by Ramona du Houx
Deep concerns about rising property taxes and the ability of cities and towns to maintain vital services dominated a public hearing Wednesday on Gov. Paul LePage’s proposed plan to abolish state revenue sharing as part of his proposed $6.5 billion state budget. The proposal is viewed as being a way to shift costs from the state to towns, many of which don't have anyway to pay for the deficit besides raising property taxes.
Dozens of people, including municipal officials and police, fire and library workers, from all across the state turned out to the joint public hearing before the Appropriations and Financial Affairs Committee and the Taxation Committee to testify against the revenue sharing provision of the governor’s budget. Town leaders from rural Maine – including Aroostook, Franklin, Hancock, Piscataquis and Washington counties – told the legislators about the impact that revenue sharing cuts have already had on their budgets, municipal services and property taxes and how much more their communities would suffer with the elimination of revenue sharing.
“The state cannot turn its back on local communities,” said Rep. Peggy Rotundo, the House chair of the Appropriations Committee. “Today we heard about the devastating impact that the elimination of these funds will have on schools, emergency services and property taxpayers, especially seniors trying to get by on fixed incomes and young families. We owe it to our towns and their residents and small businesses to protect these vital funds.”
The LePage budget would end the state’s decades-old revenue sharing arrangement with Maine towns and cities. The state gives back around 5 percent of sales and income taxes to communities, which rely on these funds for services like education, firefighting and road maintenance while keeping property taxes in check. During LePage's last term he already cut the revenue sharing forcing many communities to raise property taxes.
“We heard repeatedly from town officials across our state that the cuts to revenue sharing are detrimental and miss the mark. We should be looking for ways to reduce property taxes, not shift additional taxes on to homeowners,” said Sen. Linda Valentino who serves on the Appropriations Committee. “No community should have to choose between underfunding and understaffing our public works or police departments in place of rising property taxes.”
Under the LePage administration, state revenues have increased, but revenue sharing funds to towns have plummeted. From Fiscal Year 2012-2014, Maine reduced revenue sharing funds to Maine towns by 32 percent. If the Legislature does not blunt these proposed cuts, they will be completely eliminated in the second year of the budget.
Winslow Town Councilor Ken Fletcher, a former lawmaker and LePage’s former energy chief, testified that the elimination of revenue sharing would result in the loss of approximately $940,000 – an amount that is greater that the town’s public works, police or fire budgets. He expressed concern about the increase in the property tax burden that would result from the loss of revenue sharing and the governor’s proposed elimination of the Homestead Exemption for those under 65.
“It is generally accepted that property taxes are the most regressive of the three primary tax methods. Please do not place more of a burden on Maine homeowners by underfunding Revenue Sharing and eliminating the Homestead Exemption,” Fletcher said.
“Small rural communities like ours don’t have plush budgets. We don’t have administrators. We have no ‘rainy day’ funds,” Perry First Selectman Karen Raye said in written testimony presented to the committees. “People are angry at their increased property tax bills. This is only going to make the situation worse.”
Revenue sharing is the only discretionary funding towns get from the state to cover costs like snowplowing – a particularly vivid example given that the forecast calls for yet another storm.
From plowing to emergency responders to putting down additional salt and sand, municipalities put these dollars to work with each snowstorm.
Public hearings on the tax portions of the governor’s budget will continue Thursday.