PLAN TO KEEP STATE’S FUNDING PROMISE TO MAINE TOWNS MOVES FORWARD

Details on plan released; public hearing scheduled

AUGUSTA– Top lawmakers on the state’s budget-writing committee have prioritized a measure to keep the state’s funding promise to Maine communities. A public hearing on the bill, which would prevent further property tax increases for Maine communities by restoring the state’s funding to local towns and municipalities, has been scheduled for next week.

“A promise made should mean a promise kept. No good comes from breaking the state’s promise to fund our communities,” Senator Dawn Hill of York, the Senate Chair of the State’s Appropriations and Financial Affairs Committee. “It’s a priority for us in the Legislature to keep our word to towns across Maine so that property taxes on homeowners and businesses don’t rise.”

The bill restores $40 million in cuts 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 account reserved for tax breaks for the wealthy.

“Preventing property tax hikes for middle class families and small businesses on our Main streets is our top priority. It’s our first order of business,”  said Peggy Rotundo of Lewiston, the House Democratic Chair of the Appropriations and Financial Affairs Committee.  “Further cuts would harm our schools, our economy, and basic services,  like plowing our roads in this terrible winter weather.”

Last year, Governor Paul LePage proposed a budget eliminating municipal revenue sharing and shifted more than $400 million in taxes to local towns and communities–affecting 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. However, 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.”

Without this measure, Maine towns stand to lose an average of nearly 62%* of state funding for their local budgets, including $10.8 million toward tax relief to local commercial property owners and $29.2 million toward tax relief for residential property owners. Without the measure, there will be a statewide loss of $26 million in K through 12 school funding, $12 million for local town operations, and $2 million for county tax needs.

Hill added, “Our towns are already stretched–and they have already done so much work with state government to cut and contain costs during these tight financial times. But by law, towns are due their fair share of state dollars that they make possible. In fact, they count on and expect this money to help keep our roads clean, our sidewalks safe, and our communities vibrant.”

Over half of Maine towns have either just begun their fiscal year at the beginning of the month or will do so while the Legislature is in session.  Other towns are facing a June deadline.

According to state law, revenue sharing is funded by the state’s collection of sales and income tax and must be used to offset local property taxes. For the past several years, revenue sharing to towns has been steadily decreasing. This year alone, funding dropped from $98 million to $65 million, even lower than the state’s share in 1994.

The public hearing on LR 2721 is scheduled for Wednesday, January 22 before the Appropriations and Financial Affairs committee in Room 228 at the State House.

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*For a town by town list of projected revenue sharing reduction, please click here.