LISBON — Interim Town Manager Dale Olmstead has come up with ideas about how the town can work its way out of a $500,000 budget hole and replace the burned-out Public Works garage.

Speaking to about 150 residents at Lisbon Consolidated School on Tuesday night, Olmstead joined school board members and town councilors to discuss the town and school budgets totaling $22 million, plus three proposed bond issues that may be put on the ballot in June.

Based on his experience as town manager in Freeport for 31 years, Olmstead pointed to several problems he thinks the town should address right away.

“The town can’t continue to use surplus, or undesignated funds, to pay for operating expenses,” he said. “Most towns carry about 12 percent in surplus. Lisbon’s is down to about 6 percent.”

He added, “I know people won’t warm up to this idea, but many towns have gone to ‘pay as you throw’ for waste disposal.”

He predicted the town could save as much as $100,000 a year, and as much as $200,000 a year, in time.

“Recycling has skyrocketed in towns that have done this, and they’ve cut their waste stream by up to 75 percent,” he said.

Another of his proposals is to negotiate a cable franchise agreement with Time Warner. Lisbon does not have such an agreement, yet cable fees for customers are about the same as other towns in the area, he said. This could easily generate about $75,000 a year for the town.

“I’m quite sure they will agree to it,” he said.

Consolidating, wherever possible, can also save money, he said.

“I’m not trying to butter up your school superintendent, but I’ll tell you I’ve worked with eight school superintendents and only one of them would talk to me about combining services,” he said.

“We’ve already had one success,” he said, referring to his talks with Lisbon School Superintendent Rick Greene. “We have successfully combined our payroll functions. We eliminated one position and are saving $40,000 a year.”

On the spending side, Olmstead said, “My biggest concern is you only spend $50,000 on maintenance paving. Your roads are crumbling.”

Another concern he raised is that the town has no capital reserve.

“Lisbon is basically borrowing for everything,” he said. “There’s no money set aside for anything. This is not good planning.”

Olmstead offered an idea for a new Public Works garage, one of the three proposed bond issues. The proposed bond would fund a $1.2 million facility to replace the existing garage, which was heavily damaged when a plow truck caught fire several weeks ago.

“Even before the fire, the working conditions there were deplorable,” he said. The building was about 6,400 square feet, which he described as “totally inadequate.”

Instead of constructing a new building, however, he suggested the town look into buying a building, either a 24,000-square-foot building owned by ETTI or a 10,000-square-foot building owned by Longchamps.

Although the town will be getting $300,000 from insurance on the damaged building, using that money to fix the 1960s undersized building isn’t a good idea, he said. However, that structure could be used to house sand and salt. The town’s existing sand and salt storage does not meet DEP requirements but is grandfathered, he said.

If the ETTI building is purchased, it could be used jointly by the School Department and the town for vehicle and bus maintenance, as well as office space for administrators.

The other two proposed bond issues would fund a new $5.7 million gym for the high school and would provide $500,000 for a new track and improvements at the high school.