WESTBROOK – Despite a drop in municipal revenue sharing from the state, Westbrook’s tax rate will remain stable, with the loss made up through funds in the tax stabilization account for the next two years.

“While a revenue loss of this magnitude is significant for a municipal budget, Westbrook is very fortunate to have established and funded a tax stabilization fund to manage sudden changes in revenues and/or expenses and minimize any corresponding impact on the local property tax rate,” said Jerre Bryant, city administrator.

“We’re losing $525,000 in year one, and in year two, we’re looking at around a $600,000 loss. They’re both significant hits over the two-year period,” Bryant told the Westbrook City Council at a July 1 meeting.

Westbrook has $1.4 million in a tax stabilization account. Roughly $183,000 was used this year to keep taxes down for residents, and an additional $430,169 will be used to cover the revenue loss. Another $598,000 will be used for next year’s budget.

According to projections on future revenue losses from the state, in 2016, $399,307 could be used to offset revenue losses and $199,656 for 2017.

“The first two years is to replace the actual loss of revenue in each of those years, while the third and fourth years is to gradually wean the budget from its reliance on tax stabilization funds. This is simply a financial planning guide that may change in future years based on the future state funding levels for revenue sharing and other financial changes for the city,” Bryant told city councilors in an email.

For the past 10 years, the city has been using any surplus funds to build up its reserves, including the tax stabilization account, according to Bryant. When the city sees more revenue than projected from an area, like building permits or auto excise tax, that surplus goes to a reserve account.

“The city is really just paying the loss of revenue sharing through the implementation of good policy and collection of funds,” Councilor John O’Hara said.

The council approved the plan on a first reading, and its second and final reading and vote is scheduled for the July 22 meeting.

Revenue sharing takes a percentage of the income earned from state sales and revenue taxes and distributes that money to the towns and cities across the state. Historically, those municipalities were supposed to receive 5 percent of the taxes, but financial constraints at the state level have curbed that to around 3.5 percent annually for the past few years.

“It’s tough, we’re taking a big hit. The condition of the state budget necessitated everyone take some share of hit. The state’s model is not sustainable and there need to be adjustments made,” Bryant said.

Westbrook’s municipal budget for this fiscal year, which started July 1, is $23.12 million and the tax rate is $17.20 per $1,000 of assessed valuation.