OLD TOWN – If the Palesky Tax Cap proposal passes in November, residents could find themselves living in a much different place.

The tax cap would create a $5.5 million shortfall in the city’s budget, requiring officials to make some drastic cuts, according to city department heads.Among the changes would be:

. The Fire Department would become all volunteer.

. The Police Department staff would be “substantially” reduced.

. About 50 of the town’s 74 full-time employees would be out of jobs.

. The library would be open only a few hours a week.

. There would be no more curbside trash pickup.

And the list goes on.

Those are only some of the services city officials say likely would be eliminated or drastically reduced after taking a “first pass” look at the impact the tax cap would have on the city.

The school department also would be hit hard if the tax cap is approved. Superintendent Matt Oliver estimates that 100 employees would be let go, only the basic core classes required by the state would be funded, athletic programs and co-curricular activities would be eliminated and class sizes would jump to 30 to 40 students per teacher.

Joe Schlick, the city’s interim town manager and finance director, said those preliminary cuts would save approximately $3.1 million, but that still leaves a shortfall of more than $2 million.

“Much more work would have to be done if the cap becomes a reality,” Schlick wrote in a recent memo to city councilors.

The proposed Palesky Tax Cap would limit local property taxes to $10 per $1,000 valuation.

The tax cap would allow Old Town to raise $4.1 million through property taxes, resulting in a 20 percent reduction of the total gross budget, according to Schlick. The City Council has the authority to decide how much of that money would go to funding schools and how much would go to the city.

Previous practice has been to split the funds almost 50-50. This still would cause the school to lose about $2.7 million in tax revenue.

The school department would be affected even more, however, because state education funding also would be reduced.State law requires that a minimum local amount of dollars be raised in order for a school department to receive the full amount of state funding. If property tax funding under the Palesky Tax Cap is split 50-50, the local amount that could be raised is just more than $2 million, leaving an approximate $1.5 million shortfall in the amount required to be raised locally to keep the state education subsidy, Oliver said.

The state education subsidy would be reduced dollar by dollar accordingly, cutting school funding in Old Town by more than $4.2 million.

On the other hand, if the city chose to give the school all the funds it legally could, as other cities and towns have pledged to do, the municipality would be left with $100,000 to operate for the year after county taxes are paid.

“It’s shocking, but that’s what the numbers would represent,” Schlick said at a recent City Council meeting.

FY 2004-2005 Old Town tax figures

City $4,359,344

School $4,846,533

County $476,981

Total $9,682,858

Total tax allowed by tax cap $4,121,199

Shortfall $5,561,659