Staff Writer
PRESQUE ISLE — Following a decision to change the way funds from the unreserved and undesignated fund balance accounts are used, City Council approved an increase of just over a point to the city’s mil rate, setting the rate for 2009 tax purposes at just over 24.
Voting in favor of the increase were Councilors Calvin Hall, Ed Nickerson, Walt Elish and G. Melvin Hovey, with Councilor Jennifer Trombley voting in opposition. Councilors Ron McPherson and Don Gardner were absent for Monday night’s session.
Prior to setting the mil rate, councilors were asked to consider changing the policy on how funds from the city’s unreserved and undesignated general fund balance are used. In years past, the Council had dipped into these funds to help keep the mil rate down, including last year’s action to use $550,000 from the city’s surplus funds, reducing the mil rate by three points, with the 2008 rate set at $23 per $1,000 valuation.
Hovey provided the background information for the proposed policy change, noting now was the time to begin planning for the city’s economic future, despite current economic uncertainties.
“The more uncertainty we have as we look into the future, the more important it is we have a long-term view and utilize our forecast to look at possible what-ifs as we go into the future,” said Hovey. “What this (policy change) does, of course, is eliminate us using reserve funds for normal, everyday budget items and operating expenses. When you utilize reserves for operating expenses and normal expenditures, you compound the problem the next year, with the possibility of needing to raise the mil rate to compensate.”
Hovey said such funds were better used to, “reduce debt, such as one-time expenses” and things that are, “going to be impacting our budget in the future.”
“If the Council supports this, which I would hope you all would, this would mean if we don’t use any surplus this year, that we would need to raise the mil rate, which I’m supporting at this point,” said Hovey, noting he believed the city should be raising the money it was spending, rather than dipping into the surplus.
“We need to look into 2010; we have significant increases that we’re forecasting at this point. I’d support a mil rate increase this year — a fairly substantial one — in hopes that next year we wouldn’t have to do that,” said Hovey, adding he’d like to see the city’s budget for 2010 keep the city’s portion around where it is this year, at approximately $12.3 million.
“You can’t offset what the school might do, but you can maintain what the city might do, keeping the (2010) mil rate at the level of this year,” he said.
Trombley questioned limiting the use of surplus to keep taxes down.
“You want us to raise the money we’re spending. Technically, the money we’re spending (from surplus) was already raised, hypothetically. I agree that taking money from surplus skews the budget and I hate to use funds from surplus. What I don’t like about this is it says you can’t use the money for regular budget spending. I don’t like that interpretation,” said Trombley. “I don’t like to limit the use of what’s left over every year.”
Hovey indicated the policy didn’t say the money couldn’t be used, just that it had to be used for “one-time items from year to year.”
“This is Bangor’s policy. They don’t use (surplus) for ordinary expenses; they raise taxes to cover that,” said Hovey.
Hovey said words like “ongoing” and “year-to-year” within the wording of the policy “applied to the capital program.”
“You can use it (surplus) to reduce those items. But to use for routine expenses that are there year after year, we say ‘no,’” Hovey said.
“These moneys could be used for library improvements, the Community Center — one-time things, not year-to-year. Once these things go up (projects are built), they don’t tend to come down,” said Nickerson.
Hall said he was “happy with the policy.”
“I don’t think it’s forward thinking. It sets us up so future councils don’t have to figure what you have in, what to do with it. It will put us in good shape for the bond market. The auditors should be happy with it,” said Hall.
“This would be the policy for the future, if approved,” added Elish.
City Manager Tom Stevens said it was a “really good policy.”
“But you have to buy into the philosophical aspect. Like a lot of policies, it’s meant to be a guiding document,” said Stevens.
With discussion concluded, Hovey made the motion to accept the policy, seconded by Hall, with a 4-1 vote in favor — Trombley being the one vote in opposition. Council then moved on to set the mil rate. Hovey made the motion to set the 2009 mil rate at just over 24.5, with zero to be taken from the city’s undesignated fund balance. Council voted 4-1 in favor of increasing the mil rate, with Trombley opposing the increase.
In other Council news:
• Amended Chapter 16, Land Use and Development Code Ordinance, Chapter 1, Section XXIV, Source Water Protection Area, approving zone map for this zone and Chapter I, Section V, definitions;
• Heard a presentation by Nate Grass on the Airport Advisory Board;
• Approved order of municipal officers for paying taxes in chronological order, beginning with the oldest unpaid tax bill;
• Approved personal property tax abatements for a mobile home at 57 Presque Isle Trailer Park as uncollectible;
• Appointed Gretchen Brissette to the Forum Advisory Board, Karl Dampf to replace Ellen Bemis on the Planning Board and Sandy Gibson to replace Sandy Gauvin on the Downtown Revitalization Committee;
• Approved consent agenda items, including the closing of municipal offices at 3 p.m. July 15 to allow city employees to attend the annual city picnic — offices would be open for business as usual July 16; and
• Approved the manager’s report, including the manager’s approval of the engineering services of James W. Sewall Company for the Downtown Revitalization project, allow the city manager to pursue qualifying the city for the designation as a Tree City USA community and set the parameters for the 2010 municipal budget, with Council to begin discussing next year’s budget in October.
The next Council session will be held Monday, Aug. 3, at 6 p.m. at City Hall. Sessions are open to the public and the public is encouraged to participate. For more information or to request an agenda, contact Norma McEntee at 764-4485 or e-mail nmcentee@presqueisleme.us.
