2015-04-03 / Front Page

Final town budget numbers are in

By Duke Harrington
Staff Writer

KENNEBUNK — There was no public comment March 24 at a hearing on Kennebunk’s 2016 annual budget, but that didn’t stop selectmen from weighing in, with at least one decrying the $11.74 million spending plan.

“I have increased reservations,” Selectman Richard Morin said. “I am generally in favor of this [budget], but I am strikingly concerned.”

Triggering that concern, Morin said, was an email sent by Town Manager Barry Tibbetts earlier in the day. It touted a recent SmartAsset survey that pegged Kennebunk, where 30.2 percent of all residents are senior citizens, as the No. 1 place in Maine to retire. Kennebunk also ranked No. 36 nationally, which might seem like something to brag about, but Morin saw danger ahead.

“Those are fixed-income people and this (budget) is really pushing hard against a population that is aging,” he said. “At the same time, we can take that same discussion down the road to the school department, although at this time I don’t want to reopen that can of worms.”

According to Tibbetts and Finance Director Joel Downs, if voters adopt the $40.5 million budget presented by the RSU 21 board of education, and approve a $56.5 million bond request to renovate three district schools, it will add “between $1.15 and $1.25 to the town’s tax rate.”

That rate, currently set at $14.90 per $1,000 of valuation, is set to climb 17 cents, or 1.1 percent, based on the municipal budget. That’s less than announced earlier in the budget season, when a 22-cent increase was seen as the likely scenario.

According to Tibbetts, much of the decrease was due to selectmen deciding not to end the pay-as-you-throw program when awarding a new solid waste contract Feb. 24. The board had considered rolling all costs for solid waste collection, now partly subsidized by residents who pay for town trash bags, into the general operating budget, and thus, the tax rate.

Even better, Tibbetts said, the projected tax increase on the municipal end has been calculated before the April 1 commitment of property values. By the time tax bills actually go out early next fall, he said, the value of new construction and market-based hikes in property values will be factored in, spreading out and mitigating final tax bills.

“We think that increase in valuation is probably going to lower that 17 cents down to about a nickel,” Tibbetts said. “We never really crunch out those numbers until we get closer to late July or August, but based on past experience, that’s what we generally see.”

If Tibbetts has guessed correctly at the increase in property values, a prediction made on historical averages, the 5-cent increase would add $12.50 to the annual property tax bill of the median single family home in Kennebunk, assessed at $250,000 — which is now $3,725 per year.

However, if the $1.25 increase based on the school budget and building bond holds true, the spike would be $325.

And that’s before adding in any increase from Kennebunk’s share of York County’s operating costs, which is not yet known.

Still, most selectmen said they had done the best they could do for taxpayers, based on the part of the tax bill they can control.

“I think we’ve done a really good job of keeping this budget as low as we can,” Selectman David Spofford said. “And, for a number of years we have not seen anywhere near the increase we have this year. So, I’m very comfortable with this budget.”

The March 24 meeting was the last chance selectmen had to make any amendments to the budget. By the time they next meet on April 14, they will be inside the 60-day window to town meeting, which, per the town charter, sets the budget proposal in stone.

Still, a second public hearing will be held May 26, prior to the June 9 public vote.

The final numbers approved by selectmen and the town budget board call on a gross budget of $11.75 million, an increase of $424,839, or 3.75 percent over current spending. The net budget to be raised from taxes, after subtracting projected revenue from excise taxes and other sources, is $7.68 million — an increase of $369,405, or 5.05 percent.

The June 9 warrant also will include a question asking voters to appropriate $12,041 for line clearing by Central Maine Power Company.

Selectmen did agree to take $100,000 from the town’s undesignated fund balance, specifically to reduce the assessment for debt service.

Tibbetts said revenue is expected to increase 1.4 percent, but spending is up 4 percent. Chief among the culprits, he said, are a 1.5 percent pay hike for all town employees, as well as increased costs for utilities, workers compensation, recycling efforts and “contractual obligations.”

Of $1.76 million in capital improvement projects for the coming year, — including the purchase of new vehicles for the police, fire and public works departments, as well as new computers, road repairs and public safety projects — $869,500 will be taken from the town’s undesignated fund balance, also known as surplus. Meanwhile, $112,000 will be taken from various tax increment financing (TIF) accounts. That will leave $719,610 to be borrowed.

“That kind of debt service is exceptionally low,” Tibbetts said.

Of the $869,500 being appropriated from surplus, only some of he money is for what Tibbetts called “actual stuff.” Some $312,000 will be set aside to pay for future debt service payments.

“What we always try to do when we’re budgeting is, because we know when we issue a bond we don’t have to budget for that payment until the following year. So, we always set a little aside from that so we don’t get spikes in our mil rate. It’s just a better way of budgeting so we account for those changes going forward.”

Selectmen briefly debated further reducing the tax rate by drawing down from TIF funds, and Tibbetts said he would look into what might be possible in the future. However, most selectmen concluded they are in a tight spot, subject largely to the vagaries of state budgeting in Augusta, given expected reductions to state revenue sharing and other subsidies.

“Our state legislature and our governor aren’t doing much to help the local taxpayer,” said Morin.

However, Morin did declare himself a proponent of one plan circulating in the state capitol to allow towns to charge a local-option sales tax.

“We are a tourist industry,” Morin said. “We could offset every expense we are missing in this budget with a local half-cent sales tax on the food and lodging industry, which would be almost no impact back to the local resident.”

But not everyone agreed with the idea.

“That would be great for us, but I’m sure the business owners would not be happy with additional taxes they’ll need to collect,” Selectman Christopher Cluff said.

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