City's shrinking surplus concerns Luttrell

By Larry Di Giovanni | May 29, 2014
Courtesy of: Thomas Luttrell, Acting City Manager Rockland's acting City Manager Thomas Luttrell, says the city's decreasing undesignated fund balance (left column) is tied to a decrease in revenue sharing from state sales tax.

Rockland — As the city of Rockland's revenue sharing income from the state sales tax has declined, so has its undesignated fund balance, which concerns acting City Manager Thomas Luttrell.

As recently as the 2007-2008 budget year ending June 30, 2008, the city received $1.15 million in revenue sharing, according to city budget records, but for the 2014-2015 fiscal year starting July 1, city revenue from sales tax is projected only to be $464,558.

It could be worse: Luttrell as well as City Councilor Elizabeth Dickerson have both referenced Gov. Paul LePage's attempted “raiding” of revenue sharing that stood to take sales tax revenues away from municipalities entirely. The Maine State Legislature, of which Dickerson is District 47 state representative, restored $40 million to municipalities earlier this year. LePage said the move would harm the state's credit rating and deplete its rainy day fund used to cover state budget shortfalls.

Rockland's decline in revenue sharing has created a real impact on its undesignated fund balance, Luttrell said. With a $10.52 million general fund budget for 2014-2015 set for approval in June, the city's estimated undesignated fund balance by the end of this fiscal year, June 30, is set to shrink to $671,935. Just two years ago, its balance was $1.093 million, city records show.

But with efforts to keep property taxes from rising through a zero-based budget, the city had to take $321,500 from the fund this budget year to offset the tax burden, according to Luttrell's budget overview. In addition, this coming fiscal year includes a projected decline of $135,280 in non-property tax revenue, which he proposes to offset mainly by transferring another $100,000 from the undesignated fund balance and not filling full-time positions including reference librarian, assistant to the city manager, and fire chief.

He said keeping the reference librarian position would, for example, increase the average Rockland homeowner's property tax by $12.

“We're trying not to raise property taxes,” Luttrell said. He added that part of the city's taxation quandary is being in a high property tax state, where Rockland's average homeowner pays $3,600 yearly in property taxes, while being on the opposite end for sales taxes.

“I think the state sales tax, at 5 and a half percent, is low compared to other states,” Luttrell said. He noted that while some states allow their municipalities to enact local sales taxes, Maine does not.

The undesignated fund balance traditionally pays into a reserve the city tries to add to each year for emergency purposes, and to keep tax burdens low, Luttrell said. The reserve amount should be 8 percent of the city's actual budgeted appropriations for the current year that includes Knox County and RSU 13 intergovernmental property taxes.

That total city budget is $19.3 million, which would require a “suggested” 8 percent reserve totaling $1.54 million. But the city's current undesignated fund balance of $671,935 holds just 3.5 percent in reserve.

The city receives Tax Increment Financing (TIF) revenue from Main Street business owners and from another TIF district for the industrial park that includes Fisher Engineering. But those taxes are held in reserve accounts to improve their own districts.

Courier Publications reporter Larry Di Giovanni can be reached at 594-4401 or by email at

Comments (3)
Posted by: Mary A McKeever | May 30, 2014 09:26

I think it is more important to keep the reference Librarian working in the Library. I have seen first hand the work these Librarians do with helping children and adults alike. It seems to me that $12.00 for this position is well worth the price. I have always been treated with respect and helpful hands when searching the stacks. The Library is more than money, it is the basis of children's view of reading, research, and the joy of stories coming alive on the page. This interest and enthusiasm follows a child forever. I am a senior and once an enthusiastic child who lived at the Libraries and cultivated this enthusiasm with all of my children and grandchildren. Please, $12.00? Really?

Mickey McKeever

Posted by: Francis Mazzeo, Jr. | May 30, 2014 09:16

What would be fair would be for Rockland to not have so many non-profits that use City services for free. Attracting people here does nothing to help homeowners. LePage doesn't care about your property tax. He's open for business.

Posted by: Susan P Reitman | May 29, 2014 14:05

This state I am sure makes big bucks from the lottery profits so where does that money go?  It is criminal for RSU-13 and the City of Rockland to balance their budgets on the backs of the homeowners.  To bad the homeowner's are allowing it to happen.  Why doesn't Maine allow municipalities to enact local sales tax; it seem that would be a fair way to generate money.

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