Holt calls impact of budget 'perfect storm'

NORWAY —  Individual town department budgets may be slashed more than 10 percent for the town to absorb the revenue loss incurred if Governor Paul LePage's proposed 2014-2015 state budget is passed.

Selectmen at the January 17 meeting agreed cutting back on department costs is the best way to respond to the revenue loss.

Without cuts, the town may need to raise taxes, Town Manager David Holt told board members.

"We would have to raise as least 10 percent more," he told selectmen. "I can say that with certainty." 

Holt said LePage's tax shift would result in a $250,000 loss in revenue sharing, a loss and shift of homestead exemption of $113,472 and a personal property reduction of $80,000 –  a $443,472 total increase. 

A projected $285,177 increase in Norway's share of the SAD 17 budget means the impact to next year's budget could be $728,649.

Holt calls the impact of the shift in state costs on Norway "The Perfect Storm." As a result, Chairman Russ Newcomb suggested that the town "prepare for the worst." 

"I don't remember ever seeing such a pervasive shift of costs and cuts onto the towns all at once," Holt said. 

The budget increase does not even consider yearly increases for utilities, personnel costs, insurances and so on, Holt explained. 

In Norway, in particular, Holt said, property taxes are "exactly average" for the entire state of Maine. According to Maine Revenue Services in 2012, the average equalized property tax rate was 12.78. Norway's was 12.98. 

However, only 72 percent of Norway residents have the ability to even pay their taxes, Holt said. 

Not only has LePage increased costs to towns, Holt explained, he has also proposed elimination of tax and rent refund programs for people under age 65, as well as capping state general assistance. 

"All of those programs which are now available to people with certain income levels will be gone as we know them," Holt said. "They will be replaced with programs for people age 65 years and greater.

"It's true they have a hard time paying their taxes, but that is our mental image of these folks; it is not necessarily the truth about all of them. Some of them have significant bank accounts, some of them have retirement.

"So, while emotionally this may sound like a great idea, I am not convinced," Holt said. "In my heart, I might be able to see the point, but in my head, I know that this is going to cause some problems." 

Additionally, Holt said, Norway's liens and foreclosures have doubled the last two years, which indicates "maybe raising property taxes is not such a neat idea." 

Holt said some budgets can't be cut – many of Norway's expenses are somewhat fixed, he said. "If we try to make cuts ... it means that those things we can cut have to be cut more," he explained. 

Holt met with department heads last week offering two options, including cutting back costs by 10 percent or perhaps cherry-picking items from the budget, he told selectmen. 

"I have confidence that I can decide whether we need to arrest someone who is robbing a house or put out a chimney fire," Holt said. 

He also said he's spoken to town office staff about possibly reducing hours or cutting at least two positions. 

"I read today that Governor LePage said 'we're all going to have to tighten our belts,'" Holt said.

"I would like to see evidence that he's tightening the state's belt at the same rate he's asking the towns to tighten theirs."