Saco council adopts FY2026 budget after votes on supported entities, housing and transit funds

The Saco City Council on May 12 adopted the city’s fiscal year 2026 municipal budget, approving $39,918,235 in gross municipal expenditures as amended and approving related capital and tax measures, the council voted 7-0.

The final budget action followed more than two hours of amendment votes that trimmed some increases for supported nonprofit agencies, added targeted one‑time and reserve funding for housing and active‑transport projects, approved transfers for building repairs at local cultural institutions, and directed staff to notify the Maine Department of Economic and Community Development about reduced TIF captures for three development districts.

The water resource recovery department’s FY2026 operating budget was approved as a separate vote: the council adopted gross expenditures of $5,659,659 and a sewer user rate of $9.81 per unit, a 14.7% increase in the rate, and approved associated appropriations, the motion passed 7-0. The change was presented to the council as revenue‑neutral within the enterprise fund and intended to cover rising operating and infrastructure costs.

Most contentious budget debate centered on the city’s “supported entities” line and how broadly the city should subsidize social‑service and community organizations. Councilor Johnston moved a presubmitted amendment to strike proposed fee increases tied to chapter 147 (rental/code inspections) and later pressed for caution about adding new recurring support without a policy; the amendment to delay those inspection fee increases passed 7-0. Councilor Hatch then offered an amendment to roll select supported‑entity allocations back to FY2025 levels, saying the change was grounded in principle: "I firmly believe that as council members, we took an oath to manage municipal tax dollars responsibly," Councilor Hatch said. That amendment passed 7-0.

Councilors split on a series of additional requests from individual nonprofits. An amendment from Councilor Hewitt to add $20,000 to Aid for Saco Kids (ASK) moved by Hewitt and seconded by Gunn passed 4-3. Director Henderson noted the ASK program had previously received $5,000 in the proposed budget; Councilor Hewitt said the additional funds would support emergency housing, food and clothing programs for students, and that last year ASK’s spending served dozens of students. Councilor Berman framed many supported‑entity requests as partnership offers, saying "what I think a supported entity is doing when it makes a request is not holding its hand out for taxpayer dollars, but really making a partnership offer to the city," and urged a formal policy.

Councilor Berman’s amendment to add $5,000 to the Saco Food Pantry (bringing its allocation from $10,000 to $15,000) passed 4-3; Berman said the action was an "emergent response" to a recent loss of federal support to regional food banks. Councilor Parks’ amendment to reduce $5,000 from the TATV community education channel passed 6-1 after Parks noted no funding request had been submitted this year.

The council took multiple actions to seed multi‑year or committed funds: it approved creating a $200,000 committed fund balance for a new affordable‑housing reserve (moved by Councilor Johnston, second by Councilor Gunn, passed 7-0) and transferred $500,000 from unassigned fund balance to a committed fund for active‑transit and human‑powered infrastructure (moved by Councilor Berman, second by Councilor Johnston, passed 7-0). Councilors said both steps were intended as “seed” funding while the council develops ordinance parameters and a prioritization process.

On capital and local projects, the council approved: (1) a transfer of $175,000 from the capital improvement fund into a new committed/special‑revenue line to support Dyer Library and Saco Museum fire‑safety, use‑space, and parking‑lot paving projects (moved by Councilor Johnston, second by Councilor Hatch, passed 7-0); (2) an increase of the traffic‑safety capital reserve from $10,000 to $40,000 (moved by Johnston, second by Hatch, passed 7-0); and (3) $11,225 from fund balance for intersection design/improvements at Bayview Road and Ferry Road, creating a three‑way stop and relocating a crosswalk (moved by Johnston, second by Berman, passed 7-0). Councilors said the traffic items respond to recommendations from the Traffic Safety Committee and to frequent constituent complaints about pedestrian and intersection safety.

The council also voted to reduce the percentage of taxes captured by three local TIF (tax increment financing) districts and return the freed revenue to the general fund for FY2026. The council voted 7-0 to reduce the capture percentage for the transit‑oriented municipal development TIF (returning roughly 28% of that district’s FY2026 projected revenues), for the downtown municipal development TIF (returning about 43% of that district’s projected FY2026 revenues), and for the Park North municipal development TIF (returning about 31%). The city administrator was directed to notify the Maine Department of Economic and Community Development of those reductions.

The council approved the five‑year capital program and set property tax due dates and interest rules for FY2026: delinquent tax interest at 7.5% and overpayment/refund interest at 3.5%, with first‑half taxes due Sept. 9, 2025 and second‑half taxes due March 10, 2026. The council also adopted the school department’s FY2026 budget and the school board’s requested additional local funds; both motions passed by recorded roll call votes.

Councilors repeatedly said they want a formal policy and application process for supported‑entity funding and for TIF priorities. Mayor Jody MacPhail told the council she had spoken with city administration and said, "this summer, we will be bringing this forward at some point, to review our current policy and tactics as well as what we can do going forward to change." Staff were asked to return recommended procedures for council consideration.

The council’s package of motions altered the mayoral‑presented budget primarily through the individual amendments listed above; the final FY2026 motion to adopt the municipal budget as amended was made by Councilor Gunn, seconded by Councilor Parks, and passed 7-0.

Speakers quoted or who spoke on these items included: Mayor Jody MacPhail (Mayor), Councilor Edwards (Councilor), Councilor Parks (Councilor), Councilor Gunn (Councilor), Councilor Berman (Councilor), Councilor Hatch (Councilor), Councilor Hewitt (Councilor), Councilor Johnston (Councilor), William Doyle (Resident, public commenter), Director Toomey (city staff), Director Henderson (Finance Director, city staff), and City Administrator (city staff).

Ending: The council approved the spending plan and directed staff to implement the voted transfers and notices (including TIF notifications to state DECD). Council members said the summer workshop on supported‑entity policy and TIF priorities will be scheduled to set longer‑term rules for municipal partnerships and capital priorities.