Portland City Council’s Controversial Vote:
Pay Raises Amid Tax Hikes and Rainy-Day Fund Raids
By Together Portland
The Portland City Council concluded its budget talks amid various funding challenges, including those related to the homeless shelter, school budget, and potential tax increases. Councilor Phillips proposed a budget amendment to boost the annual pay for the city council and school board members by 25% in the current budget. Although data on comparable cities varies, and it isn’t easy to make direct comparisons, we’ve listed the amounts below for neighboring states and Maine cities with similar populations:
- Manchester, New Hampshire, Population 117,000+: $5,000
- Haverhill, Massachusetts, Population 67,000+: $15,000
- Malden, Massachusetts, Population 66,000+: $25,000
- Bangor, Maine, Population 30,000+: $2,000
- Lewiston, Maine, Population 38,000+: $4,000
Currently, the Portland stipend is estimated at $7,664 per council member, plus benefits. The Finance Committee has already recommended a 3% increase to $7,894 per council member. Under Councilor Phillips’ amendment, which passed 6-3, the 25% increase will bring it to $9,580 per council member. Due to the existing city charter language, both the school board and council salaries are linked through policy and will cost Portland an additional $33,051 per year.
Councilor Phillips expressed her desire to increase the stipend, citing expenses and time associated with the volunteer role.
“I think some people sometimes forget that we actually live in the city, and we also have to pay taxes.”-Councilor Regina Phillips
Dissenting councilors vocalized their understanding of the underlying rationale for the amendment, as councilors often volunteer time that exceeds 40 hours each week between meetings, committees, and public engagement. Councilor Ben Grant expressed this sentiment, stating, “I am going to oppose this, but I did want to speak just a little bit about the merits, which, I have no disagreement with anything that any of my colleagues have said. I think you are right that this type of service is underpaid. But I also have in mind that we are not like other employees. We are elected officials, and we did volunteer to do this. So I’m not unsympathetic to the problems that this creates. I’m certain if this isn’t the right way now, I’m willing to entertain other ideas, whether it’s, you know, separating out the insurance from the stipend that, you know, paying to do this work certainly doesn’t sit well with me.”
Mayor Dion, whose salary is set by the city charter and not directly affected by this decision, recognized the increased percentage is significant, but the overall amount is not. However, he cited the lack of transparency and recommended this should have been included in the school and city budget process, saying, “You know, I said, it’s not we’re not deciding for ourselves. We’re also deciding for the school board. And I don’t know if the finance director underlined this, but I know in earlier conversations I’ve had with corporation counsel, they’ve already passed their budget. And sure, they probably could find a squeeze to pay for this salary, but it’s a matter of transparency.”
State Budget Woes Add to Discretionary Increases
City leaders are withdrawing $8.8 million from the city’s rainy-day fund amid federal and state funding cuts in the $285.6 million budget, which will lead to a 7.4% increase in the city’s municipal tax rate but help balance the $19 million gap. As the council discussed the budget, both state and federal funds remained uncertain, even after the last-minute passage of Maine Senator Rachel Talbot-Ross’s bill, LD 698, “An Act to Sustain Emergency Homeless Shelters in Maine,” which received final approval on the last day of the legislative session and provides a one-time allocation of $4.5 million to support emergency homeless shelters.
Senator Peggy Rotundo, Chair of the Appropriations Committee, amended the original bill to remove the ongoing General Fund appropriations of $5,000,000 annually starting in fiscal year 2025-26. Instead, it now provides a one-time General Fund appropriation of $4,473,000 for fiscal year 2025-26 only. Additionally, the bill requires the State Controller to deposit into the unappropriated surplus of the General Fund $1,491,000 in revenue that would have been transferred to the Housing First Program within the Department of Health and Human Services, and $2,982,000 in revenue that would have gone to the Housing Opportunities for Maine Fund within the Maine State Housing Authority in fiscal year 2025-26, due to the increase in the Real Estate Transfer Tax enacted during the 2025 session.
The bill sponsored by Speaker Fecteau, LD 1082, “An Act To Impose a Real Estate Transfer Tax Based on the Value of the Property,” increases the real estate transfer tax for properties sold for $1 million or more. The bill increases the tax rate on the portion of the sale price exceeding $1 million to $5 per $500. Additionally, the bill exempts first-time homebuyers using Maine State Housing Authority loan programs from the tax.
The debate sparked a flurry of back-and-forth between Senators as Republicans voiced concerns over funding for Maine Veterans’ Homes, which also need financial assistance. In Portland, the homeless shelter serving citizens in the region was the main backup when Councilors proposed a permanent camping ordinance.
Federal cuts to grant programs, including FEMA, that contributed to the homeless service center and the
City Services Crushed by Economic Pressures & Policy Decisions
The focus on the homeless service center, rightfully so, may overshadow the ongoing and past policy decisions that have placed significant pressure on city staff and residents. The city is currently conducting revaluations, and the tax increase will be implemented once that process is complete. In a public statement, City Manager Danielle West shared the news following the budget approval, “While this budget includes a 7.4% increase in the tax levy, we will not know the final property tax rate increase until later this summer when the Assessor completes the revaluation process.”
The list of concerns is growing, with neighborhood groups exerting increased pressure on issues such as crime, homelessness, drug use, rent costs, housing availability, education, and livability. The Congress Street business community is raising similar concerns and awareness about issues that Bayside highlighted two years ago. With anchor businesses shutting down and outspoken owners requesting help, staff have been called to address “fire” spots across the city related to increasing criminal activity.
Additionally, the city anticipates losing $3 million in federal revenue in fiscal year 2026. The federal cuts are affecting services throughout the city, including the Greater Portland Council of Governments, which has experienced a direct budget reduction of $1 million and has paused the broadband grant scheduled to invest $11 million in the region. With Medicaid cuts included in the “Big Beautiful Bill,” it’s uncertain what impact this will have on the region’s largest hospital or the citizens who rely on the benefit. In a letter from Governor Janet Mills to the Federal delegation, she outlined the potential impacts under Maine’s program as a loss of $5.9 billion in MaineCare funding over the next decade, with $4.5 billion of this amount coming from lost federal funds.
Portland will face increased pressure on existing services as the Federal Government proceeds with budget cuts. While the current budget accounts for what was known, it’s clear that additional shortfalls will create significant challenges for the city’s finances. Regardless of your opinion on the council stipend increase, the councilors will spend more hours managing funding cuts in the upcoming year.
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