction of Taxiway Charlie which has not been resurfaced in 20 years.

Mr. Buck spoke about the shortage of workers in Sanford’s Regional Dispatch Center. He said 22 dispatchers are needed, but the department is only funded for 20 now. He said mandatory overtime is resulting in 16-hour shifts, employee burnout and high turnover. The overtime costs are huge. Bill Tower, Director of the Dispatch Center, added dispatchers leave and go to the Biddeford, Rochester and York dispatch centers so they can have a life outside of work. He said having 22 dispatchers would be “like night and day” compared to the current situation.

Budget Chair Bob Stackpole wanted the Committee members to run through some budget scenarios if specific items were added or cut from the budget. Maura Herlihy declined, saying she preferred to wait until they had a better idea of the impact of the reassessment on taxpayers. Other members agreed. Becky Brink said if city and school staff could do calculations at the next meeting, the scenarios could be worked through quickly. Mr. Buck said that could be done.

Ayn Hanselmann expressed concern about the net to taxation number, and said she wanted to reduce that number by a million, either through revenue increases or using some of the School Department’s fund balance. “We have people in our community who are just not surviving,” she said. Mr. Buck responded that voters approved the road construction projects in 2019, knowing that the biggest impact would be on this year and the next. Trying to offset that increase in other areas will impact operations, he added.

The School Department budget has to go to the voters on June 8, so it must be approved in time to allow ballots to be printed. The City budget deadline has more flexibility, but must be approved before the date of commitment on July 1, when tax bills are generated.

The full (3 hours, 15 minutes) meeting video can be viewed here: https://www.youtube.com/watch?v=VbOk4904mXk

The Budget Committee will meet next on Thursday, March 25 at 6:00 p.m.