PORTLAND — The City Council on Monday got its first look at next year’s municipal budget: a $363 million spending plan that would cut staff positions and benefits to stave off another big tax increase.
If both the municipal and school budgets advance as currently proposed, homeowners would see a 4.9% property tax rate increase for fiscal year 2027.
City Manager Danielle West said limiting the projected tax increase on the municipal side was “extremely difficult,” outlining a proposal that calls for cutting 74 staff positions — many within the Health and Human Services department — to make up for rising costs elsewhere.
West said the “single biggest budget challenge” heading into next year is the increased cost of health insurance for city employees, with employee benefit costs estimated to rise $6.6 million. She said that final number was the result of efforts to cut costs, which includes eliminating coverage for GLP-1 weight loss drugs and increasing premiums.
Another budget complication was an increase in the Cumberland County tax of $1.3 million, or 14.5%, she said.
During a budget preview in February, councilors set a goal of limiting a tax rate increase to the 5% range. West said that guidance made for “an extremely difficult budget to formulate given the increasing costs of goods, services and labor, heightened funding uncertainty at the state and federal levels, and rapidly rising health insurance costs.”
But she also pointed to a recent community survey in which 75% of respondents named affordability as a top issue in Portland. Last year, residents saw a 14% median increase in property taxes due to the combination of a budget increase and property revaluation.
West said that to meet the council’s goal, city leaders had to reduce department budget requests by roughly $18 million.
She said several options were chosen for cuts, including eliminating staff positions and increasing some city fees.
Many of the positions are vacant, including a dozen positions at the Barron Center, but the list also includes several employees at the city’s family shelter. The city announced last month the closure of its shelter for asylum seekers at 166 Riverside Industrial Parkway, which accounts for 35 positions.
The city has reported a decrease in the need for both shelter spaces because the pace of asylum seeker arrivals has slowed significantly. In all, city spending for the Health and Human Services department is expected to decrease by $4.4 million.
For the police department, next year’s budget includes the elimination of eight vacant officer positions based on “assumptions about how many officers we will realistically be able to hire in the upcoming year,” West said. However, the department’s overall budget is increasing by $3.7 million, or 18%, based on collective bargaining agreements with police last year.
West proposed increasing fees in a number of departments, including fire, health and human services, parking, parks, recreation and facilities, planning and urban development, and permitting and inspections.
The budget also proposes to use $4 million in fund balance. West pointed out that the city’s general fund budget is decreasingby roughly $6 million, which she said highlights the work being done to try to “diversify the way we fund services so it’s not all taken out on the property taxpayer.”
The first Finance Committee discussion on the budget is Thursday. The council is expected to take up a first reading of the budget May 18.
Mayor Mark Dion said the budget reflects “balancing our needs with our residents’ financial realities.”
Officials said based on an estimated $150 million increase in local assessed valuation, the impact on the property tax rate from the city’s portion of spending would be 24 cents per $1,000 valuation, or 4.2%. The estimated impact of the increase on a homeowner with a property valued at $540,000 would be an additional $130 in property taxes.
The most recent Portland school budget proposal would raise the school department’s portion of property taxes by 6.4%. The school board is scheduled to vote to send its budget to the City Council on Tuesday.
The final tax rate increase won’t be known until it’s finalized by the city assessor in late summer.
VOTE ON CAPITAL PLAN DELAYED
The City Council on Monday postponed a vote on next year’s capital spending plan due to two councilors being absent, which led to complications when councilors proposed a series of amendments.
The capital plan for fiscal year 2027 calls for $24.4 million in new bonds to help pay for a list of infrastructure needs, building repairs and equipment purchases that totals $46 million.
Councilors proposed several amendments to the plan, including reappropriating $200,000 from a $500,000 request for the completion of Congress Square Park to add lighting at the skate park at Dougherty Field.
The amendment, offered by Councilor April Fournier, came after some councilors have questioned the price tag for finishing the Congress Square project after years of delays and increased costs.
But while councilors initially thought the amendment passed by a 4-3 vote, city attorney Michael Goldman pointed out that five affirmative votes are needed on all amendments.
After discussion, the council tabled the vote until its next meeting on April 27. Councilors Wes Pelletier and April Fournier were absent.
FIRST READ ONLY ON ICE COOPERATION
After initially planning to vote Monday on whether to expand limitations on cooperation with federal immigration enforcement to all city employees, officials conducted a first reading only.
After weeks of negotiating ordinance amendments with the city’s legal team and the American Civil Liberties Union of Maine, the council was originally slated to waive a second reading and vote on the ordinance language Monday as an emergency, which requires seven affirmative votes.
However, just before the meeting, city staff said the item would be a first read only, with the council now poised to vote April 27.