SACO — The Saco City Council approved the Fiscal Year 2020 budget which will add an estimated 11 cents to the tax rate on Monday evening, but during deliberations, the council reduced the school department’s proposed FY 2020 budget, to begin July 1, by nearly $1.4 million.

The vote was made after midnight as Monday night’s City Council meeting dragged into the early hours of Tuesday morning.

The City Council approved a $28.8 million municipal budget and a nearly $40.5 million school budget.

The combined school and municipal budget will raise the current mil rate by an estimated 11 cents to $19.49. An 11 cent mil rate increase would equate to a $22 annual property tax increase on a $200,000 home.

Broken down, county taxes will raise the mil rate by one cent, while the municipal budget will raise the mil rate by 68 cents. These increases are offset by the school budget, which decreases the mil rate by 58 cents.

Tuesday’s early morning vote was the final vote for the municipal budget, but the school budget has one more pending vote before final approval.

Residents get the last say on the school budget at a city-wide ballot on June 11. Voting at the June ballot will take place from 7 a.m. to 8 p.m. At the Community Center, 75 Franklin St.

The reduction to the initially proposed school budget came in two parts.

The council first voted to decrease the proposal by $290,00 due to insurance rates being lower than projected, and then decreased it by $1.1 million, a move introduced by Councilor Nathan Johnston.

Johnston said the council had previously helped the school department get out of debt by reassigning $1.6 million of the city’s unassigned fund balance. Also, Johnston said, the 2019 fiscal year municipal budget decreased the mil rate, offsetting a mil rate increase from the school budget.

Johnston said it’s projected the school department will end the year with about $1.4 million in surplus stemming from $783,000 in funds over budgeted to Thornton Academy, a $509,000 surplus of special education funding and $150,000 in unused contingency funds.

Johnston said last year, the school department over-estimated its budget.

“This overestimation was a direct hit to the tax levy last year. The intent of my amendment is not to hurt the classroom or punish the school department,” he said. He said his intent was to control the mil rate by not over-budgeting.

School Finance Director Jason DiDonato said though the school department anticipates there will be a $1.5 million surplus at the end of the calendar year, there is currently no surplus on the books.

“It’s frowned upon by the auditors to budget a surplus for the following budget year that hasn’t been realized yet,” said DiDonato.

DiDonato said while the city helped the school department pay off its debt to Thornton Academy and from costs associated to leaving Regional School Unit 23, the school department still had a negative fund balance of $460,000.

He said he would be hesitant to budget the full amount of the anticipated surplus and not be able to guarantee funding for programs.

Superintendent Dominic DePatsy said on Tuesday that the school board will be meeting May 22 to “openly discuss” the council’s decision to reduce the budget. The school board will determine whether to use anticipated surplus or make reductions, he said.

— Staff Writer Liz Gotthelf can be reached at 780-9015 or by email at egotthelf@journaltribune.com.