Orono is moving forward with funding plans for multiple projects to start in 2026 following the Town Council’s Monday meeting.
A town meeting at a currently unset date will allow residents to give their input on the town using undesignated funds, taking out bonds and using tax-payer funds to cover the $11.6 million needed for multiple plans across town. The bonds would go toward a library expansion, sewer infrastructure repairs and a new police station.
Orono would need $9 million in bonds to complete needed projects, including a sewer maintenance project that would cost $6 million. The town would also take out a $3 million bond to boost funding for $5.6 million in projects planned for the near future.
The projects are part of the town’s multi-year improvement plan and are not on this year’s budget, meaning the town would have to use reserve funds or take out bonds to fund them.
Orono currently has four active bonds that account for nearly $16 million dollars of debt. Orono Town officials had hoped to avoid adding to existing bonds, paying more interest yearly or raising tax rates to fund projects.
Sewer upgrades costing $6 million would be funded through a bond that would be paid off through sewer rate payers. Rates would increase 5% in 2027 and 2028 to cover the bond interest.
The Council was unanimous in support for the sewer upgrades and said the improvements are needed.
The library expansion has been planned since 2023 and would enlarge the library from 6,500 square feet to more than 13,000 square feet. The project in total was estimated to cost more than $7 million in 2023.
Council Chair Dan Demerritt called the library and police station “multi-generational projects” that would increase services if funded.
Work to renovate the fire department and relocate the police department began last summer, when town officials bought the former bank at 56 Main St. The building requires $3 million in repairs and renovations before the Orono Police Department can move in.
Part of the funding comes from $1.2 million of capital plan reserves that were slated to be used for road projects in the next year. Councilors decided to spend that money to lower the bond amount, which Deschene said would have a smaller effect on road maintenance this year than expected.
“I understand the perception that, you know, we’re putting public works projects on hold, but it is saving us $40,000 plus in interest per year. I would like to take that full recommendation,” Councilor Jacob Baker said.
Orono’s nearly $16 million and Regional School Unit 26’s roughly $14.5 million in debt service are not out of the ordinary amounts compared with other municipalities in Greater Bangor, Kate Dufour, director of advocacy and communications for the Maine Municipal Association said.
A $1 million bond accrues roughly $40,000 in interest per year, Baker said.
The more than $30 million the school and town have out on bonds is not a deficit, but debt service, Dufour said, because the entities are paying it back yearly and budget for it. The funds from the bonds are usually used for larger projects that would raise tax rates if funded through the town’s budget.
“It’s no different than a credit card. It’s getting cash up front in order to perform some sort of function, and it’s usually capital. You’re using debt to build, construct or advance something,” Dufour said.
The town and school debt service is different from the budget shortfalls Penobscot and Washington Counties face because it’s getting paid off yearly and is not an unaccounted for deficit, Dufour said.
Similar to the county budget process, Orono’s decision on the bonds won’t go to a town vote, but residents still have a say in the process through the town meeting, Dufour said. With that input, communities may have different thoughts than their councilors or neighbors.
“There’s great fluctuation [in priorities] from municipality to municipality. And some communities might see bonding and borrowing as a way to fund projects over time,” she said.
Town Manager Clint Deschene touched on the changing nature of a community that may think of funding project differently, saying “I don’t know what the community is thinking all the time, but I do know I hear a lot of ideas of other things we could be doing, and if we spend [our capital budget] all out, that’s less than we could be doing.”
The amount a bond costs in accumulated interest is nearly equal to the interest earned on the town’s funds, Deschene said, meaning the town would be able to pay roughly just the borrowed amount.
Councilors were worried about a volatile economy that may require them to use their reserve funds, which moved them to keep $800,000 in reserve funds to account for possible needs in the coming year.
Councilors were also aware that the reserve monies may allow them to fix issues as they come instead of going out to bond in the near future.
“I would just like to say to [the Council] that I’d like us to try really hard when we get any extra money, if anything extra comes from the state or anywhere else, to be aware that we otherwise will be back here. So to be aware going forward, I really love us to try not to be bonding again,” Councilor Sarah Marx said.
