BANGOR – An analysis by City Manager Edward Barrett of the impact of the state’s new property tax reform initiative suggests that the measure could result in as much as $2.4 million in savings for Bangor property tax payers.

As it stands, Bangor’s proposed $74.7 million budget for city and school operations is expected to result in a property tax rate of $20.45 per $1,000 in valuation.

According to the analysis, done at the request of Councilor Dan Tremble and distributed to city councilors Wednesday night, the city’s property tax rate for the coming fiscal year would have been $21.71 per $1,000 in valuation without the limits set by LD 1.

“It has disciplined us in terms of what we spend for operating the city,” Tremble said Thursday in a telephone interview. “It’s had a huge impact. A drop of over a buck and a quarter on the tax rate is substantial.”

The tax reform program, known as LD 1, aims to ease the local cost burden on the school side of the ledger by providing more state money while curbing the ability to raise taxes on the municipal side. It also requires municipalities to offset “net new state funding” through a reduction in the maximum allowable tax levy.

The maximum allowable tax levy can be exceeded or increased only if approved by a majority vote.

In his memo to councilors, Barrett wrote that LD 1’s biggest impact on the municipal side of the budget is the limit it places on the tax rate. Because of that limit, the city expects to spend $475,612 less on providing city services next year.

Under the proposed $36.4 million education budget, Bangor schools would receive $13.5 million from the state and need to raise about $19.8 million locally. An additional $3.1 million would come from other revenues and balances.

Though the school budget shows a 4.7 percent, or $1.6 million, increase over this year, the local share will be 4.28 percent lower because Bangor received $2 million more in state aid under Essential Programs and Services than it did under the old education funding formula.

School officials have used $884,000 of the increased funding to offset the local tax burden, Superintendent Robert Ervin said in recent talks with city officials.

The actual effect on individual property taxpayers will vary, Barrett cautioned earlier. In some cases, the lower tax rate will be washed out by increased property values.