Portland, Westbrook and South Portland have furloughed hundreds of municipal employees in the face of sharp declines in revenues caused by the coronavirus crisis.

The temporary layoffs are intended to prevent the cities from running out of budgeted funds before the end of the fiscal year June 30. The vast majority are in Portland, while dozens have been furloughed in the neighboring cities.

They mostly affect part-time, temporary and seasonal employees, but also include workers who staff libraries, community services and recreation programs. The Portland Public Library, which closed to the public on March 13, is furloughing about 25 percent of its full-time equivalent staff.

“These are very difficult times for everyone,” Westbrook Mayor Michael Foley said, noting decisions that adversely impact employees are “not entered into lightly.”

Some nearby cities, including Saco and Biddeford, have no plans to furlough workers, and widespread layoffs of municipal employees in Maine are not expected in the near term, the Maine Municipal Association said.

However, the fiscal year that begins July 1 poses an even larger challenge for every city and town in Maine. Municipal officials statewide are scrambling to adjust their budget plans amid uncertainty about revenue streams, including property and excise taxes, and municipal revenue sharing.

“The hardest part is there is so much unknown,” said Eric Conrad, spokesman for the Maine Municipal Association, which represents 484 municipalities in Maine. “We haven’t been through this before.”

Biddeford City Manager Jim Bennett says one thing is certain: “Every community in Maine is going to be hit financially.”

The Maine Treasurer’s Office has informed municipal officials that revenue sharing distributions in May and beyond will be “well below budget.” Currently, municipalities receive 3.5 percent of the income and sales tax collected by the state. While the state cannot yet forecast the impact on tax collections, the letter warned that towns should anticipate lower payments through July and a “more significant impact” to the August distribution.

Municipalities also are seeing declines in other revenue streams such as excise tax, ambulance fees, recreation fees and, in some cases, property tax collections, although it is too early to say how steep those declines will be, municipal officials say.

“I think it’s too early to say how deep the hole will be, but it’s fair to say there will be a hole,” said Bryan Kaenrath, the city administrator of Saco.

In Portland, Human Resource Director Gina Tapp said the city has sent temporary furlough notices to 311 workers, mostly to on-call, per-diem, seasonal, temporary or event staff. The city employs over 1,400 people.

City Manager Jon Jennings hopes a combination of temporary furloughs, a hiring freeze and a mandatory review of all spending requests will reduce the need to make any other staffing changes before the end of the fiscal year.

“We are in good shape through the month of March,” Jennings said. “April is the month that this becomes very real and very frightening in terms of the declines in revenues we’re seeing.”

The city says it is facing an anticipated shortfall of 20 percent, or $2 million, in parking revenues, and an expected shortfall of $360,000 in revenues related to cruise ship visits.

Jennings said event staff and seasonal workers were among the first round of furloughs that occurred a few weeks ago. Another 35 employees, primarily workers in the parks and recreation department who had no work to do, were furloughed recently, Jennings said.

Jennings said all of the affected employees continue to receive health care benefits. And some employees have volunteered to be furloughed or have their hours reduced, since they are eligible for unemployment benefits.

“We feel OK – we don’t feel great – we feel OK for the remainder of this fiscal year,” he said. “The real concern is the next fiscal, whenever we get to that (budget plan). It’s going to be critically important to reduce our costs due to the lack of revenue.”

Portland Public Library Director Sarah Campbell said over 30 per-diem workers and shelf-stockers have already been furloughed, and on Sunday another 24 workers – two full-time and 22 part-time – will be furloughed. Campbell said the library, a quasi-municipal organization that receives 84 percent of its budget from the city, felt compelled to “do our part” to help the city save money.

She had originally hoped to receive funding for the library through the federal CARES Act, but the money it receives from the city makes it ineligible. The federal assistance program extended to small businesses to help them maintain payrolls is not available to the public sector.

The library decided not to institute salary cuts for middle and upper management because they are needed to keep the business operations and the library’s online programming running, Campbell said. The library continues to employ 46 people, and intends to rehire everyone as soon as possible, she said.

“We are going to bring our staff back and make our team full as soon as we possibly can and we’re absolutely going to need them when we reopen to the public,” she said.

In Westbrook, city officials decided last week to furlough 21 employees and institute a hiring freeze as they brace for a potential $1 million shortfall in the fourth quarter of this fiscal year. The furloughed employees represent 9.3 percent of the city’s permanent workforce and the city will see a savings of $325,000 in budgeted expenses through June 30.

City Administrator Jerre Bryant said the city takes in $3.8 million in revenue from excise taxes, but has collected none so far in the fourth quarter. He’s anticipating another $100,000 in lost revenue from recreation programs that are not being held.

The employees who have been temporarily laid off are primarily from the Walker Memorial Library and the city’s community center, which are both closed. But there are furloughed employees from nearly every department in the city, said Foley, the mayor. Those employees will continue to receive full health insurance coverage and can collect unemployment benefits.

The furloughed employees are expected to return to work once emergency measures are lifted in six to 12 weeks and the city resumes full operations and services.

“We need to protect the city’s cash flow by making adjustments,” Foley said. “We were one of the first municipalities to do those furloughs. I believe we won’t be the last.”

In South Portland, 77 part-time, non-permanent employees have been furloughed and there is a freeze on all nonessential spending. The furloughed employees primarily work in seasonal or temporary positions and some only worked a few hours per week, said Stephanie Weaver, the city’s human resources director.

City Manager Scott Morelli said he is pleased that the city has been able to keep all its permanent employees on the job and there are no plans for further layoffs.

Morelli said the city has seen a dropoff in revenue from vehicle excise taxes – the second largest source of revenue for the city behind property taxes – but some of that will likely pick up again once the emergency ends and people register their cars. The city is anticipating there could be some decline in property tax revenue, although 75 percent of homeowners in the city pay property taxes through mortgage escrow accounts and Morelli said lenders will continue to make those payments.

“During the last great Recession, we didn’t see much of a dip in terms of property tax payments. This is, of course, a whole new world so no one really knows what impact that could have,” he said. “No one has a crystal ball here for what the economy is going to look like three months from now, six months from now or a year from now.”

During typical years, this is prime time for building municipal budgets for the coming year. This year, however, communities may start the new fiscal year on July 1 by carrying over the current spending plan until a new municipal budget can be approved. That is allowed under an emergency bill approved in response to the coronavirus pandemic.

Conrad, of the Maine Municipal Association, said most municipalities are taking a conservative approach to the next budget year, often aiming for flat budgets.

“If there were new hires proposed when the economy was looking good, those will probably be the first to go,” he said. “On the other hand, we’re not hearing about imminent dire cuts because you don’t want to cut vital services unless you absolutely have to.”

In Biddeford, Bennett, the city manager, and the superintendent of schools are working to update the budgets they had presented to the city council and school committee. The revised budget proposals will likely be presented in early May, and Bennett’s goal is to deliver the services residents expect with little or no tax impact.

Bennett may be able to defer some capital spending. And he anticipates a temporary dip in excise tax revenue will be resolved when the governor’s emergency order is lifted and people start registering their cars again.

“My sense is the economy will bounce back quicker than it did in previous downturns,” he said. “It’s really a reaction to the fact that the majority of consumer spending has been put into quarantine.”

Staff Writer Randy Billings contributed to this report.

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