Final Municipal Budget On Hold

The final 2021-2022 municipal budget is on hold for now, awaiting more information out of Augusta before the City Council will vote to approve or amend it.

On April 8, City Manager Steven Buck presented the proposed municipal budget and his recommended amendments to the Budget Committee. The proposed budget includes $30,535,165 in municipal appropriations and $3,922,668 in capital reserve funding, offset by $15,118,696 in municipal revenue. The balance of $19,339,137 is to be raised by taxation. This bottom line represents an increase of $1,338,869 over the current year’s budget.

Mr. Buck explained to the Committee that the items from the voter-approved 2019 referendum – debt service on the road bond, street light LED conversion, and increases to the Parks/Recreation and road construction capital improvement programs – amount to $1,392,378. When those items are deducted, the amount of net taxation is actually a decrease of $53,509 from the current year’s budget.

Mr. Buck then went over his recommended amendments to the appropriations side of the budget:

• Adding 2 Firefighter/EMS positions, which the City Council agreed to several years ago but have been repeatedly put off
• Adding 2 Dispatcher positions, which were requested to enable the Dispatch center to reduce overtime and retain employees
• Reinstating the part-time Grant Writer position which had been cut from the budget in a previous draft
• An additional $50,000 to cover increases in fuel costs since the first draft
• Cutting the $13,500 the City pays to help fund the Chamber of Commerce, and adding $603 for a Chamber membership instead
• Cutting $6,000 for the Literacy Volunteers, at their request
• Cutting $100,000 from the Airport Capital Improvements Plan, as this money will be coming from federal funds instead
• Sanford’s share of the York County tax bill is expected to decrease by $2,014

These adjustments would add $339,467 to the budget. However, Mr. Buck expects that additional funds from increased municipal revenue sharing, federal reimbursement for the vaccine clinics, and the American Rescue Plan, will more than cover it. The State budget recently passed by the legislature and signed by the Governor includes municipal revenue sharing at 3.75%. The legislature’s Taxation Committee, however, is recommending that be increased to 5% in a supplemental budget, and the Revenue Forecasting Committee has used this figure on their website. “It would be political suicide to do this unless they were confident of passage,” he said. Sanford’s portion of that increase would be more than half a million dollars. He is also estimating over $600,000 in additional revenues from the ARP.

With this additional revenue, he also requested the Budget Committee not use $850,00 from the Undesignated Fund Balance that the proposed budget calls for. If his projections are accurate, this would cover all of the recommended adjustments, and reduce the budget by $350,248, putting the final net taxation figure at $988,621.

The increase in property values this year complicates the budget discussion even further. The total increase in property values is estimated at $114 million at this time. While this lowers the mill rate significantly, it’s not good news for single family homeowners, whose properties have increased more in value in the past year than any other category. Under the proposed budget, a single-family home valued at $200,000 to $225,000, with a homestead exemption, would pay an additional $372.95 in taxes. However, if the revenue projections are accurate, the budget with all the amendments would means a $216.46 increase instead.

Mr. Buck added that the legislature is also considering funding the Homestead Exemption at 100%, instead of the current 70%, which would mean an additional $600,000 for Sanford, but he didn’t include that in his numbers as it is less certain of passage.

Budget Committee members were not comfortable approving any of the proposed amendments with the revenue figures still uncertain. Most members were in support of adding the firefighter, dispatcher and grant writer positions back into the budget if the projections prove accurate. They voted unanimously (with one member absent) to send the basic budget forward to the City Council for approval, and let the Council make the amendments if the municipal revenue sharing is increased to the 5% level.

The City Council heard Mr. Buck’s presentation at its April 20 meeting. They discussed it briefly before tabling the budget. They will likely revisit it at their May 18 meeting.