Council taps reserve accounts for 2014 budget

    CARIBOU, Maine — Councilors approved a revised expense budget and revenue budget as presented by City Manager Austin Bleess during the April 28 City Council meeting, which carried a total of $8,698,999.
Last year’s budget totaled $8,894,532 in 2013-14, and the 2012-13 budget was $9,156,014.
“The revenue sharing amount for 2014 is $171,030 lower than what it was for 2013,” Bleess explained. “This is also about $1 million less than what it would be if the state had kept its promise to the citizens of Maine and fully funded revenue sharing.”
Last year’s budget came with a mil rate of 20.5, and the majority of city councilors were emphatic about holding this year’s mil increase to a maximum of 1.4.
Bleess emphasized multiple times that there are still too many variables — like the County tax and the RSU 39 commitment — to establish an accurate mil rate for 2014.
The newly approved $8,698,999 budget comes with a suggested mil rate of 21.9 — exactly 1.4 mils higher than last year.
“With the reduction in revenue sharing, which the state does not look like they will share for much longer, and the use of one-time funds in revenue and cutting of capital reserves, we are going to have to make tough choices for future budgets as to what services are going to be reduced or eliminated or how high of a mil rate the city is willing to tolerate, or what revenues we can try to generate,” Bleess said.
With $142,745 reduced from the budget since the council’s April 8 meeting, much of that reduction was realized by tapping reserve accounts — something Mayor Gary Aiken was not enthusiastic about.
“We’re just playing games with numbers, putting it off for another year,” he said. “Holding the mil rate at a certain level this year, but next year it’s going to increase twice as much if we didn’t hold it this year — that’s what it amounts to.”
Bleess reiterated that’s why the city needs to look at the budget and, at some point, make some tough decisions as to what services need to be reduced or eliminated, or how high of a mil rate the city wants to tolerate.
Councilor Shane McDougall and Councilor David Genthner opposed the revised expense budget and revenue budget.
“Since I’ve gotten on council, the only thing I hear is we need to cut taxes, we need to lower the mil rate, and through this whole process it’s been cut a thousand dollars here, $500 there,” McDougall described. “I think it’s time the city makes fundamental changes on what services are needed and required,” he said, suggesting the possibility of combining certain city services. “We’ve plucked everything off the budget that we have now. There’s no more fat to trim, so if the mil rate’s going to go down, there’s only one thing you need to do, and that’s cut services — which I know isn’t a popular thing.”
Shortfall in service fee information delays action
Information aired at Monday night’s public hearing has caused the city council to hold off on action to potentially charge a service fee for tax-exempt residential properties that are used to provide rental income — excluding student housing, parsonages and property owned by the Aroostook Band of Micmacs.
The proposed service fee — a maximum of 2 percent of the annual gross revenue — would have applied to properties like Caribou Gardens, the Central Aroostook Association, Facilities Inc. and Rose Acres; while the councilors did identify during their last meeting that Caribou Gardens pays a 2 percent PILOT already, it was not identified that Rose Acres pays five times that PILOT amount.
“I was kind of disappointed, to be frank with you, to read in the paper that Rose Acres isn’t paying their fair share,” explained Philip St. Peter, who is a founding board member of Rose Acres and has tenure with the organization exceeding four decades.
When the facility received its first rent payment from its first tenants back in 1973, St. Peter remembers that 10 percent of that very first payment was sent to the city of Caribou.
“We’ve sent 10 percent of the income every month since then,” St. Peter described. Going back 10 years into the books of Rose Acres, St. Peter reported that Rose Acres has paid the city of Caribou $405,239 in the past decade.
“If we were to pay at your present tax rate of 22 mils, you’d be getting $37,400 from us. Last year you got $44,900 from us, so if we were being taxed the right rate, you’d be losing $8,000,” St. Peter explained. “If you pass this ordinance today, and you tell us to pay 2 percent — instead of the $44,960, you would receive $8,830 from us.”
Back when Rose Acres opened, St. Peter described that a stipulation of receiving that first loan from Farmers Home Administration was that Rose Acres would not pay taxes; instead, they were instructed to pay a 10 percent fee to the city of Caribou, and they have been doing so ever since.
When asked, City Manager Bleess informed the council that he was aware that Rose Acres was sending monthly payments, but wasn’t sure how those payments lined up with the 2 percent.
Councilor David Martin pointed out that paying a service fee in lieu of taxes has been part of the business plans for both Caribou Gardens and Rose Acres.
St. Peter expressed his disappointment that the city hadn’t done their homework, and Mayor Aiken said that he was disappointed himself.
“In my opinion, we’re not going to act on this tonight based on what I’ve heard already,” the mayor said.
Also speaking during the public hearing was Brian Ostlund, manager of Facilities Inc.
“I guess about the only thing I have to say on this is I hope the council would consider that nonprofits work on tight margins, and 2 percent could make a difference as to whether we stay open or close. “The margins we’re running there right now, we can’t charge any more rent to our clientele because we’re locked in at the HDU (Housing and Urban Development) fair market rate, and we simply can’t raise our rates to cover this 2 percent,” he added.
While Ostlund expressed his concern that Facilities Inc. could possibly close due to a 2 percent service fee, Councilor Martin questioned St. Peter’s willingness to continue paying 10 percent as opposed to 2 percent.
“I’ve always believed that everyone should pay their fair share — that’s the way I’ve always been,” St. Peter answered.
The council voted to not take action on the service fee until additional information can be obtained, with councilor McDougall opposed.
Empty ballot for city council vacancy
The council approved the date and time for the special election that will fill a vacant seat on the council, but no one has decided to run for City Council.
During last November’s election, the seat’s victor was found to be ineligible to serve on the council and, in January, longtime council member Kenneth Murchison was appointed to the seat until an election could be held. The election will determine who will occupy the seat on the council for the remainder of its term — which runs until Jan. 1, 2015.
As the ballot lacks candidates this election, City Clerk Jayne Farrin explained on Tuesday that voters may write in a candidate to fill the council seat — making certain to fill in the indicator bubble stipulating that they’ve written in a name.
Ballots this election — both the school’s and the city’s — will be hand counted; Farrin reminded voters that the candidates they write in need to be residents of Caribou who qualify under the charter.
“We’ll count the ballots and if the person who gets the most votes is a Caribou resident, and qualifies under the charter, they will be the winner,” she explained.
“If that person chooses not to serve,” Farrin added, “it will not go to the second place finisher.”
The election takes place for Tuesday, June 10 at the Caribou Wellness and Recreation Center; polls open at 8 a.m. and will remain open until 8 p.m.
The next meeting of the Caribou City Council is scheduled for Monday, May 12 at 7 p.m. in the councilor’s chambers.