Old Town manager lowers estimate of tax cap impact to $4.5M shortfall

OLD TOWN – New estimates on the impacts of the proposed Palesky tax cap show that cuts could be slightly less than original figures given by former City Manager John Lord.

The overall shortfall would be about $1 million less than Lord’s previous $5.5 million estimate, according to figures from City Manager Peggy Daigle.

Daigle’s estimate of the municipality’s revenue loss, at $4.5 million, includes a few different assumptions from those Lord had applied to his calculations, she explained on Tuesday.

Using 2004-05 property valuations and budget amounts, Daigle said she assumed that certain city and school debt had been legitimately approved by voters and didn’t have to be figured into the mill rate.

The proposed Palesky tax cap would limit local property taxes to $10 per $1,000 valuation. Voter approved debt, however, does not have to be figured into that amount.

For example, Old Town’s approved debt would be added to the 10 mill rate cap, allowing the city to raise property taxes to $13.52 per $1,000 of valuation even under the Palesky initiative.

“If it wasn’t approved right, it does come off the top and it’s that much less that we can raise,” Daigle said.

She also did not include the 55 percent education funding previously approved by a referendum vote or the additional or increased service fees and other charges the city would look at if voters pass the item.

The city will “aggressively seek” increased fees and other charges if Palesky passes, Daigle said.

On the school side, the city manager said she would rather make sure the schools are funded before worrying about town funding.

The City Council annually determines how property tax revenues are divided between the school and city. Previous practice has been to split the funds almost 50-50, but Daigle said she likely would encourage the council to ensure that the schools are funded first if the proposed Palesky initiative passes.

“Personally, I like giving the money to the schools,” Daigle said. “The schools and the kids are your future. It doesn’t make sense to do things the other way around.”

If the revenues are split the same way they historically have been, 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.

Supporters of the Palesky initiative have said that the consequences won’t be as dire as some town officials have said.