LISBON — Citing “structural challenges” ahead, Town Manager Glenn Michalowski told councilors that more cuts are coming for the proposed $26 million budget.

Those budget numbers include $8.9 million for the schools and $1.2 million for Androscoggin County, leaving the municipal side of the budget at $16 million.

Michalowski gave councilors a snapshot Monday evening with the unveiling of the budget plan, which will not be finalized until voting in June, he said.

“While we recognize that the budget will not pass as presented, the finance director and I have already begun planning for necessary reductions,” Michalowski said.

Areas being considered for cuts include a freeze on merit pay increases, a hiring freeze, withdrawing the proposal to pay 100% of employee’s dental benefits and cutting back on capital and other one-time expenses.

After making $2.7 million in cuts and looking for at least another $121,000 to cut, the town manager said the budget would increase by $3.7 million as proposed, resulting in a tax increase. Town officials are hoping to lower that number.

“It’s not where we start. It’s where we end,” Councilor Normand Albert reminded his fellow board members.

Finance Director Samantha Bryant gave a PowerPoint presentation on the proposed budget.

Complicating the budget process are revenue miscalculations and errors in the 2025 budget that forced the town to use an additional $1.3 million from the fund balance on top of the $500,000 that had been planned to prevent a tax increase. Due to a calculation error, revenue was double counted on the tax rate form, resulting in a budgeted deficit for 2025.

Bryant said that due to the budget errors, some new upcoming expenses, as well as external payments, the town would need $21.5 million in tax revenue, a 45% tax increase, she added. Any tax increase will be at a much lower rate, she stressed.

Bryant and Michalowski both stated that it was their goal to not touch the fund balance this year, but that may not be possible with the pressure on the budget.

“Money for fund balance should be used for long-term sustainability,” Michalowski said.

He added that “a colleague once told me that recurring revenues should equal recurring expenses.”

The budget, as presented, includes full-time staffing for the Fire Department and an additional part-time aide for the library. The administration will lose a human resource director.