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What You Need to Know About the Budget and LD1

Articles 3 and 10 must pass to approve the Town budget
Posted on: May 31, 2022 - 9:09am
Vote

When voters head to the polls for the June 14 election, they will vote on articles impacting the Town budget. For the budget to pass, both articles must be approved.

Article 3 reads: "Shall the Town vote to raise and appropriate $10,697,041 to fund the FYE 2023 Municipal Budget, as recommended by the Town Council?"

Article 10 reads: "Shall the Town vote to increase the Town of Gray’s property tax levy limit established for FYE 2023 by State law to $1,010,088 in the event that the municipal budget approved under the preceding articles will result in a tax commitment that is greater than that property tax levy limit, as recommended by the Town Council?"

Please see the FAQ sections below explaining the property tax levy limit (also known as LD1) and its relation to the Town budget. 

What is LD1, and why is it on the ballot?

LD1 is a state law that attempts to limit the growth of Town budgets by requiring a vote if the property tax levy limit, which is determined by the LD1 formula, is exceeded. Because of this formula, voters will need to approve the new Town budget figure in Article 3 as well as an override (increase) of the LD1 limit in Article 10 for the Town budget to pass.  Article 10 on the ballot asks voters to increase this limit from $4,645,213 to $5,655,301.

In the past two fiscal years, the State has gone from giving towns 3 percent in revenue sharing to 5 percent, and this has a direct impact on the LD1 formula (see the next question). The increased State revenue changed Gray's LD1 formulation enough to warrant an override.

Is it true that voting in favor of the LD1 override will raise property taxes?

No. A vote for the LD1 override is not a vote for higher taxes.  “We don't anticipate an increase in the mill rate this year if voters approve LD1,” explains Katy Jewell, Gray’s finance director. “Taxes are based on numerous factors, including the mill rate and property valuation, but when it comes to LD1, there is no direct correlation between increased taxes and passing the override.”

LD1 is a complex formula that does not include other budgets, but the other budgets do impact the mill rate. Gray’s mill rate is impacted by the School (63%), the Town (29%), the County (4%), and TIF funds (4%). Unlike the Town budget, the School and County budgets are not subject to LD1, but if all three budgets balance (if revenue offsets budget increases), then the mill rate does not increase even if there is an LD1 question on the ballot. On the flip side, it is also possible to see property tax increases without hitting the LD1 cap.

As they were creating and approving the FY2023 budget, it was a priority for the Town Council to not increase the mill rate.

What happens if I don’t vote for the LD1 override?

If the override does not pass, voters cannot pass the budget as presented by the Town Council and the Town Manager. The budget includes vital funding for community planning including Village planning and two large infrastructure projects (Yarmouth Rd/Main Str), development, the new Clerk position, matching funds for grants, paving, and two new Firefighter/EMT positions. The Town Council has also ensured the budget reflects the voter-approved Comprehensive Plan. You can read more details about the budget here.