CAPE ELIZABETH – A little more than a year after abandoning the all-volunteer origins of its rescue department, Cape Elizabeth plans to begin absorbing the cost of the per-diem staff with sizable general fund payouts this year and next.

Then, starting with the 2014-2015 fiscal year, the town’s longtime “rescue fund,” set up to process payments for ambulance rides, will get absorbed into the town’s general operating budget.

“If a fund is not self-supporting, and what we are seeing with the rescue fund is that’s not possible, it should not be a separate fund, it should be a part of the general fund,” said Town Manager Michael McGovern at a workshop session of the Town Council Monday.

McGovern warned the council to expect a comment along those lines from auditors the next time the annual check of the books crossed under their noses. Asked by council Chairman James Walsh why he did not simply fold the rescue fund into this year’s municipal operating budget, on which the council is scheduled to begin debate March 14, McGovern said he was trying to keep the annual budget hike under 2 percent.

As it is, even with council-approved transfers from general surplus into a separate rescue fund, McGovern’s first pass at the 2014 operating budget shows municipal spending climbing $213,704 over this year’s expenditures, a 2.4 percent increase. Ultimately, McGovern did not make the 2 percent cap because of a last-minute $45,000 hike to the town from the Maine State Retirement System, he said. The proposal adds $3.14 per $1,000 of assessed value to local property tax bills for municipal services.

The 2.4 percent increase presumes that state revenue sharing will rise to $640,000 and not get cut to zero as proposed in the biennial plan proposed by Gov. Paul LePage. Despite a still sluggish economy, it also builds in a $69,200, 4.2 percent rise in excise tax income as well as a 2.8 percent growth, good for $92,100 in other non-property tax revenue.

That leaves room for $800,000 in capital improvements for the coming year, including $295,000 for road paving and drainage work, as well as for a backhoe purchase and an upgrade to the town hall electrical systems, items budgeted at $110,000 each.

With school spending up $712,621 to $22.5 million, and county government also looking for a sizable uptick in its tithe, Cape tax bills are expected to grow 3.3 percent to a new property tax rate of $16.36 (up 52 cents) per $1,000 of assessed value to support the combined $33.2 million budget.

To support the rescue fund, McGovern has asked for a $90,000 transfer into the revenue fund before the end of this fiscal year, June 30, as well as an additional $85,000 transfer next year.

“This account will have severe financial stress unless we supplement it,” he said. “Then, next year, we’ll transfer everything, revenue and expenditures, into the general fund.”

Cape Elizabeth began paying for a per diem EMTs to man its rescue station for up to 10 hours per day, seven days per week, starting Jan. 1, 2012. The move came after Councilor Caitlin Jordan expressed concern about slow response times in August 2011, following complaints from town residents.

“We’re seeing more and more [instances] of having to put a second tone out for rescue,” acknowledged McGovern at a September 2011 workshop on the issue. “That means the dispatcher has been waiting and waiting to hear that someone is en route.”

A seven-member fire and rescue committee met that same month, reporting that average response time had grown from almost two minutes, to 13 minutes, six seconds, from 2010 to 2011.

“We have 30 members, but sometimes we’re lucky if we get two to respond to a call,” said Fire Chief Peter Gleeson, noting that, while Cape began paying volunteers per call five years ago, it still adhered to an “age-old” method of simply hoping enough trained members were in town and available to respond whenever a call for help went out.

“Volunteerism, in general, has been declining in all public aspects, due to the economy, both parents working, some with multiple jobs, and lack of free time to donate,” he said. “As members move or retire, not all are being replaced.”

The solution, implemented by the council, was to approve hiring per diem staff to man the station during the day. Those hours were ultimately filled by volunteers already working for Cape Elizabeth, most of whom have full-time rescue jobs elsewhere but “moonlight” in Cape.

At pay rates ranging from $16.25 to $18.25 per hour, the cost to the rescue fund ran to $76,394, and, even when implemented, McGovern warned councilors that they would soon have to approve general fund payments.

To keep the rescue fund in the black and to create a backstop in case of unanticipated costs, McGovern has asked the council to augment it with two general surplus transfers totaling $175,000 through the next two years. WIthout that money, the fund could go negative by nearly $8,000 before June 30, 2014, he said.

For this year, McGovern is asking for a $90,000 boost which, with billing for services, will push revenue for the unit to $260,000. After current year expenditures to support the ambulance, now projected to run to $263,900, the fund will have a balance on June 30 of roughly $169,506.

Next year, McGovern plans to ask for an $85,000 shot, building revenue to an estimated $265,000, on $267,318 in expenses. That will leave $167,188 in the fund when it is rolled into the general fund for FY 2015. Assuming no additional costs, the total general surplus band aid on the rescue will total a little more than $7,000 when it becomes an annual $85,000 general-fund expense.

Despite the drain on Cape Elizabeth’s undesignated surplus this year and next, and the ongoing cost to taxpayers thereafter, McGovern said the per diem program has been a success.

“The good news is that our response time is much, much better,” he said. “We don’t get complaints anymore about response time. Obviously, we are saving lives as a result of this change and more traumatic cases are getting handled more quickly.”