VEAZIE – The Town Council on Monday night recommended residents increase spending and cut taxes. National politicians have said that only can be accomplished with smoke and mirrors. Veazie, however, is doing it with steam.

The $1.2 million the Casco Bay Energy Co. steam plant will pay in taxes next year will allow the town to decrease the property tax rate from $18.40 to $17.20 per $1,000 of assessed valuation. If approved by voters at the town meeting June 12, it will be the fourth consecutive year the town’s tax rate has dropped.

That would put Veazie’s tax rate about $7, or 30 percent, below surrounding communities, according to Town Manager William Reed. It also would allow the town to keep the tax rate stable and not lose a significant amount of state aid to education or state revenue sharing funds. Reed estimated that if the tax rate went too far below the state average, the town could lose 40 cents in state revenue for every $1 the tax rate was decreased.

“When we talked about the tax increment finance district for Casco Bay three years ago,” said council Chairman Roderick Hathaway, “we had a vision of a $15.50 tax rate, but we hadn’t figured in what the effect would have been on state aid to education.”

More than $775,000 of the extra income would go to capital improvements and reserve accounts including $38,000 for repairs to the municipal building, $42,000 to consolidate school and town accounting systems, $40,000 toward new fire department equipment, $30,000 to sidewalk development, $40,000 toward the elderly housing project at the old school and $20,000 for improvements to the ball field.

Hathaway said the newly created and additionally funded accounts were part of the town’s 10-year capital improvement plan and the council’s attempt to stabilize the tax rate during the next decade. He said that of all the proposed spending, the $40,000 to develop a comprehensive plan was one of the most important steps.

“Let’s be visionary,” Hathaway said during Monday’s public hearing. “Let’s plan out our future so we can control growth. Let’s make decisions now so our community will be the way we want to it to be. The comprehensive plan is the most critical item in the budget.”

The proposed budget included a 23 percent increase in the town’s year-old parks and recreation department budget. School board member Peggy Lewis praised the town’s commitment to the program and the implementation of after-school programs.

“It’s been really delightful to see the high level of participation in the programs,” she said. “It’s wonderful to see how often the school building is used by the community and to know that kids have a safe place to go after school.”

The proposed increase in the school budget was 9 percent, with most of the money going to salary increases and tuition increases for high school and special education students, according to Superintendent Thomas Perry.