07/09/2013

State revenue, expenditure estimates reduce projected tax-rate increase for 2013-14

Municipal revenue sharing will be lower, the cost of the Homestead Exemption will be higher, but so will the state's school subsidy for 2013-14.

The bottom line? A lower anticipated tax rate for property owners in Cape Elizabeth.

Passage of the state budget last month caused the Town Council on July 8 to restate its municipal budget approval for 2013-14, one that increases anticipated revenues by a total of $239,455 by also increases expenditures by $38,242.

"The changes have the effect of lowering the proposed tax rate from $16.40 per $1,000 valuation to $16.28 per $1,000 valuation," Town Manager Michael McGovern said in a memo to the Town Council.

The rate represents an increase of 2.8 percent over 2012-13, up 44 cents, but 12 cents less than what was adopted by the council in May and subsequently approved by voters for the school portion in the school-budget validation.

This restated budget approval reflects three revised estimates:

• State School Subsidy from $2,192,506 to $2,620,194 - an increase of $427,688.
• Maine State Revenue Sharing from $640,000 to $451,764 - a decrease of $188,236.
• Homestead Exemption local cost from $157,000 to $195,242 - an increase of $38,242.

School expenditures will remain at $22.5 million. The schools will not be spending the extra $427,688 in state subsidy because part of the council's budget adoption in May stipulated that unanticipated state revenue would be used to reduce the property tax.

"There is a concern, however, that this is only anticipated revenue," McGovern said at the meeting July 8. "There could be a curtailment. If so, we would hold the schools harmless," he said.

The budget restatement says that if a curtailment of state school funding does occur, the town will make up the difference so that the authorized school expenditure amount is unchanged.

State budget ups and downs

"The (state) budget has had its ups and downs for Cape Elizabeth," McGovern said. At the June council meeting, officials braced for a possible $215,500 reduction in revenue sharing that would have meant a higher tax rate than originally proposed. The adopted state budget includes a revenue-sharing reduction of $188,236 for the town, and a $38,242 increase in the cost of the Homestead Exemption to the town.

The Homestead Exemption gives Mainers who have kept their home as a primary residence for the last year a break by exempting $10,000 of their property's value from taxation. The adopted state budget reduces the reimbursement to the town for that exemption by $38,242.

The anticipated increase in school subsidy, however, offsets the reductions in state revenue sharing and reimbursement for the Homestead Exemption, resulting in a property tax rate that will likely be lower than councilors thought when the budget was adopted in May.

The town assessor is expected to commit and set the property tax rate in early August.