2015-02-13 / Front Page

Town budget up 6.25 percent

By Duke Harrington
Staff Writer

KENNEBUNK — After several years of relative stability, Kennebunk’s municipal budget for the upcoming 2015-2016 fiscal year is set to spike 6.25 percent.

In a series of three budget meetings last week, Town Manager Barry Tibbetts blamed the increase on “additional expenses beyond our control.”

Among $512,476 in new spending proposed by Tibbetts, the largest hike is $117,000 for recycling and solid waste collection, composting services and operation of the transfer station.

The town recently received six bids on four options for contracting out those services. Selectmen were scheduled to award those contracts at their Feb. 10 meeting, which took place after the deadline for this week’s Post.

“I think with the change in service level you are going to see, you’ll probably find that [cost increase] to be very acceptable,” Tibbetts told selectmen and budget board members at the Feb. 3 unveiling of his proposed budget.

Other new costs include an $84,000 hike in workers compensation insurance — “That one was a bit of a surprise to us, to be honest with you,” said Tibbetts — as well as a $46,000 increase in utility prices, a $37,000 bump in employee health insurance premiums and an extra $20,000 to be set aside for EMS wages, based on the predicted number of ambulance runs during the next fiscal year.

Tibbetts also has proposed a 1.5 percent wage hike for all 67 full-time town employees, at a total cost of $85,000. Selectmen have not yet voted on whether to grant that increase. Members of the police and teamster unions already are contracted to get a 1.5 percent pay raise.

Additionally, Tibbets has proposed spending $12,000 to hire a part-time laborer for the parks department, as well as $11,000 on a part-time deputy town clerk.

Having an extra parks worker “allows for greater efficiency, productivity and balancing of workloads,” Tibbetts said. Meanwhile, having a part-time clerk will allow the town’s full-time clerk to continue working part-time as Kennebunk’s general assistance administrator, he said.

There also are plans to hire a permanent part-timer to manage the summer day and Just for Kids programs. However, Tibbetts said that position will have no budget impact due to reduced spending and line-item shifts elsewhere within the recreation department budget.

Other new costs include a $20,000 budget bump requested by library trustees and $52,000 in new expenses for public services, including public works, parks and recreation. Tibbetts noted that his $11.12 million gross operating budget includes “no cuts in services.”

At the Feb. 7 budget meeting, selectmen and budget board members agreed to almost $29,000 in cuts to the proposed $1.55 million combined budget for fire department and EMS services.

According to town Finance Director Joel Downs, that brings the expected tax hike from municipal services to 22 cents per $1,000 of assessed valuation. In other words, if the budget is adopted by voters in June as it currently stands, the owner of a median single-family home in Kennebunk, assessed at $250,000, can expect a property tax increase of $55.

“Of course, this is all on just the town side of things,” Tibbetts said. “We don’t yet know what the school budget or the county tax will look like.”

School directors already have warned that next year’s school budget will likely top $40 million. Monday’s school board meeting, at which the school board was expected to vote on a $58.37 million facilities bond — and whether to take that borrowing request to voters in June, or November — was postponed to Feb. 23.

On the municipal side, Tibbetts proposed $11.12 million gross operating budget (up 4.8 percent from current spending) is augmented by $719,610 in debt service payments and capital improvement spending. From that is subtracted $7.87 million in anticipated revenues during the next fiscal year.

That revenue projection is, Downs said, “essentially flat,” year-to-year. That’s because while revenue streams such as excise taxes are budgeted to increase again next year, cuts are anticipated to state subsidies. The current budget cuts $409,371 from state revenue sharing and $161,155 from homestead exemptions in anticipation of changes expected to come out of Augusta during the current legislative session.

Also coming off the gross budget is $100,000 to be taken from the town’s $7.95 million undesignated fund balance.

“That creates a hole where next year we’re starting with a $100,000 deficit, but after going through the budget with all the different constraints and challenges we had, we felt it was necessary for us to recommend that again this year,” Tibbetts said.

That injection pegs Tibbetts’ recommended net budget for 2015-2016 at $7.77 million, to be raised from taxes, an increase of 6.25 percent over this year’s $7.3 million assessment.

However, Tibbetts said, flat municipal spending in recent years means the average rate of growth for Kennebunk’s net budget since 2009, when it was $6.86 million, has been 1.07 percent per year. This year’s increase pushes that average to 1.79 percent. That compares to a 2.14 percent annual growth rate for Kennebunk’s share of the RSU 21 budget, which has jumped from $18.34 million in 2009 to $20.83 million this year.

However, whichever side of the ledger is growing faster, both ends compare unfavorably with the real growth in average personal income. According to U.S. Bureau of Labor Statistics, Maine incomes grew by an average of just 0.86 percent per year in the decade from 2003 to 2013, the most recent year for which data is available.

During budget deliberations on Feb. 3, 5 and 7, selectmen generally held their tongues, while members of the budget board kicked back only occasionally.

One exception was the Feb. 5 presentation on funding for nonprofit agencies. Although Tibbetts’ proposal is down $15 from the $32,115 to be spent this year, debate on those line items consumed nearly an hour.

“That’s always a lively discussion,” Downs said. “It’s interesting that funding for nonprofits is such a lengthy discussion, but then they spend just eight minutes on $2.1 million for the police department.”

However, Tibbetts noted that Police Chief Robert MacKenzie is one of many department heads in Kennebunk habituated to underspending his annual budget. For example, in the fiscal year ending June 30, MacKenzie left $50,696 on the table. Combined with sizable windfalls in excise tax collections, beach permit sales and ambulance billing – all of which came in higher than expected – led to Kennebunk taking in $922,000 more than it spent last year.

Kennebunk had an estimated $7.95 million in its undesignated general fund as of June 30. Meanwhile, the town’s fund balance policy requires that enough money be held in reserve to pay its bills for two months, even if all revenue stopped. Adding in $499,000 for a possible new school building bond and probable cuts next year to state aid for education, means the town must retain $6.56 million of its reserve. That leaves $1.39 million to play with, and Tibbetts has proposed using $931,500 — all of last year’s surplus and then some — for capital improvement projects. He also plans to borrow $880,000, at a projected interest cost of $94,100 per year over 10 years, for additional expenditures. Including paying off higher interest bonds and covering a $58,613 deficit over the past two years in the town’s “pay-as-you-throw” trash collection program.

Capital protects include reconstruction of Old Port Road, installation of culverts on Emmons Road, and localized repairs to nine other streets, including Holland Road, Thompson Road and Sea Road.

Other capital projects include roof work to town hall and the central fire station; carpeting the auditorium entrance and meeting rooms; and buying land for a new town employee parking lot. Also on tap are equipment purchases, including seven Tasers for the police department, and vehicle acquisitions, such as a new plow truck, police cruiser and fire department “brush truck.”

Tibbets noted that the draw from surplus means all of the capital projects are using money previously raised, meaning that spending will not impact next year’s mil rate. Still, not all members of the budget board seemed impressed with how surplus funds are being allocated.

“If this was a for-profit organization we’d have the stockholders cheering us,” said budget board Chairman Peter Marshall. “But what do we do with the money we’ve made a profit on? We spend it on stuff.

“We haven’t even considered reducing the mil rate in spite of the fact this town is making a profit every year, or call it a surplus,” said Marshall. “Our surpluses are turning into capital purchases. I see some areas where there’s a proposal to accelerate our debt service and it leads me to wonder if we may be buying too much.”

“It’s like my wife having another $20 and telling her it’s surplus — it’s gone,” agreed budget board member Edward Karytko. “No matter how much we’d like to keep it for reducing bills, it’s gone. So, to that point, we have to be really careful what we’re spending the money on.”

A meeting to finalize those decisions for the coming fiscal year was held on Thursday, with a tentative final session planned for Saturday, Feb. 14.

The board of selectmen will conduct a public hearing on the proposed 2015-2016 budget on March 24, with a second hearing on May 26. Selectmen are scheduled to sign the warrant for the June 9 town meeting referendum on May 12.

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