Maine cities, towns face historic tax increases as costs rise relentlessly

Apr. 30—As the Westbrook municipal budget took shape, one thing was clear: Everything was going to cost more.

To compensate, city leaders proposed a "status quo" budget with no new positions or programs and cuts to investments in streets, sidewalks and public safety purchases. They suggested transferring $1 million from the undesignated fund balance to help offset unavoidable costs.

But with school spending up by $3.2 million, residents could still see an 8.8% tax increase, the largest in the city's history.

Mayor Michael Foley knows that's a tough pill to swallow.

"Individuals and families continue to be confronted with skyrocketing prices for housing, food, fuel, energy and other essential products and services (and) we are very concerned this budget will just add to the struggles of our residents," Foley said.

Across southern Maine, municipalities are in the midst of the annual budget process and are trying to balance rising costs of goods and services — from wages to fuel to trash disposal — with a goal of minimizing the tax impact. Large school budgets are tipping the scales even further.

In many communities, staff had to put together proposals without knowing what school budgets would look like.

"We knew with inflation and things of that nature that this was going to be a difficult budget year," South Portland City Manager Scott Morelli said. "As we got into the budget process, it became clear it was actually going to be a lot more difficult than we envisioned early on, due in part to the rising costs."

The $45 million budget in South Portland is down nearly 15% from the current year. The city was able to cut $10 million from General Assistance because it will no longer be paying local hotels to operate as temporary homeless shelters. But when combined with the school budget, overall spending in the city could add 4% to the tax rate.

Councilors will decide in the next few weeks if and how they want to cut the city budget any further.

Morelli said "all the low-hanging fruit had already been picked off the tree." That included eliminating several open positions and cutting funding for a program that provided an alternative response to certain police calls involving people dealing with substance use issues or homelessness.

"We really wanted to try to balance not presenting a tax increase that was irresponsible, but also making sure we are still providing the services people wanted," Morelli said. "We achieved that goal, but there were a lot of things we had to cut to get there."

COSTS GOING UP

North Yarmouth's proposed $4.4 million municipal budget is up significantly this year and could increase the tax rate by 3% or more. The total increase, about $665,000, is driven largely by a spike in the cost of waste collection, Town Manager Diane Barnes said.

In the coming year, the town will have to pay nearly $82,000 to Casella for waste disposal, plus a one-time cost of $253,000 to buy new garbage cans the company is requiring for collection. Those costs alone account for nearly half of the overall budget increase. Another 11% comes from cost of living adjustments.

But there are some revenue bumps helping offset it all, including residential growth, Barnes said.

"I don't think there's any municipality out there that isn't seeing large increases this year. I'm happy the growth in this area is mitigating some of the expenses here, so the mil rate won't be so high," she said.

In Biddeford, inflation is expected to add nearly $1.3 million to the proposed $40 million budget.

The cost of services is up by $445,000, utilities are up by $126,000 and operating costs increased by more than $714,000.

"One of the interesting fallacies that people have when it comes to government spending is that somehow we have the ability to avoid inflation," City Manager James Bennett said. "We don't have any gigantic extra purchasing ability to avoid what CMP charges, or the cost of gas and diesel and all the things we have to buy."

According to the U.S. Department of Labor, the rate of inflation was 5% for the 12-month period leading up to March.

Increases in wages, fuel costs, electricity, tipping fees and health insurance added nearly $1.4 million to the $23 million budget in Scarborough, where the tax rate is expected to increase by nearly 5%.

It's a similar story in Gray, where the budget is up 7.6%, an increase that town councilors say is in line with inflation but will have a nominal impact on the tax rate.

In Portland, the proposed $261 million budget includes a 6.1% tax increase. But Danielle West, the interim city manager, said it could have been much higher — 14% — if staff had not worked over the past few months to bring it down.

Portland also is losing revenue, including $7.4 million in one-time funding to help cover General Assistance costs and an estimated $1.7 million cut in state revenue sharing.

"We're trying to do more with less, so what we've tried to do is make little shifts or additions that we could to address council goals," West said before unveiling the proposed budget to the council last week.

STAFFING CHALLENGES

Beyond inflation, one of the biggest challenges many municipalities face is staffing. In a competitive labor market, officials are prioritizing wage increases and other incentives to attract and retain employees.

While Westbrook's budget does not include any new positions, the city will invest more than $1 million in pay and benefits.

In Brunswick, the cost of salaries and benefits for existing employees rose by nearly $1.8 million, the largest portion of the town's $4.1 million spending increase. But it's also one of the few adding new positions. The proposed budget includes $577,000 to pay for eight new people to expand social services. Property taxes could increase more than 7% under the combined municipal, county and school budgets.

Biddeford has been moving toward its goal of becoming a preferred employer, but that doesn't mean the city is just throwing cash at employees, Bennett said. The city is spending less on non-union raises than surrounding communities but is making changes that improve employee lifestyles without a large tax impact, like switching to a four-day workweek for most departments and offering enhanced mental health services.

"I've noticed other communities around us have had to do things like shut down solid waste operations because they don't have enough staff to plow roads," said Bennett, the city manager. "These are very real issues we have to deal with and we have to think about how we remain competitive."

One of the good things about the South Portland budget is that it gives employees a minimum 4% cost of living increase, Morelli said. City councilors are considering increasing that to 6%.

"That is a big cost and part of the reason we had tougher decisions than usual, but we really need to be competitive with other communities and pay people what they're worth," he said. "As tough as the budget was and as few bright spots as there are, that's one of the things we can be proud of."