City officials say that two referendum questions on the Nov. 3 ballot could increase operating costs by more than $12 million annually.
Mayor Kate Snyder said the analysis was prepared at her request and was distributed to councilors last week. She warned that a minimum age proposal and a reform package called the Green New Deal for Portland could lead to additional cuts in city services.
“We are heading into a very difficult and uncertain year,” Snyder said. “This is a big deal.”
Her warning comes after the recent city budget eliminated 65 positions and officials worry about another difficult budget year ahead.
A city spokesperson told the Press Herald in late September that staff would not analyze the fiscal impacts of the referendum questions ahead of the election. However, Finance Director Brendan O’Connell presented the city manager with an eight-page analysis on Oct. 14.
Snyder and every city councilor except Pious Ali announced Oct. 13 that they oppose Questions A-E, which were placed on the ballot by People First Portland, a political action committee formed by the Southern Maine Democratic Socialists of America and their allies.
Em Burnett, a volunteer with People First Portland, questioned the assumptions behind the city’s projections and suggested the city should look to offset any additional costs.
“Voters in Portland have an opportunity to help our neighbors and those who need it most,” Burnett said. “The Maine Center for Economic Policy estimates that our vote to raise the minimum wage has the potential to lift 1,600 people out of poverty in Portland.”
Of the five referenda opposed by the council, the biggest fiscal impact would come from Question C, a sweeping building, labor and zoning reform package called the Green New Deal for Portland, which despite its name is unrelated to the similarly-named national reform package.
The referendum proposal, among other things, would increase energy efficiency standards and add solar-ready roofing requirements for city projects, while also adding prevailing wage and minimum apprenticeship requirements on all city-funded projects over $50,000, including road, sidewalk, school and other construction projects.
O’Connell said in his memo that Question C would add an estimated $8.8 million annually to the cost of construction projects and eliminate 90 percent of the local vendors that typically bid on city projects. O’Connell said he could find only one recent bid that would have met the apprenticeship requirement. In that case, it came from a Massachusetts contractor, whose bid was 29.7 percent higher than the others.
Using that as a baseline, O’Connell estimated the apprenticeship requirement would add up to $7.5 million annually. He said enforcement would cost an additional $75,000 and LEED certification standards could cost $50,000 annually.
Burnett criticized the city for using one anecdote to predict future costs.
“If contractors want to refuse to invest in the next generation of workers, or if they want to refuse to pay their workers a prevailing wage, they are free to do so,” Burnett said. “They just can’t get public money doing that.”
O’Connell’s analysis focused on municipal departments, such as public works, parks, recreation and health and human services.
School officials also have said they are concerned about how the ordinance would impact the school department’s ongoing school renovations, which are already coming in above budget.
“Our projects have sought to address educational needs as a priority and address energy efficiency improvements where possible,” Superintendent Xavier Botana said. “They are also concerned that the loads imposed by the roof requirements would likely trigger structural upgrades to our buildings where they are not currently planned.”
And affordable housing developers have warned that increased costs would make it impossible for them to compete for necessary tax subsidizes to build affordable housing in Portland and would likely build those projects elsewhere.
The minimum wage proposal, meanwhile, could cost the city an additional $3.3 million annually, O’Connell said.
Question A would increase the minimum wage in Portland from $12 an hour to $15 an hour over the next few years. It would also require time and half pay during state, county or city emergencies, including the current emergency stemming from the coronavirus and other weather-related emergencies.
O’Connell said the city has 738 part-time, full-time and seasonal employees making under $15 an hour and that it would cost $300,000 a year once the minimum wage hits $15 an hour in 2024, not including schools. That could lead to cuts at the Barron Center, a city-run nursing home, as well as cuts in recreation and facilities management and social services, he said.
City workers who earn less than $15 an hour include seasonal staff who work in the city’s parks or athletic facilities or at the ice arena, the golf course, cemeteries or on the islands. according to O’Connell. Some do winter seasonal work, such as sidewalk maintenance. The group also includes election workers and volunteers.
O’Connell said the city employs between 2,100 and 2,200 people, and 1,400 of those are full-time employees, he said.
The fiscal impact would go beyond bringing those employees up to $15 an hour, he said.
O’Connell said the ordinance could negatively impact morale of employees earning above $15 an hour who have more training and skills than part-time and seasonal workers who would get raises because of the referendum. Additional raises would be needed for 391 workers who now make between $15 and $22.50 an hour, including 87 certified nursing assistants at the Barron Center, according to his analysis. If those nearly 400 workers receive a 10 percent raise, it would add nearly $2.3 million alone to the annual budget, he said.
“Many of the programs within these departments would operate at a loss if forced to pay artificially inflated wages and would be at risk for elimination during the annual budget process,” he said.
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