Norway looking at budget woes

NORWAY — Town Manager David Holt had some bad news for the Board of Selectmen during its meeting last week.

Over the first four months of the fiscal quarter, the town has seen losses of $93,050 compared to last year.

Unless the trends dramatically reverse themselves, Holt questions whether the town may be forced to cut services or raise taxes.

"That's $100,000 not in the town's favor in the last four months," said Holt, "so if you multiply that out, you get some idea of where we're headed, even though it's not exact."

Holt passed out documents showing that the town has seen a drop in revenue sharing and excise taxes, as well as an increase in General Assistance (GA) costs.

Holt said that the revenue losses have come at a time when property taxes, and property tax rates, have remained stable.

"Other sources are less stable," said Holt. Even though other revenues are a small part of the revenue picture, as compared to property taxes, "they are very important because they are a significant amount of money."

Over the four months, "we're spending $18,000 more than we did last year [on General Assistance]."

Increased GA costs aren't the only, or even biggest, part of the problem. Holt said that the shortfall is happening due to "several things driven by a variety of factors."

The biggest hit to the town comes in the form of reduced revenue sharing, which dropped from $197,000 to $132,000 over the first quarter, a loss of $65,000.

Excise taxes dropped by about $10,000, to $210,767.

Another complicating factor is the fact that SAD 17, which has lost significant state revenues, is likely to ask for an increase of local support.

The grim news forces the town to consider unpleasant options.

"Does the tax rate increase?" read Holt's handout, "Are services cut? Are new efficiencies and sources of revenues found?"

Tax rates have remained stable in Norway for the past three years, and increased property values in the town have continued to boost Norway's budget during that time period.

However, there is no indication that the town's growth will make up for the red ink.

"We should not anticipate that growth will pay for increases in the cost of mandates and loss of revenues," said Holt.

Since 2008, the town's total property value has climbed, albeit at an ever-slowing rate.

Between 2008 and 2009, the town's growth caused an increase of $231,689. The following year, that slowed to an increase of only $87,182. For the current year, FY11, the increase has shrunk to a mere $19,444, much less than the anticipated shortfall in the town budget.

"Even though the revenues have been declining and costs, such as from the school and county, have gone up, the selectboard has been able to do diligent work to keep the tax rate very stable," said Holt.

That may have to change.

"None of the alternatives are going to make anybody jump up on the table and say 'hooray,'" said Holt. "There are going to be things that are challenging and difficult."

As part of his presentation, Holt appended an eight-page list of state-mandated tasks that municipalities must do.

"If you read this list of things that we're forced to do by law, you could all find some things that maybe you think we could do without in tough times," said Holt. "I am hoping that our new governor and new legislature will look at this list with that eye."

The list, which was originally compiled by the Maine Municipal Association (MMA), contains many services that municipalities provide to citizens.