Community leaders, mayors, police officers, and firefighters strongly urged the state’s budget-writing committee to pass a bill that would restore funding to Maine’s towns and municipalities referred to as “revenue sharing.” Based on the sources of property taxes statewide and municipal spending statewide, the loss of $40 from Revenue Sharing will result in $29.8 million of cuts to local education and a $10.8 million increase in property taxes on business.
“Everyone on this committee and almost all of our colleagues made a promise to our constituents back home that they would receive $65 million in revenue sharing next year. If we don’t pass this bill, we will be virtually eliminating this property tax relief program for our towns,” said Senate President Justin Alfond addressing the committee. “This program was $120 million program in 2007. Without this bill, next year it will be just $20 million.”
The bill, LR 2721, would keep the state’s forty year promise to fund $40 million to Maine towns by scaling back corporate tax breaks to large scale retail stores like Wal-Mart; eliminating accounting tricks that allows large out-of-state firms – mostly oil and gas companies – to pay less in taxes; by using state dollars reserved for critical purposes; and by drawing down dollars from a GOP-initiated account reserved for tax breaks for the wealthy.
“These funds are a partnership and an obligation the state has to our local communities,” said Representative Peggy Rotundo. “We collect over $1 billion in economic activity from the revenue generated from Main Streets across our state. We owe it to our towns to return some of these funds to help keep property taxes from spiking for families and to help fund our schools, police and firefighters.”
Under the LePage administration, state revenues have increased, but aid to towns, or revenue sharing funds to towns, has plummeted. From Fiscal Year 2012-2014, Maine reduced its funding to Maine towns by 32 percent. If the Legislature does not blunt these proposed cuts, aid to towns will decline by 79 percent in Fiscal Year 2015.
“We’ve seen today town officials from our biggest cities to our smallest towns respond in desperation and outrage. They’ve told us loud and clear that their budgets are as tight as can be. They depend on the state to keep its promise and cannot tolerate placing any more unnecessary pressure on local taxpayers,” said Democratic Senator Dawn Hill, the co-chair of the Appropriations and Financial Affairs committee. “If the state doesn’t keep its promise, no town will escape the choice between cutting bare-to-the bones services or raising property taxes. And, many will have to do both.”
More than half of Maine towns have either just begun their fiscal year or will do so while the Legislature is in session. Many others are facing a June deadline.
Without this measure, Maine towns stand to lose an average of nearly 62 percent of state funding for their local budgets.
For more than four hours, town official testified about existing stretched budgets and the impossible choices selectboards and councils will have to make.
During the public hearing, the Town of Scarborough distributed a unanimous resolution that the town council passed in support of the revenue sharing bill.
Last year, Governor Paul LePage proposed a budget eliminating municipal revenue sharing and shifting more than $400 million in taxes to local towns and communities, primarily impacting business and residential property owners. The Legislature rejected the Governor’s proposal, blunted his property tax hike, and kept the bulk of revenue sharing in place.
In December, Governor LePage doubled down on his threat to eliminate revenue sharing to towns and even went so far as to call revenue sharing “welfare.”
“Gov. Lepage has called revenue sharing to cities and towns welfare. That is only true if our community police and fire departments, schools and public works are all welfare programs,” said Bangor City Councilor Joe Baldacci. “Revenue sharing was part of a concept that there should be a state and local partnership to fund basic services like police, fire, schools and roads without overburdening the already overburdened homeowner. That partnership with the current administration has been virtually destroyed. We need leadership who is committed to restoring this partnership that is so important to controlling property taxes for thousands of homeowners.”