By Dan Aceto

Staff Writer

The Scarborough Finance Committee met last week to review the town’s current budget and discuss expectations for the 2011-12 fiscal year.

Town manager Tom Hall said he expects this year’s budget process will not be easy.

“Not unlike the last two years, we are in a time of decreasing revenues. We won’t have typical growth in value as expected,” he said.

Hall said while expenses for the town have remained roughly the same, he anticipates inflation in many fixed-cost services such as health insurance, workers compensation, utilities and oil costs, which comprise most of the budget.

“It’s going to cost more just to maintain these things,” Hall said. 

Finance Director Ruth Porter  said this year’s town budget was $65.6 million and about 48.6 percent has been spent.

Porter said the town fund balance also has decreased from about $4.5 million to $2 million. The school fund balance decreased from about $1.8 million to $1 million.

“In some respects it has gone down because the town and school designated to use $850,000 each to help fund the budget,” Porter said.

Hall said the fund balance plays an important role in offsetting the town budget.

“It’s important to maintain a healthy balance for these times,” Hall said. “We’re not going to have the ability to use the fund balance like we have in the past.” 

Porter said the fund balance is used to offset the cost of the budget whenever necessary.

Hall said the school department will also face its own set of challenges now that stimulus money from the American Recovery and Reinvestment Act of 2009 will not be available.

“It’s still unclear to me and others what will happen with state education subsidies and what level of support we can expect from the governor. That could make a huge difference,” Hall said.

In addition, the issue of whether to construct a new intermediate school building is a topic that will need to be addressed, he said. 

Last week the school board approved the Wentworth Building Committee’s decision to construct a new intermediate school in response to concerns of mold, asbestos, radon and other structural problems associated with the current building.

“It’s certainly looming large,” he said.

Hall said the multi-million dollar project will undoubtedly be brought to voters in November. Although a new school would not be factored into the 2011-12 budget, he said the budget will set a precedent for things to come.

“It’s important to set the mood and tone by setting a good budget this year,” Hall said. 

Councilor Mike Wood agreed and said the issue of building a new intermediate school cannot be avoided. 

“The earlier that enters into the discussion the better, because that’s a reality,” Wood said.

Wood said construction of a new intermediate school also could generate more local revenue through construction and other services. He proposed the finance committee organize a breakdown of all services in town and how much each costs to better analyze spending.

“That  way       we can see, ‘this is what you get for your tax dollars,’ and look at which programs work and which don’t,” Wood said.
Hall also said three union contracts for the paramedic, police and dispatch unions end this year and that non-union employees have not received cost-of-living pay increases in the past two years. He said he would like to reward employees if possible.

“If we don’t give them a raise from one year to next, they’re effectively bringing home less money,” Hall said. “It’s really a matter of morale and the quality of our staff is a direct reflection on the quality of service we offer.” 

Hall said residential home values are lagging by as much as 10 percent and although he remains optimistic Scarborough will make a steady climb out of the recession, the mil rate may increase.

“If the value goes down, the tax rate goes up, it’s a simple mathematical equation,” Hall said. 

Hall said in past years the total town valuation with new construction and appreciation in value exceeded $60 million annually. That number is now closer to $15 million he said. 

“With the bust in the real estate market values have not appreciated as they had been. That additional value each year gave us the ability to fund cost of operations without affecting mil rate,” he said.

Hall said the mil rate currently stands at $12.63 per $1,000 of property value, up from $12.15 last year.

Hall said two promising residential development projects currently under consideration at Eastern Village and Dunstan Crossing could bring the town more revenue.

 “It’s a positive sign that developers and banks are backing them and building homes,” Hall said. 

Finance Director Ruth Porter said she would like to remain optimistic about the upcoming budget proposal.

“I think it might be a little bit of a tough budget, but if we adjust revenues appropriately I don’t think it should be that bad. The only unfortunate thing is taxes might have to go up a bit,” she said.

Hall said this year’s budget must remain focused on Scarborough’s top priorities.

“This isn’t a year to be taking on any new projects or initiatives, we need to be buckling down and sticking to basics,” Hall said.