Saint John council reviews 2026 budget as Senate Enrolled Act 1 begins to bite

The Town of Saint John on Sept. 24 heard a detailed presentation on the 2026 municipal budget and early effects of Senate Enrolled Act 1, with financial advisers saying the town faces an estimated $1 million increase in circuit-breaker losses and recommending a council workshop to plan responses. Amber Nielsen of Baker Tilly told the council that 2026 is “the first year of the impacts that come from Senate Enrolled Act 1,” and that the town’s general fund would likely shoulder most of the loss.

Why it matters: The changes in state law will phase in over several years and shift some tax relief to residential homeowners while reducing property-tax revenue for local governments. Saint John lawmakers will have local decisions to make in 2027 about whether to replace county income-tax revenue at the town level.

Baker Tilly’s presentation summarized five years of revenue and spending history and laid out assumptions for 2026. The firm estimated an increase in circuit-breaker exemptions of just over $1.0 million statewide impacts allocated to the town, with about $750,000 of that affecting the general fund. The Department of Local Government Finance’s growth quotient for property-tax levies is capped at 4% for 2026, Nielsen said, and the Legislative Services Agency’s April 2025 estimates were used for the circuit-breaker figures.

Nielsen said the town has benefited for years from rising net assessed value, which helped keep circuit-breaker losses low and tax rates relatively flat. Baker Tilly projected about a 5.5% increase in Lake County net assessed value for 2026, and estimated a roughly 6% increase in the town’s local income tax allocation for next year. But the firm warned that beginning in 2028 some county-administered local income-tax buckets could move to municipal control, which would require local decision-making to preserve existing revenue streams.

On specific funds, the advisers showed the proposed 2026 budget as balanced overall for main operating funds (general, motor vehicle highway, park, public safety LIT), while several capital funds were planned to spend down reserves for projects. Notable capital items include a multi-phase US-41 water-main replacement project that will draw roughly $1 million from the water utility fund for phase one and a large stormwater project on Joliet Street.

The presentation also outlined a five-year financial forecast showing that the town’s combined funds remain above a 50% operating-reserve target through 2029 under the current plan, but that the general fund could drop close to the 15% minimum under a “no-action” scenario after 2028 when certain income-tax distributions change unless the council adopts replacement revenue or other measures.

Council members and staff discussed technical points, including why some tax-rate lines on Form 4 were intentionally inflated to allow cushion for bond closings and net-assessed-value changes. Nielsen said lease-rental estimates were set at “the absolute maximum tax rate…for planning purposes” and would be adjusted after bonds close. She and Eric Walsh recommended a planning workshop this year to walk through the five-year forecast and the Act 1 impacts.

Quotes from meeting participants were limited to those on the record. Amber Nielsen (Baker Tilly) said, “2026 is the first year of the impacts that come from Senate Enrolled Act 1.” Beth Hernandez (Clerk Treasurer) and other staff confirmed that the town’s budgets and supporting documents have been posted online and are available for review.

Next steps: Baker Tilly asked the council to schedule a workshop before year-end to review the five-year plan and the Act 1 impacts so the town can consider replacement revenue options, efficiency opportunities or other policy responses. The council conducted first readings on the civil, sanitary and water budgets and directed staff to continue outreach with the water and sanitary boards on capital projects.

Ending note: Staff and advisers said several budgeted capital projects will draw reserves in 2026 by design, and that the council has roughly a year before the larger statutory changes take effect in 2028 to evaluate options and adopt local policy changes if desired.