FAIRFIELD — Voters approved taking up to $150,000 from the town’s savings account to make up for dramatic cuts in municipal revenue sharing Monday night, but the ongoing state budget battle could still raise local property taxes.

About 60 voters at Monday’s special town meeting approved drawing from the town’s undesignated fund balance, sometimes called the surplus account, after a five-minute discussion.

The move is meant to ease the tax impact of a $243,000 cut to the town’s municipal revenue sharing program that’s in a state budget approved by the Legislature earlier this month. Gov. Paul LePage vetoed the budget Monday; the Legislature is expected to vote on a possible override when it reconvenes Wednesday.

Town Manager Josh Reny said that veto by LePage, who has advocated for an elimination of municipal revenue sharing, leaves open the possibility of even deeper cuts.

Last year, the town received $727,000 in revenue sharing. Under the state budget that LePage vetoed, it would receive about $483,000. If further cuts were made in response to the veto, Reny said, Fairfield would have no time to call another town meeting before its property tax assessments become due.

“This is all sort of last minute and we’re late in this process,” Reny said.

In that scenario, further municipal revenue sharing cuts would result in a local tax increase.

Fairfield’s town leaders have worked to raise the undesignated fund balance in recent years, which was $26,000 in arrears five years ago. Last June, an audit showed the account had been built up to $1.1 million.

Reny said that while Monday’s vote allows the town council to take money from the undesignated fund balance, it may not take the full amount authorized by voters. If the town’s departments spend less than the $5.4 million currently budgeted for, the savings can be applied to the budget gap, which would lessen the need to tap into the undesignated fund balance.

“There’s a very good possibility that at the end of next year we will not have tapped into any of that $150,000,” Reny said. “We simply don’t know.”

Reny said voters must understand that their tax bills will increase, even though the town budget itself was flat this year.

The town’s property tax rate is $19.70 per $1,000 of assessed property value, but an increased assessment from School Administrative District 54 will increase the rate to about $20.30 per $1,000 of assessed property value.

Fairfield is one of many towns that will be left with a last-minute budget gap created by the reduction to municipal revenue sharing. Other towns are considering drawing down their own undesignated fund balances, cutting services, raising taxes or some combination of the three.

Reny said Fairfield’s town council decided against making last-minute adjustments to the town budget because “we don’t want to make a very quick and not-well-thought-out position on cuts.”

The state budget passed by the Legislature reduces the total amount of municipal revenue sharing from $140 million to $100 million statewide.

Matt Hongoltz-Hetling — 861-9287
mhhetling@centralmaine.com

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