As revenues plummet, intended tax break less likely



MOUNT DESERT — Because of an anticipated drop in municipal revenue caused by the coronavirus crisistaxpayers here likely will not get quite as much of a break next fiscal year as town officials had hoped to give them. 

Initially, the town’s proposed budget called for using $400,000 from the Undesignated Funds Account to reduce the total amount that taxpayers will owe.  

But on the recommendation of the town manager and town treasurer, the Board of Selectmen voted April 21 to increase that amount to $500,000. If approved by voters, that $100,000 change would have lowered next year’s estimated tax rate by 5 cents, to $8.22 per $1,000 of property valuation.  

But it soon became clear that the COVID-19 pandemic would be eating into several of the town’s sources of revenue, particularly excise taxes. 

Treasurer Kathi Mahar told the selectmen May 4 that, because of that, it probably would not be prudent to transfer $500,000 in undesignated funds to help reduce the increase in next year’s tax rate. On her recommendation, the board voted to ask voters at town meeting to approve the transfer of $400,000, as initially proposed. This change will require the approval of the warrant committee. 

The open floor town meeting, originally scheduled for May 5, has been postponed to a date to be determined. 

In each of the past few years, the town has reaped about $650,000 in excise taxes on motor vehicles and boats. Mahar said that amount will be down about $90,000, or 14 percent, this year. 

“We also anticipate [state] revenue sharing, which we don’t get a whole lot of, will be down about $8,000,” she said. “The state doesn’t anticipate collecting as much [as usual] in May and June, so the towns will not get as much.” 

Mahar said she estimates the town’s investment income will be down about $4,000. 

Mount Desert and other municipalities also could receive less than expected in state reimbursement for homestead tax exemptions. 

“We’re not really sure, but the state may not reimburse to the new 50 percent requirement of the homestead exemption,” she said. They could go back to the old rate of 28 percent. If so, we would be looking at being about $15,000 down for that. 

“We don’t anticipate we’re going to have as much surplus from 2020 as we have in prior years, so we want to protect our fund balance a little bit. 

Tremont Town Manager Chris Saunders said other town managers around the state have told him they are expecting excise tax revenues to drop by15 percent to 20 percent this year, so that is what he is anticipating.  

For revenue sharing, I want to expect the worstcase scenario, so I’ve estimated that the state will give us half what they gave us last year,” Saunders said. “Our investments are a money market account, so it’s a very low, guaranteed interest rate. I don’t anticipate any changes to that income.” 

He said he hasn’t heard of any plans for the state to change the homestead exemption reimbursement rate. 

Sarah Hinckley contributed to this story. 

 

Dick Broom

Dick Broom

Reporter at Mount Desert Islander
Dick Broom covers the towns of Mount Desert and Southwest Harbor, Mount Desert Island High School and the school system board and superintendent's office. He enjoys hiking with his golden retriever and finding new places for her to swim. [email protected]
Dick Broom

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