SOUTHERN PORTLAND – With COVID-19 affecting several aspects of the city’s budget, the challenge for fiscal year 2022 will be to keep tax rates down, city councils said on Jan.
City administrator Scott Morelli plans to present a budget proposal to the city council on March 15, he said during the budget advisory workshop for fiscal year 2022.
The pandemic has affected a variety of variables for the budget, said finance director Greg L’Heureux. In April 2020, the city had planned to complete a revaluation of the properties, but due to closures, the process was delayed by a year.
He said one of the most important factors in the coming year is the expected impact of the tax shift. The current commercial and industrial side makes up 44 percent of the total rating, and residential properties make up 56 percent.
“The COVID dynamic is essentially weakening the commercial side and strengthening the residential side,” said L’Heureux. “That amplifies the effects of the tax shift significantly.”
The negative impact will affect some taxpayers, he said.
“Some very humble income taxpayers will see a substantial surge due to the appreciation of their homes and we have no other means to mitigate this other than looking at the budget and developing our budget for the coming year as frugally as possible,” L said ‘Heureux.
Another budget impact, according to L’Heureux, is new debts for projects approved by voters. These include a new Cash Corner Fire Station, public safety improvements, and improvements for pedestrians and traffic.
The two biggest impacts on the city’s economic revenue are consumption tax and state revenue sharing, he said. Fiscal year 2021 excise tax revenue declined $ 1.74 million, and the city used its fund holdings to make up the difference.
Looking ahead to fiscal 2022, L’Heureux said revenue is expected to offset fund balance as it begins to return to the top.
For the portion of the school budget, the school board has scheduled a budget presentation for March 22nd, Superintendent Ken Kunin said.
“We see this not just as a tough one-year budget, but as the start of several challenging years,” said Kunin. “As we’ve spoken over the years, we still need to build stronger fund balances and reserves to meet the things we need to spend on.”
City councils said they want to pay off the voter-approved debts and make sure property taxes stay low.
While this is not easy, the council must try to find areas that need to be cut to achieve this, said Councilor Katelyn Bruzgo.
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