WESTBROOK – The Westbrook City Council took one step closer to finalizing the 2012-2013 combined city and school budget this week.
At a meeting Monday, the council voted 5-0 (Council President Brendan Rielly recused himself from the vote, saying he wanted to avoid a potential conflict of interest because he does some legal work for the school department, and Councilor Dorothy Aube was absent from the meeting) to give its initial approval to the budget. The council must hold a second vote on Monday, May 14, to give final approval to the budget. Then, Westbrook voters will have a chance to weigh in on the school budget at a June 12 referendum vote.
The city budget, which encompasses municipal and county spending, comes in at approximately $23.1 million, a figure that is down about $164,000 from the 2011-2012 spending plan.
The total school budget comes in at $30.9 million, down from the originally proposed $31.1 million, decreasing the money needed from local property taxes from $16.7 million to $16.5 million. The decrease in the school budget came from lower-than-expected insurance rates and savings realized from staff retirements.
At a meeting earlier this month, School Superintendent Marc Gousse said the school department’s budget had anticipated a 5 percent increase in health insurance costs, while the actual figure came in at 4 percent. Additionally, the department’s dental insurance premiums decreased by 1 percent and a number of teacher retirements added to the savings.
The school budget represents a 0.15 percent increase in spending and a 1.16 percent increase in the amount needed from local taxes over this year’s $30.8 million budget.
The school budget’s impact on the local tax rate is 19 cents per $1,000 of valuation, which would represent a 10 cent increase to the overall tax rate. However, that rate increase will be mitigated by money from the city’s newly created tax stabilization reserve account, which will be used to offset the increase, leaving residents with the same tax rate as this year.
The tax stabilization reserve fund, which was given initial approval by the council on Monday night, will set aside approximately $850,000 from the city’s excess fund balance to be used to offset property tax increases. City Administrator Jerre Bryant said the city would use about $183,000 of that money this year to keep property taxes level.
Councilor Michael Foley, chairman of the council’s Finance Committee, said he was happy to see the city have the money that allows it to create a fund to help offset tax increases.
“The city has been very fortunate to have sound financial management over the past few years,” Foley said. “Hopefully as the economy improves, revenues will improve and we will not have to tap into this (in future years).”
“This is something that really could have benefits down the road for the community,” agreed Councilor John O’Hara.
In addition to approving the tax stabilization fund, councilors also gave initial approval to use approximately $1.2 million from the excess fund balance to pay for the city’s capital improvement this year and to use about $760,000 to cover a deficit in the school department budget.
While the councilors supported using the money to cover the school deficit, they were clear that they wanted to see steps taken to make sure that the situation does not happen in the future. Additionally, Foley told the city administration and the school department that he wanted them to work on a set of policies to ensure that there are no future large deficits, adding that he would like to see those policies drafted in time for the council’s next meeting on May 14.
Foley said that the council’s Finance Committee would be doing quarterly reviews of the city and school finances to make sure spending is in line with revenues.
“We understand this (deficit) isn’t something that has occurred under the present school administration,” he said. “(But) this is something that I take very seriously.”
Councilor Paul Emery said he wanted to know where the money had gone.
“Apparently it’s been a 10-year problem,” he said.
Bryant responded to Emery, saying that the deficit was accumulated over a period of years and that a good deal of it could be pinned on lower-than-anticipated revenues.
O’Hara was also concerned about making sure that the city and schools avoid budget deficits going forward, but he said he believed that the city was doing the proper thing in using money from the excess fund balance to clear the deficit.
“I don’t like the idea that this has accumulated over the years,” O’Hara said. “But the fact remains, ladies and gentlemen, that we have it (the deficit), it is ours, it belongs to us and we have to clean it up. It is our bill. Before we move forward, we have to clean up the past and I am not happy about that, either.”
Gousse assured the council that he “was very appreciative of the scrutiny” that the council and the city were giving the school budget. He added that he is meeting weekly with Bryant to go over financial matters, among other things, and he will continue to work with the city.
Gousse said he has put tight controls in place to keep track of school spending. No expenditure is approved without his review, he said, and he signs off on every purchase order before any money is spent.
“It’s very important that we live within our means,” he said.