2015-07-24 / Front Page

City banks school subsidy

By Duke Harrington
Staff Writer

SOUTH PORTLAND — Property tax bills are going out later than usual in South Portland this year, but given the reason why, most residents probably won’t mind.

In the words of Mayor Linda Cohen, when the need for a delay became clear last week: “They will not be disappointed.”

In separate meetings held on Monday, July 20, the South Portland Board of Education and city council each voted on how to allocate an unexpected windfall of nearly $900,000 from the state. By channeling much of that money into the current budget just before the annual tax commitment is set, the twin votes have helped knock 33 cents off the city’s mil rate, reducing it from the anticipated amount — $17.73 per $1,000 of assessed value — down to $17.40.

According to city Finance Director Greg L’Heureux, that will save the typical homeowner $66 in taxes this year, reducing the annual property tax bill on a median single family home — assessed at $200,000 — to $3,480 from an anticipated $3,546.

Although $66 may not seem like much, it’s sure to be a welcome reprieve to that median homeowner, who last year paid $3,420, when the mil rate was $17.10.

The reduction in taxes comes thanks to an increase in the state subsidy for public education, as well as increased revenue from the state.

The $6.3 billion biennial budget adopted by the Legislature over the veto of Gov. Paul LePage June 24 allocated an extra $20 million to general purpose aid for education. Of that, South Portland got $884,204 more than anticipated when, on June 9, voters approved the school department’s $46 million operating budget for the current fiscal year.

The plan — pushed by L’Heureux — was for $484,000 of the windfall to go back to the city, to be used for property tax relief. Because the school department is limited to spending only what voters approved at the June 9 budget validation vote, the remaining $400,000 in new money will go into a reserve account, to be applied toward next year’s school budget, or to be reallocated at that time into reserve accounts dedicated to specific purposes.

“I am the one who pushed and pushed that we should consider this,” L’Heureux said during a joint school board/ city council workshop on July 15. “I see the day-to-day events that occur in city hall where people are stressed to the point (of breaking) because of their taxes. This year, I had more people in my office crying than I have in a long time. So, I have tried to be an advocate to keep the tax rate down.”

“I’ve heard from elderly women, including some who have had to sell their homes because they can’t afford their tax bills,” added Councilor Melissa Linscott.

Still, some at the joint session joked that L’Heureux’s compulsion to control the growth of taxation may be driven as much by what he sees happening in neighboring towns as by what goes on in South Portland.

“I think it really helps that Greg lives in Scarborough,” said Councilor Tom Blake.

In what has become an increasingly common occurrence in Scarborough in recent years, voters have twice since June 9 rejected the school department’s operating budget, forcing the town council and school board there to joust over a Goldilocks level of growth in school spending.

It’s a different story in South Portland, however, where city councilors have pledged not to leave the school department in the lurch, should the state fail to follow through on its promised subsidy.

“We will work that out together as a group, because that’s how we got here and that’s how we do it these days,” Cohen said. “Eventually, it’s all one pot of money and the people paying for that pot are the taxpayers, so it is very nice to see these two boards working this well.”

For a brief time, it looked as if the school funding debate might not be all sunshine and roses.

Originally, the plan had been for the school board to vote July 13 on how to divvy up the increased state subsidy. The city council was then going to have a special meeting on July 15 to enact the change, just in time for the annual commitment of taxes, which usually takes place on July 15.

Once the tax rate is set, it takes about a week to process and mail out property tax bills, the first quarter of which are due Aug. 21.

However, in a workshop session held just prior to their July 13 meeting, school board members deadlocked over how to proceed. According to school board Chairman Richard Matthews, some school directors, remembering how Maine governors have ordered curtailments in school subsidies twice in the past six years, wanted to hold on to more of this year’s funding, giving back perhaps as little as $300,000. Others wanted to wait for a legal opinion, to find out for certain if they could spend any of the new subsidy dollars this year.

“I was frustrated. It felt rushed,” school board member Rick Carter said, apologizing to the council for causing the delay.

Carter said he “completely agrees with the numbers.” He simply felt that a one-hour workshop on the dispensation of nearly $1 million, held immediately prior to a vote on that topic, left many board members feeling a little flat footed.

But the school board was not alone in that sensation. After the school board voted 4-2 to table its June 13 vote, a joint workshop with the council was hastily scheduled for June 15. Initially, the council was going to vote immediately after that session, until some councilors reached for a similar application of the brake.

“It seems like a rather brief discussion for so much hooch on the table,” City Councilor Claude Morgan said at the time. “Forgive me, but the brevity is a little worrisome. We’re being asked to make a very large decision on the razor’s edge.”

The council decided to push its final vote until Monday, June 20, even though that would cause a delay in mailing out tax bills.

Ultimately, everyone seemed to agree they ended up about where they would have anyway, had final funding numbers come down sooner from the state.

“If we had this money when we were doing our budget, which we should have, would the outcome have been any different? I’m not sure it would have,” said school board member Sara Goldberg. “Maybe we would have put some more into reserves, but ultimately we want to keep the tax rate down, too.”

Meanwhile, others are just thankful for the unexpected 11th hour influx of cash from Augusta.

“I still need somebody to pinch me and tell me this is real money coming back to us,” Morgan said. “It doesn’t quite feel real yet, because we’ve had such a ridiculous roller coaster ride.”

Also contributing to lower than expected tax bills in South Portland this year are a $50,000 increase in general assistance funding (again driven by the state budget), annual growth of $19 million in the city’s tax base (due to new development and increased property values), and annual fluctuations in Business Equipment Tax Exemption and homestead exemption filings (both of which automatically adjust the tax rate as state subsidies roll in).

Interim Superintendent Kathy Germani said the school board will likely apply its $400,000 — when the money can be spent next year — to some combination of bus purchases, technology upgrades, building maintenance projects and general reduction of tax needs.

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