New Years’ Dreary: Town managers leery of coming year

OXFORD HILLS — Across the nation’s airwaves, and through the internet, on financial news programs of all kinds, the cry has gone out — “If you think 2008 was rough, wait until 2009.”

Naturally, the economy has a direct impact on municipal government, and the taxes paid to support it.  Here in the Oxford Hills, however, town managers say 2008 was, taken as a whole, not as bad as might have been expected. 

What is concerning, they agree, as they sit down to draft annual budgets to be voted on in June, is the outlook for the coming year.

In Norway, Oxford, Paris and Buckfield, town managers say they got through 2008 with excise taxes relatively unscathed.  While all report a dip in the dollars collected from vehicle registrations, the drop so far this fiscal year, on average, amounts to no more than  “a couple thousand dollars.”

“That caught me by surprise,” said Norway Town Manager David Holt.  “I would have expected [it to drop] a lot more.  I can only guess that maybe people are taking advantage of deals on new cars, or maybe they bought expensive cars last year and the excise taxes on those are still fairly high.

“Excise tax revenue is something that may take a couple of years before we really start to see a decline,” said Holt.

What’s also surprising, is that building permits are up in Paris, and nearly doubled, year-to-year, in Buckfield, while foreclosures are either static, or trending down.

Paris, for example, sent out 36 foreclosure notices in early December, for unpaid 2007 property taxes, 22 fewer than the year before.  Of those, the town had to foreclose on just three homes. 

However, Town Manager Sharon Jackson says the total past due on those three homes amounted to a little more than $4,000.  One of the homeowners is expected to make good soon, while the mortgage company has paid back taxes on the other.  Jackson said she hopes to sign quit claim deeds on both properties within two weeks.  Meanwhile, the third homeowner has agreed to a payment plan to reclaim the property. 

“I’m not having a problem with payments not coming in for taxes,” said Jackson.  “That’s a good sign.”

All four towns are on pace for collections from all sources, reporting that with the fiscal year half over, each has brought in between 46 and 55 percent of expected revenue.

“We’re right were we estimated we would be,” said Jackson.

The good news for the towns appears replicated in the business community.  Steve Wallace, director of the Oxford Hills Chamber of Commerce, says 60 new members have signed on since he took the helm late last spring.

About half of those members, he says, report doing “surprisingly well,” during the past few months.

What is suffering, he says, are businesses dealing in “luxury items.”  And while two modular home manufacturers closed this last year, and it will “a couple of years” for the industry to recover fully, Wallace says the factories and builders that remain report brisk business, despite some seasonal layoffs.

“Even though the pie isn’t bigger than it was last year, their slice of that pie is bigger,” says Wallace.

Of course, with far fewer manufacturing facilities in the area than  during the last economic downturn, in the early ‘90s, it becomes harder to measure the impact of a recession.

“We’ve become a fairly residential place,” says Holt.  “Most people who are lucky enough to have a job drive off to Portand to work.   So the affect of bad times does not hit us in the face quite as much.  It’s not as evident.”

Still Holt reports that applications for general assistance are up, at least anecdotally. 

“I see a lot more people standing in line for that,” he says.  “We have a lot more people on our work fare program.”

However, while Norway allots more than $30,000 to help the needy, smaller towns, like Buckfield, appropriate a lot less.  Buckfield has rarely exceeded the $2,000 voters set aside — last year it spent $1,500 — but already this year, only a third of the way into the winter season, Buckfield’s two grand is gone and the town is dipping into general fund reserves to fill oil tanks.

That and other indicators, have town managers on edge as they begin to craft budgets for next year, a process Holt likens to “exploratory surgery” even in times of milk and honey.

“I’m very much concerned, for us, for the year that starts July 1,” says Holt.  “We’ve go a lot of work that’s needed on our highway and sewer systems.  I don't know how we are going to pay for that stuff in the economy we are facing.”

“I think the hard times the towns are looking at is all based on asking, ‘What will happen next year?’” agrees Buckfield Town Manager Glen Holmes, whose town already is over budget on winter road maintenance.

“We’re just trying to keep the budget reasonable for our needs,” says Jackson.  “Last year we kept it flat-funded, but we do have needs we have to take care of this year.   You can’t put off maintenance, or it will cost you in the long run.”

As an example, Jackson says Paris should have purchased a new police cruiser last year.  This year, it’s looking at buying two.

Keeping up with maintenance can be a challenge in the face of annual increases to so-called “fixed costs,” such as insurance premiums, fuel, and salaries.

While Paris plays catch up on the age of its fleet of vehicles, Holt says Norway, which took out a million-dollar road bond just four years ago already has “stacked up” another million dollars worth of projects.

“In Buckfield, we need to do four-and-a-half miles of road every year, and, even now, we’re not doing that,” said Holmes.

The concern for local towns seems to focus on two general areas — a drop in state revenue sharing and a proposed change in how excise taxes are collected, scheduled for a November, 2009, vote. 

Holmes says that while he has yet to see a loss in revenue from the state, scuttlebutt among his peers is to expect a 5 percent decline in the current fiscal year.  A projected $838 million revenue shortfall in the state’s next fiscal year means another drop, plus promised cuts in tree-growth programs, a tax rebate enjoyed by many area residents.

“When the state brings in less money, we get less money,” says Holmes.  “For us, that could mean $100,000.  My selectmen have asked me to bring them a flat budget, but with less revenue, a flat-budget can mean a dramatic tax increase.  I need to find a way to bring in a negative budget in spending to maintain zero tax growth.”

“It is concern,” says Jackson, pointing out that Paris expects to get  $460,000 this fiscal year from various state revenue sharing programs.

“We depend on that,” she said.  “If we don’t have that, we have to make up for it somewhere else. 

“It’s going to be tough to make up for that,” says Jackson. “I don’t think the state realizes that, when they decrease the revenue they  give us, that impacts local property taxes.  I don’t know how else we going to make up for that.”

State Rep. Sawin Millett (R - Waterford) says that while the mood under the capital dome can change between January and May, legislators do appear to have local wallets on their radar screens.

“Right now, there appears to be broad bipartisan support for decreasing state services, rather than raising taxes,” he said, in a recent interview.

Still, he says, elected officials cannot control what voters do in the ballot booth.  The November excise tax measure promises to cut excise taxes in half, and cut sales taxes on vehicles that get more than 40 miles to the gallon.

“People need to understand, and I’m not sure that they do, that while this will decrease their excise taxes, it will increase their property taxes,” says Jackson.

“The thing about the excise tax is that it is the one government fee in which all of the money goes where it is supposed to,” says Oxford Town Manager Michael Chammings.  “One hundred percent of it goes to maintain the roads and, legally, we have to maintain the roads.  I can promise you that ever dollar lost on the excise tax will end up going to the property tax.”  

“People can pay less for excise taxes, but they should then expect to have poorer roads,” agrees Holt.

“I’ve been doing this a long time and what I have come to find is that people expect two things of me, most often,” says Holt.  “They want good roads and low taxes.  But those two things are not good companions.  It creates a bit of a struggle, like a brother and sister growing up.  They get mad at each other all the time.”

Meanwhile, Buckfield has its one special set of problems as it prepares to merge its school district with two northern neighbors.   Consolidation of central office functions will not save money, Holmes said, because Buckfield’s share of a much larger central office may be more than it paid to run its own, smaller one.

“School consolidation is not ‘save money, year one,’ kind of a thing, or even a ‘save money, year five,” said Holmes.  “Here, must of the staff cuts will come through attrition, but then there will be costs associated with merging union contracts, so, even with time, there won’t be a tremendous savings.”

On this side of the mountain, Norway Paris and Oxford remain in talks about overhauling fire services, which, if approved by voters, could mean full-time firefighters and increased taxes.

“We have a lot of things where the dynamic is changing, but the economy is bad, so it’s hard to say what will happen,” says Holt, added his own spin on the mystery of voter sentiment.

“Certainly, this is not a year in which I am looking to add a lot of things,” he said, “ but over the years, I’ve seen [town meeting]  increase a lot more budgets than I’ve seen them cut.”

The general feeling seems to be that local property owners should expect tax increases this year, perhaps sizable, simply to maintain existing services.  How the numbers will play out remains to be seen.

“It’s a good time to keep the belts tight,” says Holt, “but I think the people up here are maybe a little better at surviving than elsewhere.”