2016-05-05 / Front Page

City manager takes new approach to Saco budget

By Ben Meiklejohn
Staff Writer

SACO – In his first year as city administrator, Kevin Sutherland has worked with department heads to establish a “maintenance of effort” budget, one that retains the services provided by the city with minimal impact to the taxpayer. Sutherland said he changed the budget process from previous years in an effort to better explain the budget to the city council and the public.

Among changes in how the budget is presented, Sutherland moved employee salaries and benefits out of its own piece of the budget pie, and instead categorized them as appropriations in each city department.

“The bigger parts are really public safety and public works,” Sutherland said. “They’re about half the budget.”

In future years, Sutherland said he plans to separate the costs of facilities into each department’s respective allocations.

Sutherland has proposed to the city council a nearly $49 million budget for fiscal year 2017, which includes city expenditures and York County taxes. The school board unanimously approved a $34 million budget for the city’s schools on March 2, which the city council is scheduled to vote on at its Monday, May 9 meeting.

Sutherland said the proposed budget represents a $281,822 increase from the current budget and a 1.45 percent increase on the tax levy. However, most taxpayers won’t see an increase in their tax bill due to the state’s expansion of the Homestead Exemption, which exempts a certain amount of the assessed value of a primary residence from being taxed.

In previous years, $10,000 of the assessed value was exempted, but in 2017, the amount exempted will increase to $15,000 and in 2018, $20,000.

Sutherland said the additional $5,000 reduction to the assessed value next year will save property owners $100 on their tax bill but result in a loss of revenue for the city of nearly $200,000.

“This budget proposes raising taxes just enough to gain that loss back, effectively keeping taxes the same for residents of Saco,” Sutherland wrote in a letter to city councilors, explaining his proposal.

Sutherland said he felt it was important for councilors to know the per-month impact of a city’s budget on a property owner because most people pay bills on a monthly basis, not annually.

Sutherland said the median value of a home in Saco is $211,000, which results in a $4,000 tax bill under the current mil rate of $19.22 per $1,000 of valuation – or $338 per month. Of that monthly amount, Sutherland said homeowners pay $189 for the school budget, $139 for the city budget and $10 to York County.

The proposed budget would represent a $19.74 mil rate, but with the Homestead Exemption, Sutherland said owners of a primary residence at the median value would see an overall increase of $11.62 on their tax bill – or less than $1 a month.

Sutherland said increasing other city revenues is an important factor in keeping the mil rate from rising too much. In the past four years, Sutherland said the city has increased its revenue by 5 percent. Sources of revenue include fees for participation in parks and recreation activities, parking meters and transfer station fees.

Sutherland said the proposed budget would remove a provision that allows users to bring 3 cubic yards of waste per year to the transfer station free of charge.

Among the largest expenditure increases projected, Sutherland said salaries would increase by $180,000, pensions by $120,000, and health insurance, $250,000. The city’s debt payments would also increase by $180,000 because of two bonds approved by voters in recent years – a $990,000 loan to restore Stackpole Bridge and $450,000 to improve energy efficiency at Saco Middle School and the police station.

Sutherland said he credited department heads for helping to keep tax rates down. He asked them to make the necessary reductions in their departments, totaling $680,000, so as to keep the mil rate lower than a 1.5 percent increase.

“The more important story is that we actually got staff to cut further than $680,000, because they came back at a levy growth of 1.45 percent,” he said.

Sutherland said even though he has previously developed a $164 million budget as the budget coordinator for Tompkins County in New York, forming a budget for a Maine municipality has been a learning experience for him.

“It was a little different there in terms of incorporating the school budgets. They were all separate tax bills,” Sutherland said. “It’s new to me where it’s all in one bill, and having to spend time explaining it. With a couple more years behind me, I will do a better job. I truly appreciate the council and department heads giving me the opportunity to change (the process). That’s what my goal was in this local budget.”

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