Portland City Manager Jon Jennings will present his recommended FY22 municipal budget to the City Council tonight during a remote meeting at 5:00 PM. Agenda and Zoom information can be found at www.portlandmaine.gov/agendas.
The City’s FY22 revenue outlook continues to feel the effects of the pandemic. Recent estimates from the Finance Department indicate that the City had COVID related revenue losses of nearly $28 million during FY21 and the tail end of FY20. Revenue estimates for FY22 have also dropped by millions of dollars in a number of key categories when compared to the most recently completed fiscal year prior to the pandemic. Jennings and Finance staff expect it will take some time for revenues to fully rebound.
General fund expenditures have increased 4.6% from FY21 to FY22. In light of all this, the City Manager is presenting a recommended budget that includes a 4% decrease in the tax rate on the City side of the overall budget. This 4% decrease would mean a new city-side mill rate of $11.16 per $1,000 of assessed property value, 46 cents lower than last year.
“I have made it a priority to run our municipal operations and implement Council policies in the most efficient and effective manner, and in a way that limits the burden on taxpayers,” said City Manager Jon Jennings. “I have always been concerned about the affordability of our city and how government can be a driver of costs associated with this. In light of the effects the pandemic has had on people, and the fact that we have an upcoming citywide revaluation this year, it was important to me to submit a budget with a tax rate decrease.”
Jennings continued, “Over my tenure as City Manager, I have challenged myself and staff to think of ways in which we can be innovative to improve the experience of our customers and streamline internal processes. I’m proud of what we’ve accomplished over my six years here -- the progress we’ve made in making municipal government more compassionate, innovative, inclusive, and transparent. As well as our efforts to address some of the long neglected critical infrastructure projects. I look forward to reviewing this budget with the Finance Committee and full City Council.”
The American Rescue Plan (ARP) approved by the federal government does provide the City with a backstop to recoup some of these revenue losses. It is expected that Portland will receive roughly $48 million over the course of two fiscal years. As the City continues to wait for the guidelines for how this money can be used by the December 2024 deadline, the Manager and Finance Director have crafted a three-year plan for how to use a portion of the funds to cover some of the revenue losses in COVID impacted categories.
This plan gradually reduces the need to cover key revenue loss areas over the course of the next three fiscal years as the expectation is that these revenues will slowly return. Preliminarily, the recommended FY22 budget does include the use of $8.75 million in ARP funds. Doing so allows the City to sustain municipal services while presenting a budget with a property tax rate decrease, something Manager Jennings continues to believe is the right thing for taxpayers.
City Manager Jennings is recommending using $5-6 million of ARP funds in FY23 and $2-3 million in FY24 to recoup remaining losses as revenues in key categories climb back to pre-COVID totals. After addressing the COVID related revenue losses in City budgets, the City Manager believes the use of remaining ARP funds should be decided by the City Council with staff recommendations made outside of the fiscal year budgeting process. It should be noted that if it weren’t for the use of $8.75 million in ARP funds, the projected tax rate increase would be in excess of 4% to maintain current levels of municipal services.
The recommended budget does include building back up some staff and resources in areas in which activity has resumed and in areas to meet Council goals. After the tough decisions made last year, which included a reduction of 65 City positions, this budget includes the restoration of 20.5 full-time employees.
The recommended budget also continues to dedicate a significant amount of money and staff resources to providing social services, emergency shelter, public health, and long-term care to our neediest populations. The Health and Human Services Department continues to be the City’s largest department, and over this last year they have worked tirelessly to provide crucial services to their clients and the public at-large during the pandemic. For the third consecutive year this Department received the largest funding increase of any staffed Department. In FY22, the increase in HHS funding of nearly $2.7 million is over three times larger than the increase in any other staffed Department.
Read the City Manager’s full budget letter, here.
After tonight, the Finance Committee will meet to review the municipal budget on Tuesday, April 27 at 5:00 PM as well as on May 6, 13, and 20. The Finance Committee will hold a Joint City/School budget meeting on April 29 at 5:00 PM. The first read and public hearing on the municipal budget will be held by the full City Council during its May 17 meeting and the second read will be held during its June 7 meeting.