Calais Considers Raising Taxes

By Lura Jackson

 

With a quarter of the city’s fiscal year now behind it, the finance committee met on October 10th to review how the budget appeared so far this year – and whether or not it appeared that the city will have to raise taxes. The city has not been regularly investing in or following a capital improvement plan, requiring some creative financing when emergencies arise. The sitting council has expressed on multiple occasions that it would like to update, and follow, a capital improvement plan – however, doing so may necessitate raising taxes.

City Manager Jim Porter summarized the condition of the budget with the statement that “there are no red flags at this point.” City Finance Director Crystal Gallina elaborated that there have been some unanticipated expenses, such as the need to drain the pool twice and to refill it and add the appropriate chemicals, and overtime in the fire department. There are some projected savings, as well, including up to $75,000 a year if the city switches to a different health insurance carrier.

This year’s budget was for $78,000 less than last year, but the city inadvertently over-collected by $172,000 last year. Put another way, this year’s budget is technically $94,000 higher than last year’s. Councilor Mike Sherrard said that, with that in mind, and using a figure of an increase in the budget of $75,000 a year, “we’re looking at a $375,000 shortfall over five years” if taxes are not increased. “We need to decide if we’re going to raise taxes,” Sherrard said. 

“If we do switch our health insurance, it will be a huge savings,” City Finance Director Crystal Gallina said, implying that the savings could mitigate the need for a tax increase. She expressed that the city should look at every potential way it can save money since the only recourse after that is cutting personnel. 

With that said, Gallina said that, based on the recommendations from other cities at a recently held Maine Municipal Association conference, the city needed to proactively invest in and follow a comprehensive capital improvement plan. Per Gallina, a sound capital improvement plan would include an allocation of ten percent of the current cost of asphalt per mile computed with the city’s total mileage every year. Five percent would be for roads, and five percent for sidewalks. “That will at least get it to where you always have money to do it if a problem comes up,” Gallina said.

“Our tax base is shrinking, we’re not getting any new businesses or new people in the community,” said Councilor Sherrard. Sherrard said that if a capital improvement plan account was created for $25,000, as an example, then the city would need to either raise that $25,000 “from somewhere” or remove it from the operating budget of the associated department. “It’s not a good situation to be in.”

Raising the amount the city collects would put it into a new mil rate, Gallina said, if the current valuation of the city remains the same. “To go from 25.3 to 25.4, it would only take $15,000 more in additional spending,” Gallina said. “We’ve got to be cautious there if we want to hold the mil rate.”

“We’re already in the top ten percent of highest taxed communities in the state,” Councilor Sherrard said. “Are we willing to raise taxes in a community that doesn’t have any jobs and fifty percent old people that can’t afford to pay any more?”

Councilor Eddie Moreside expressed that he is concerned with the number of properties that the city is foreclosing on each year. Each property that is foreclosed on represents a loss in taxable value. “If you do ten properties a year, that’s one hundred in ten years,” Moreside pointed out.

City Manager Porter countered that the incoming businesses of Tractor Supply and the Dollar Tree have offset some of the losses of those taxes. “That can replace seven or eight houses,” Porter said. However, Porter acknowledged that the city is steadily losing property.

Councilor Scott Geel said that the city does need to have a capital improvement fund, expressing that the council has “let it slide” in the three years he has been there. He said that the reason the council has been letting it slide is because the city does not have the money, and that the city will need to determine a source of funds to allocate to such a purpose if it wanted to be prepared for emergency needs.

To properly fund a proactive, forward-facing capital improvement plan, Councilor Sherrard said that the city will have to raise taxes, a statement that Councilor Moreside met with, “Instead of foreclosing on ten homes, you’ll be foreclosing on twenty.”

To avoid raising taxes, the committee agreed that it would need multiple workshops to prioritize the city’s goals and enable it to see where any potential cuts could be made. The committee further recognized that there are some feasible profitable ventures, such as recreational marijuana, and savings from reductions in health insurance that may offset the need to raise taxes.