As you’ve probably read by now, Portland’s Acting City Manager Sheila Hill-Christian has called for a freeze on city hiring and travel, weekly reviews of overtime payroll and a halt on purchases above $1,000.
Earlier today, we carried a story by Katie Sampson from our media partners at CBS 13, WGME, explaining the situation — click here to read her report.
As Katie reported, these measures are being taken as a precaution against the risk that the city won’t get its full reimbursement from the state for general assistance aid distributed to undocumented immigrants. Gov. Paul LePage has made it clear he intends to withhold reimbursements from municipalities giving that money out to people he believes are not legally entitled to it, while the city of Portland — among others — has maintained that it’s obligated to disperse the benefits to anyone who needs it, including undocumented immigrants.
If the state simply just withholds reimbursements for the aid distributed to undocumented immigrants, it’ll leave Portland covering about $3 million in general assistance costs it would’ve otherwise had covered by state subsidies. If the state refuses to give Portland any GA reimbursements — including for benefits given to people whose immigration or citizenship status is not in question — as a form of punishment, as LePage has threatened, the city will be looking for ways to cover around $9 million in lost subsidies.
LePage last week was re-elected for another four years in the Blaine House by a notable margin over a popular six-term U.S. congressman, and his Republican party reclaimed control of the state Senate. The governor could absolutely see those election results as a public endorsement of his stances on a wide range of issues, including general assistance aid, and be in no mood to compromise with city officials in the traditionally left-leaning Portland.
While the city has yet to get a firm figure for how much this hiring, travel and purchasing freeze will save, city spokeswoman Jessica Grondin told me today the City Council will likely have to consider a much more robust slate of cost-cutting measures if it has to cover $9 million in funding losses.
The city of Portland — as well as Westbrook and the Maine Municipal Association — is challenging the LePage administration’s authority to withhold general assistance reimbursements in court, and even a temporary injunction requiring the governor to release GA subsidies while the case plays out would solve the short-term financial crisis in Portland.
With all of those things in mind, here are some important notes about the freeze:
- Purchases above $1,000 can still be approved by acting city Finance Director Suzanne Knight.
- Exceptions to the hiring freeze are going to be made on a case-by-case basis. For instance, the City Council is scheduled to vote on Monday on the proposed hiring of Dawn Stiles as its new Department of Health and Human Services director. Considering DHHS is the department in charge of distributing general assistance aid, Grondin said that hiring would likely be allowed to proceed. The city is also notably still looking to fill its finance director and city manager vacancies — while the latter search is still very much in its infancy, those are the types of hires that would probably be allowed. Also, Grondin noted that refusing to fill some positions, like openings on the police force, for instance, wouldn’t save money because leaving the vacancies would drive up overtime costs for other officers. So when the more frugal option is to hire new employees, the city will do that.
- For what it’s worth, the city has 61 positions that are vacant and subject to the hiring freeze, although as I wrote above, not all of those positions will be frozen.
- Perhaps most visibly, the spending freeze at least temporarily slams the brakes on the city’s ambitious plan to purchase property on Canco Road. The City Council in March approved this $3 million plan to consolidate portions of its fire, public services, traffic and trades divisions under one roof at 212 Canco Road, a strategic move that was largely attractive because it would free up city-owned 65 Hanover St. — where two of those divisions are located — to be put on the market for sale. And because of the $85 million mixed-use Midtown project proposed for nearby, the city is betting the sale value of 65 Hanover St. is going to go up significantly in the next year or two. But now that plan is being put on hold, at least until the City Council can give it another review under its current fiscal constraints — a review which could take place as soon as Monday night.
According to Grondin, the city submitted paperwork to the state for GA reimbursements for part of June and July about two months ago, and has yet to hear back what portion of those general assistance costs — if any — the state plans to reimburse. Grondin said the city submitted two versions of the paperwork — one including the amount the city paid to undocumented immigrants, and one leaving that amount out.
The difference per month is just less than $300,000. That is, the city distributes about $860,000 per month in general assistance aid, and about $560,000 of that is distributed to individuals who are not undocumented immigrants and who undisputedly qualify for it.
So why did the city submit paperwork including a request for reimbursement for general assistance benefits distributed to undocumented immigrants when the city knew the governor would resist — if not refuse — those reimbursements?
Well, I went into great detail about all of the city’s options, as well as the pros and cons of those options, in a previous blog post you can read by clicking here.
In short, because Portland is locked in a court case with the administration over these reimbursements, the city will need a paper trail showing it tried to get those subsidies and, additionally, showing that the administration refused to give them up.
Portland officials say they’re concerned about lawsuits from aggrieved immigrants if they’re refused aid they’re ultimately determined to be entitled to, which is one of the reasons the city is being defiant of LePage’s demands to cut off funding for them.
“We’re kind of caught in a tough situation in complying with state law and following the court case and then also trying to address the issues that the governor has raised,” Mayor Michael Brennan told CBS 13.
As I wrote in the blog post linked above, if Portland ultimately is left covering all of its own GA distributions going into the future and continues distributing those funds as it currently does, it would trigger a 4.5 percent increase to local property tax rate. That’s another $182 in annual taxes for a home assessed to be worth $200,000, on top of whatever other local school, county or city budget increases come up.
Interestingly, the city’s financial adviser, Joseph Cuetara, also told the council in September that if the city dipped into its fund balance to cover its GA payments and couldn’t legally force the state to hand over reimbursements by the start of the next fiscal year, it would likely cause bond rating agencies to tag Portland with a “negative” outlook or even downgrade the city’s bond rating from AA1 to AA2 or AA-.
That’s important because of Portland’s outsized share of the state’s economy. The Greater Portland metropolitan area accounts for more than half of the Maine economy, so a downgrade of Portland’s bond rating could affect the bond ratings of neighboring communities or even the entire state, Cuetara said.