2016 budget awaits vote
as community center gets topped off
PRESQUE ISLE, Maine — Sometime between now and the end of December, the Presque Isle City Council has to approve a budget for next year, most likely with at least a small tax increase, and confront a number of ongoing issues.
The councilors met most recently Nov. 16, 2015 for one of several budget workshops on spending plans for next year and are still mulling over the city manager’s recommended $11.3 million budget, plus $1.7 million in capital spending requests from city departments. The council will meet again to consider the budget on Monday, Dec. 7, 2015.
City Manager Martin Puckett and other staff have been trying to craft savings in different areas since first proposing the budget to council members, and he estimates that the budget would come with a tax increase of 1.86 mill, to $27.32 per $1,000 of property value.
Without additional capital spending, the recommended 2016 budget would amount to an increase of 7 percent over 2015, a chunk of which is a projected $525,000 to pay for the bond debt set to be borrowed for the community center.
Some $6.06 million of the budget, about 2.7 percent higher than last year, is devoted to personnel costs for the city’s approximately 100 employees — including salaries, insurance and benefits. The city employees’ union is still in discussions over compensation issues, though Puckett expects health insurance spending to increase by as much as 8 percent.
In the rest of the budget, $1.87 million would be devoted to contractual services covering everything from snow hauling to debt payment, and $1.4 million would cover supplies and maintenance. About $978,000 would pay for the city government’s utilities, $628,000 would go to capital outlays (a slightly pared-down version of what department heads are seeking) and $427,000 would account for the “other” category, including $70,000 in general assistance and $14,000 for the city jail.
With $4.1 million in expected revenue, under the manager’s recommended budget Presque Isle would spend $7.24 million next year, about 11 percent more than net spending in 2015.
Among the city departments, public works would receive $1.7 million, the police $1.2 million, the fire department $917,000, the parks and recreation department $798,000, the library $358,000 and the Presque Isle Industrial Council $354,000.
Much of the increase in next year’s proposed budget would come from the addition of the community center to the category of debt, adding $525,000 and raising total debt to an estimated $901,000. The city council recently voted to authorize the city government to take as much as $9 million in bond debt to finance the community center and other projects lying in the potential pipeline, including a new outdoor pool.
The $525,000 slated for next year’s debt payment for the community center would join a slew of other debt responsibilities, including $170,000 to pay for the public safety building (part of a $2.6 million loan being paid through 2021) and $94,000 for the public works garage (part of a $1.14 million loan ending in 2025). The debt service also includes payments for a number of properties subsidized through the Presque Isle Industrial Council — $4,273 for the Acme Monaco building, $4,300 for the Child Services building, $6,389 as part of a reserve for the FedEx building and $57,000 for renovations to Building 615, being used by Northern Maine Community College.
Councilors still have to decide what allocations to make to various departments and private organizations like the Central Aroostook Chamber of Commerce, Wintergreen Arts Center and the Area Agency on Aging. And, if not as part of the budget proper, in the coming months they’ll also have to weigh in on pool designs and other potential projects.
And then there are other financial issues that crop up.
At the last budget workshop, Floyd Rockholt, a trustee of the Presque Isle Development Fund, raised concerns about the city-owned fund slowly leaking its modest principal to pay administrative fees charged by the city — an odd scenario of a city losing money to itself.
The $28,000 annual administration fee the fund is paying to the city planning and development department “is more than the income that the fund gets from interest,” said Rockholt, the owner of Eagle Hill Stamps & Coins. “It’s eating into the principal and the fund balance, and that is something that I don’t think should happen.”
Last year, the fund earned $21,500 in interest, while losing a net $13,000 from the principal, Rockholt said.
The development fund was created in the late 1980s, using a federal grant intended for a food company that left the area, and it’s aimed at helping start-up ventures and expanding businesses with low-interest rates, often in combination with capital from commercial banks, Rockholt said. There are currently 12 loans out, including one to the city government at no-interest for the demolition of the former Cunningham Middle School.
The fund is going to track how much time is spent on administration, but Rockholt also sought some intervention from the council. “I’d put it out to bid and I’d guarantee you could get a bid for administering the fund for $5,000 or $6,000 easily.”
Councilors said they were concerned about the fee and vowed to look into it.
“I don’t remember us actually discussing these fees as a council in the past,” said councilor Craig Green, who also sits on the development fund’s board. “This was an administrative thing behind the scenes that maybe Jim [Bennett] or other city managers had worked out in the budgets. I totally agree that we could look into it.”
“The fact is we need to evaluate whether our actual cost is to do the administration,” said Emily Smith, city council chair. “If it in fact is more than the interest and it’s eating into the principal of the development fund, than something needs to be changed.”
