Bar Harbor Faces Budget With Less Cruise Ships: Parking Fees to the Rescue?
Warrant Committee Presents Recommendations to the Town Council
The Bar Harbor Story is generously sponsored by Swan Agency Real Estate.
BAR HARBOR—The town’s warrant committee, town council, and school committee members last night showed that they are all very much in line with the recommendations for a budget that will steer the town’s revenues and expenses for the next fiscal year, which begins in July. It is a year with less projected cruise ship revenue.
“I think we’re pretty close,” Councilor Matthew Hochman said when it came to those recommendations and thinking between the warrant committee and town council. “I think we’re really close.”
“It’s worth noting that these are the only things that came up for us as well—the cooperating agencies,” Council Chair Valerie Peacock said and said that the council is thinking about taking a different approach to how the requests for agencies with larger amounts of funding are handled in the future.
For now, the budget—once it is finalized—will go before voters at town meeting June 10. Voters can tweak elements of the budget during that meeting.
The current increase for the town’s general fund is approximately 11.2%, but there are a lot of moving parts prior to it being finalized for that presentation to the voter. The current projections see property taxes covering $28,241,495.
Bar Harbor Warrant Committee Chair Christine Smith told the group Tuesday that they appreciated the way the budget was presented this year.
“It made it a more easy process, I think, than last year because of the hard work that was put into it,” she said.
For the past few weeks, members of both the warrant committee, its subcommittees, and town council have been meeting with Town Manager James Smith and Finance Director Sarah Gilbert trying to create a budget with less cruise ship fees, more parking fees, and unknown costs for supplies.
Most of the differences in the warrant committee’s budget recommendations came from cooperating agencies and expanding the flat funding.
The group recommended flat funding for the Bar Harbor Historical Society at $2,500, which had asked for an increase to $75,000.
At its workshop last Thursday, the council also discussed creating a more formal relationship with the Jesup Memorial Library, Mount Desert Island YMCA, and Island Explorer in the future since all are funded at a high level. They also quickly discussed the Bar Harbor Historical Society, which had a funding request meant to help preserve its collection of Bar Harbor history and support free community events that was larger than in the past.
“I love what they do. I think they are deserving of the money,” Hochman said, but the jump from $2,500 (the amount of previous years) to $75,000 was felt to be too high. The councilors discussed potentially increasing the budget line to $5,000 this year and wondered if it should be treated as a cooperating agency or as something different in the future.
The YMCA asked for $50,000 more than this year’s funding, which if approved would see the town contributing $200,000 for the next fiscal year. The warrant committee has suggested a 3% increase.
The Island Explorer is currently funded by both the cruise ship revenue and parking revenue. The total ask from the agency was $310,544. The proposed budget has $216,438 coming from the parking fund for the Island Explorer.
The Island Explorer asked for $94,106 from the cruise ship fund to bring the total up to the requested $310,544. James Smith budgeted for $25,000 from the cruise ship fund which amounted to a $69,106 shortfall for Island Explorer’s total ask.
The warrant committee recommended funding the Island Explorer for its full ask—and recommended that the additional $69,106 come from the parking fund to make up the difference.
“Do we have the room in the parking meter fund to cover that?” Hochman asked Smith.
“This is where I’m going to defer to our fabulous finance director,” James Smith said to Gilbert.
“We sure do,” Gilbert said. “We have an estimated fund balance at the end of FY26 of $968,000.”
Traditionally, the free bus service has been funded from cruise ship revenue at a higher amount than proposed by Smith this budget. However, the town no longer allows as many cruise ship disembarkations (1,000 or less a day without fines), which has resulted in less cruise ship visits and less money. To deal with this, the warrant committee recommended using parking fee revenue to fully support the Explorer this year.
Funding for the Island Explorer, an island-wide, free, bus system, was also discussed at the town council workshop last Thursday.
James Smith had said at the workshop the town could take the money from the cruise ship fund to buy time to fund the busses more fully without impacting the tax payer. Parking fees also would not impact the tax payer. The council still has time to finalize the budget before it goes to the warrant and voters.
FUTURE CRUISE SHIP FUNDS
The future was also a bit of a question mark when it came to cruise ship fees, which the town collects when cruise ship passengers come to Bar Harbor. There is a federal court case as well as other court cases dealing with the town’s ordinance that limits cruise ship disembarkations to less than 1,000 a day as well as with the Golden Anchor, the business where the passengers disembark. The town has also agreed to work with a smaller cruise line, American Cruise Lines, about disembarking smaller ships onto the town’s Ells Pier in downtown Bar Harbor.
Original numbers presented in the draft proposed budget were tweaked this past week.
“We had $14 for the port development fee and the passenger service fee,” Finance Director Sarah Gilbert said.
They decided to do a 2.5% cost-of-living-adjustment (COLA) for the legacy ships, so the passenger service fee for the larger ships would now be $3; the passenger service fee for the smaller non-legacy ships tendering at Ells Pier would be $9.45.
They also decided to do a 2.5% COLA increase for the legacy ships, so the port development fee for the larger ships would now be $2.68 for a total of $5.68 in fees. The port development fee for the smaller non-legacy ships tendering at Ells Pier would be $4.55 for a total of $14 in fees.
These readjustments of fees has resulted in a $523,183 reduction in cruise ship fund revenue and a $481,622 reduction in the cruise ship fund balance.
“It’s costing us money to have cruise ships coming to the town of Bar Harbor right now,” Peacock said at the workshop. “It’s a hard thing for me to sit here and see that.”
“It’s not a good place to be,” Hochman said.
“It is not a good place to be,” Peacock agreed.
“We really need to let the courts settle things out,” James Smith said.
There is a right and an obligation to allow up to 1,000 daily disembarkations under the town’s land use ordinance, James Smith said.
He said that it might not be worth the controversy to have those cruise ship conversations right now, but there is also too much unknown and ambiguity.
“It’s a very precarious place to be. There are still a lot of unsettled questions,” James Smith said. “We basically have enough fund balance to carry things for the next two or three years while we sort some of this out.”
There are potential options out of the ferry terminal, he said, and there is enough fund balance to give the town a couple years to figure it out.
Tax money is not covering the deficit, but the fund balance from the cruise ships themselves.
“And we need to manage it. And we need to figure it out,” he said.
An eventual solution, he said, might be a reduction in services.
CURRENT TAXES
The current tax rate is $10.04. The proposed rate is still $10.71. It has not been readjusted yet according to warrant committee proposals nor finalized for town meeting by the council, but is still in process.
For a property owner with a median home value of $522,350, the total annual tax would be $5,597 a year. That is an increase of $352 next year. The total proposed budget is approximately $28.2 million.
THE BAR HARBOR BUDGET ITSELF
In a January 17 memo addressed to the town councilors, James Smith wrote, “The FY2026 budget reflects the Town of Bar Harbor’s strategic commitment to balancing fiscal responsibility with the delivery of essential services and investment in critical infrastructure.”
It’s a message repeated throughout the budget documents, often called a “binder” because the hard paper copy is presented to councilors and warrant committee members in large plastic binders. The budget is also available online.
The voter-passed school bond and infrastructure bonds are impacting this year’s budget.
“In FY2026, the budget accounts for the full financial obligations of both bonds, principal and interest. To stabilize the tax mil rate amid these increased obligations, the FY2026 budget proposes utilizing parking revenues for property tax relief,” James Smith wrote.
It’s a bit more than that, too.
“Additionally, we are recommending some use of the parking fund balance as a stopgap measure to further mitigate the tax burden on property owners. These measures are designed to provide immediate tax relief while supporting long-term fiscal sustainability,” James Smith wrote.
DISCUSSIONS
Last Thursday, the town council met in a smaller room across the hall from the council chambers where discussion ranged from preordering salt to cruise ship fees.
Only warrant committee members Carol Chappell and Shaun Farrar and Bar Harbor Chamber Director Everal Eaton attended the council workshop. Chappell and Farrar eventually left the 5 p.m. meeting to attend their own warrant committee meeting, which began at 6:30.
Peacock brought up spacing in the budget for increases potentially caused by possible tariffs on Canada.
“I think it’s worth kind of noting there’s all this unknown stuff that could be impacting our expenses,” Peacock said.
James Smith said that the financial updates the staff gives to the council track revenue and expenses. If they found that things were not adhering to projections, they would all work to make accommodations for that.
“We’d probably have to take some spending freezes of our own,” James Smith said if costs become overwhelming in the future, but that it’s hard to predict. “Short of a crystal ball—it’s just paying attention to those lines as they materialize.”
Vice Chair Maya Caines said the budget doesn’t have a lot of wiggle room as it is.
James Smith said there are ways to deal with increased and unpredicted costs: a vacant position might not be advertised, overtime might not be covered.
“We’re preordering salt,” he said. “Hopefully, we’re not chewing through too much.”
He said it’s not uncommon to look at a road budget and have an asphalt cost come in at over 200%.
Co-operating agencies requested increases aren’t in the budget nor are any new agencies that hadn’t been funded previously.
The town is looking at making adjustments in pay for staff in the police department and dispatch.
“There were some targeted positions that needed adjustments as well,” James Smith said.
OTHER DISCUSSION AT THE COUNCIL
How warrant articles are presented at town meeting can also potentially be tweaked in the future after conversation. All options have pros and cons, however, James Smith said.
The councilors also had a general discussion about the process of adding onto taxes and how when funding a nonprofit that they support, they are also making the voters do so in a way that may not be voluntary for the voter.
James Smith said a goal of his is to embed the concepts of sustainability into the thought process of each department.
The school budget came in lower thanks to a higher state subsidy than originally expected.
“It came in lower as Superintendent Zboray had anticipated,” Gilbert said. “That’s great, an extra $90,000.”
However, the high school assessment came in higher by about $200,000, Gilbert said.
“That 90,000 went fast,” Hochman said.
There were also discussion about the costs within the Glen Mary budget lines.
There’s still a question about what the cost of the Glen Mary pool project is going to be, what its size will be, and what its scope will be, James Smith said. His position is that the town has limits about what’s available. Ultimately, it is private property and the Bar Harbor Village Improvement Society’s project. That group has also been working on repairing the shore path, which had been devastated in a duo of storms in January 2024.
VIS is still doing the engineering on the Glen Mary project. Once the organization comes with a proposal, Smith said, the questions are how is it going to get paid for “and who is going to pay what.”
There was also some discussion about the money from the Higgins Pit bond. That project did not go forward and Smith is waiting for an energy audit report before the use of those funds.
Councilor Earl Brechlin would like to see where that money is in the budget. Because it is a restricted asset, it has to be held separate. Without a plan of where to put them, it’s hard to put those funds in the budget, Smith said.
It has to be spent within three years. If they aren’t spent, there is just paperwork to fill out with the IRS, Gilbert said. The town can only generate so much interest on the bond before it goes out to non-interest earnings. The town won’t be subject to the arbitrage penalty because it isn’t earning over 5%, she said
LINKS TO LEARN MORE
FY26 Budget
Presented by the Town Manager and Finance Director January 23, 2025
Disclosure: Shaun Farrar is an elected member of the warrant committee. Because of that, he hasn’t proofread this article. Please be kind if I have a lot of typos. We are just a team of two over here on the best of days. Also, let me add the disclosure that I did last year: Although we are married, we do not always think the same way on all things and we have entirely different brains. Our daughter worked full-time for the Bar Harbor Historical Society before she deployed. He recuses himself from votes about the society and discussions.
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fewer. fewer cruize ships.