The City of Portland is facing budget challenges that could leave it with a projected $20 million shortfall for the coming fiscal year.
A decline in general assistance aid from the state, the loss of American Rescue Plan funds and overtime pay for city employees represent more than $16 million of the shortfall.
Mayor Mark Dion said federal relief funds during the pandemic allowed the city to stay afloat, and those have run out.
"COVID funding allowed us to maintain our revenues when they dropped, and we could have a service level people got accustomed to. Now that funding is worn down, costs have caught up with us and we have to make some other choices," he said.
The City finance director told the council last week that the shortfall could lead to a 9.5% increase in the mill rate, which would add about $500 to the tax bill of a property owner whose home has a median value of $375,000.
Dion said citizens are contacting him to suggest flat funding the city budget to avoid a mill rate increase, but he says that would require cuts in services.
"I think they need to be more engaged. Listen in to the budget hearings. Send us your feedback. Help us make choices, because that's what it's going to boil down to," he said.
The city's finance director said there are ways to reduce the shortfall, including investment management that could bring in $1 million of interest and income, using a debt service reserve to cover pension obligations and continuing to lobby the state for general assistance funding.
At a council meeting last week, City Manager Danielle West said the city is looking for the state to reimburse it for 90% of its general assistance costs, due to the millions of dollars Portland spends to meet the needs of its unhoused, immigrant and low-income communities.
"They're looking at a total overhaul of the GA system, so I don't know where it will land. We will be involved and talking with our lobbyists about that being the No. 1 focus this legislative session because of the fact that one-time funding is so significant because of the big burden we shoulder here in Portland," she said.
Legislation to expand the general assistance system in Maine was carried over from the last session. The Health and Human Services Committee takes up the measure in Augusta on Monday.
West is expected to have a draft budget for the city council April 8.
