In a presentation to town councilors Tuesday night, Lisbon interim Town Manager Jim Bennett largely attributed controversial shortfalls in two recent fiscal year budgets on staff double counting certain town revenues when calculating the tax commitment and budget, amounting to a nearly $2.5 million problem.

There was public outrage earlier last year when the budgeting errors were made public and the current fiscal year’s budget was put forward by councilors with an 11% increase compared to the previous year.

Many people at the time spoke about their frustration with the increase and aired concerns that the funding shortfall may have been caused by theft or embezzlement.

Residents called for further cuts to last year’s proposed budget and some called for allowing the public to vote on municipal budgets; currently only councilors vote to approve the municipal budget. Many of the new councilors elected last fall ran on a platform of bringing the town back under a town meeting-style governance, which would give residents final budget control.

The controversy also contributed to the school budget being rejected twice, with residents taking their frustrations with the town budget out on the only budget they did have direct influence over.

Early on in Tuesday night’s meeting, Bennett made clear he is doubtful any theft or malice occurred. Instead, miscalculations seem to be the predominant culprit, which went unnoticed by town staff due to a lack of review process and other longtime town practices, he said.

Officials in some towns do not completely understand the state’s Homestead Exemption submission system, making it easy for staff to miscalculate the reimbursement amount, he said. That may have been the case in Lisbon in fiscal year 2024, leaving a $900,000 hole in the budget that year, according to Bennett.

“No malice,” he said. “If you don’t understand the form, (if) people aren’t talking to each other, (if) people aren’t double checking each other’s work, it happens.”

If the error had been caught and rectified, the tax rate would have been $1.28 higher or town staff would have made other decisions that year to keep the increase in taxes down, Bennett said.

Then, in fiscal year 2025, the town double counted town revenues in some departments, making it look like the town had more in revenues than it actually did, amounting to an error of about $1.5 million, he said. Had those errors been caught, the tax rate would have been about $1.50 higher.

So when councilors last year were developing the fiscal year 2026 budget, there was a more than $2 million gap they had to either cut spending by, raise those funds through property taxation, or fund it through other town means, Bennett said. 

“That set up a perfect storm for everything that happened during the last budget cycle,” he said.

The town’s fund balance could pose another future funding challenge if it has become dangerously low, he said. The city drew roughly $2.5 million from it in recent years to reduce the tax burden on property owners amid the town’s 2025 and 2024 budgeting shortfalls.

Until the town gets the auditor’s report back, it is unclear exactly how much is in that fund but Bennett said it is something to keep an eye on.

Bennett is recommending that multiple staff look at town budget calculations, including the finance director, assessor and town manager going forward, he said.

They all should be checking the tax rate commitment and calculation themselves to minimize errors, he said. Bennett does not believe that has been the common practice among town staff going back several years, predating staff hired in more recent years.

Bennett’s report to the council included 17 recommendations in the areas of staff and internal controls, the budget and financials, trends, policy and economic development.

Councilors will use the information and recommendations provided by Bennett to set their goals this year and determine next fiscal year’s municipal budget.