LISBON — Hearing calls about the effect of tax increases on residents, the Town Council voted 5-2 Tuesday to reject the municipal budget offered by the town manager.

When combined with the school, county and water budgets, the overall tax rate would increase by 18.6%. The proposed municipal budget accounts for 10.6% of that increase, Town Manager Glenn Michalowski said.

Lisbon voters earlier this month overwhelmingly rejected the proposed 2025-26 school budget at the polls. School Committee members, who will vote on a new education budget Friday, were also met Monday with residents frustrated over the potential tax increase.

Now that the municipal budget has been rejected by the council, the town charter says the town manager’s budget goes into effect July 1 until the council adopts a budget.

Only Chairman Fern Larochelle and Vice Chairman Chris Camire voted for the budget. Normand Albert, Mark Lunt, Nick Craig, Jo-Jean Keller and Jeremy Barnard voted no, but for different reasons. Albert said he first wanted to see the final copy of the audit, Lunt wanted to deny raises for the year, and Barnard said the town has already made too many cuts.

Barnard said he wouldn’t support a municipal budget that increased less than 12%. The manager’s proposal is a 10.6% increase over the current year’s budget.

“I think that 10 and change (percent increase), I’m concerned about that being too deep already,” he said. “A lot of the cuts we make we’re going to look back and not appreciate that and see that we perhaps have cut too deep in some areas.”

An accounting error of $1.3 million last year has placed the town in a huge financial hole. Officials used money from the unassigned fund balance to cover the deficit but also used an additional $500,000 from that account. Auditor Ron Smith chastised the town last month for numerous arithmetic errors. He determined that the town actually used $2.9 million from the fund balance, leaving the town at a dangerously low level.

Before the discussion and vote on the budget, a dozen residents spoke to the board about their displeasure with what was being proposed.

“I feel as a resident and as a taxpayer that there haven’t been enough cuts,” said resident Karen Stevens. “We taxpayers have given you suggestions, have given you opinions, said we’re willing to do without certain services or go lower on certain services.”

“I don’t think that we’re really looking hard at the solutions,” added resident Scott Giasson. He urged the town to seek 10% cuts from each department head.

Another resident said, “I called a realtor and when she asked for the address and what town, she said ‘Good luck. We can’t even get people to look at properties in that town.'”

Michalowski said after the last workshop earlier this month, he went back and made some adjustments to nonessential programming and positions suggested by the council.

“Staff has worked diligently to identify responsible, targeted reductions that preserve core services and avoid disruptive cuts,” Michalowski said. “At this stage, meaningful further reductions would likely require significant changes to staffing levels or service delivery — trade-offs that would carry long-term impacts for the community.”

No reductions were made for Public Works. Michalowski said the council indicated a willingness to address structural revenue issues at the Transfer Station through policy changes, such as sticker fee adjustments or reviewing commercial hauler activity.

Camire noted that expenditures are actually $400,000 less than last year.

Cutting $3 million from the budget is not a quick fix, Craig said. “We still need to operate. We still need to be viable as a town,” he said. “Cutting $3 million will not allow us to function as a municipal government.”

Michalowski did offer a glimpse of good news, saying revenues were trending upward, but he said it was premature to speculate on the amount.