Norway may be forced to eye tax increase

NORWAY — Times are tough and tough choices may have to be made, says Norway Town Manager David Holt. With decreases in revenue accompanying increases in local obligations, he is concerned that the town might need to raise the local tax rate for the first time in four years. 

"There may have to be a tax rate increase this year," Holt said at the meeting of the select board Thursday, February 3. "Either that or we may have to find a way to do without things that we have always had."

Norway's income from state revenues has decreased steadily during the past few years, a result of statewide economic woes.

"If you look at our state revenue sharing which, up until recently has been our second largest source of revenue, it has dropped a lot in the last three and I'll bet it will again next year," he said.

When state projections for the next fiscal year are released in April, Holt believes that Norway will have seen a drop of $100,000 from 2007 levels, a significant decrease for a town of approximately 5,000 residents.

In addition, drops in local revenue, primarily expressed by drops in motor vehicle excise tax revenues, have made matters more complicated. Difficult financial situations for families across Norway have led to fewer vehicle purchases.

Compounding all of these problems is the fact that state-mandated general assistance obligations, paid to those presently unable to support themselves, has increased as more people have lost jobs and seen their income decrease or disappear altogether.

"General assistance is a kind of indicator for the economy," said Holt. "In good times it goes down, but in rough times it goes up.  It's been going up considerably lately."

To accommodate, Norway has been putting off increases in spending by postponing raises for non-union town workers and delaying the replacement of town equipment. Holt worries that the town is simply forestalling the payment of necessary costs to a later date.

"There are some things in the budget that we may not choose to put off any more," he said.  "We're keeping things longer than we had anticipated and, while that does help the budget in one given year, in the long-term those expenses are still there." 

Meanwhile, the salaries of non-union town employees have not increased for the last two years.  Holt will be making a recommendation to the board that the town give them a 1.25 percent per year raise, representing a total 2.5 percent increase and keeping their raises in line with those of unionized town employees.

It is too soon to forecast exactly how much money will need to be raised. Should tax rates remain where they are, however, cuts to the town budget may have to be made.  In that case, says Holt, Norway may find that its options are limited.

"In a town of Norway's size, it's pretty hard to find all that many things we do that are elective.  You look at things like the library and recreation before plowing the roads."