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Proposed revenue sharing cuts would be devastating
RUMFORD -- Just how bad would the Governor's proposed revenue sharing cut to local communities?
State Sen. John Patrick (D-Rumford) said revenue sharing that would be lost include $368,000 to Dixfield, $598,000 to Mexico and $979,000 to Rumford.
Holding his third community forum in three days, Friday's forum in the Rumford Falls Auditorium consisted primarily of Mexico and Rumford officials. It was co-facilitated by Representative Matt Peterson.
Rumford Town Manager Carlo Puiia said the focus at the forums has been on the town officials, "but this affects every household. People are going to lose their services."
Patrick said he asked for these forums to receive a give and take "on what I call one of the toughest budgets I've ever seen in my lifetime or heard of in that the paradigm has shifted basically on how we do budgets with how the Governor proposed making the budgetary changes that he did."
He said he was there to explain a bit about the budget, hear what the issues are and to get some ideas as what people would be willing to do to mitigate the proposal the Governor is bringing forward. Patrick indicated that it's probably going to be another two to three months before they get the finalized budget.
The lead topic was Governor LePage's proposed two-year budget, for which Patrick had a handout that featured the highlights of that budget. Proposed cuts totaled more than $425 million, which include:
* $280 million by eliminating revenue sharing (portion of sales and income taxes paid to towns);
* $29 million to shifting costs for teacher retirement to the towns;
* $25 million by reducing funding to school districts;
* $82 million by eliminating property tax relief programs for anyone under the age of 65:
* $12 million by the eliminating the BETR (Business Equitment Tax Reimbursement) program and limits of the BETE (Business Equipment Tax Exemption) program to manufacturing;
* $8 million by the reassignment of truck excise tax revenues away from towns to the state highway fund.
Mexico Town Manager John Madigan said, "I think the Governor threw it all out on the table, every municipal program, hoping something is going to stick. But depending upon what sticks, any way you slice it, is going to hurt Mexico, Rumford and our whole area."
Patrick said, "I'm scared to death that this may be closer to the norm and that things that stick, can we actually live with them? No Democrat or Republican has said, 'Let's raise taxes. Let's do this.' In order to change some of these things, is we've got to hear from you folks and citizens on what is more important to them on how we can fix some of these things."
Madigan, who has served on the Maine Municipal Association's Legislative Policy Committee for some six or seven years (as well as six years back when he was Rumford town manager), said, "Try to get an even mix of taxation, as it's always been scewed to property tax. Right now, the property tax makes up 44 percent of the entire mix. Sales tax is only 21 or 22 percent, and income tax is 33 or 34 percent."
"One hundred years ago or more, property ownership was a true indicator of the ability to pay. That is no longer the case. So property tax is really getting slammed and really, it lets off the hook renters who don't own property. It taxes businesses more for two reasons -- because it's more valuable and that there's personal property tax involved."
Noting how these changes would affect his town, Madigan said he took his exact budget from last year and didn't change anything.
"It would increase real estate value by $3,445,000, primarily the homestead. Now that property that was exempt is going to be taxable. So all those people with a homestead are going to autommatically going to get an additional $250 tax bill, on top of everything else."
Madigan said he will go from $1,217,000 in non-tax dollars to $777,000. That $439,000 less non-tax revenue. "That's what drives my mil rate up, from 25 mils to 28.5 mils, minimum. On a $100,000 home, is a $350 increase, plus the $250 loss of homestead. That's $600 for a $100,000 home in Mexico is the full estimated impact of all of these changes combined, without any information on what we're going to do with the school bill."
"I don't know how we're going to do this," he noted, adding that a townwide survey by Androscoggin Valley Council of Governments determined that 58 percent of Mexico's citizens are low to moderate income.
"We can't absorb this. It's just devastating," said Madigan.
"My whole summation of what's going here is that the state is losing credibility in the eyes of the municipalities simply because of principal. Excise tax belongs to the municipalities. We don't have a whole lot. We have that and the property tax. The state has any means of taxation it wants to dream up," he said.
"The last 15 years or so, the whole attitude (at the state) has been 'no new taxes.' Baloney, because the municipalities have been hit every year with new taxes because of the shifts, the tweaks that have been done," said Madigan.
"To me, revenue sharing is sacred. All these other programs you guys have invented because of what the state thinks is important, which is fine. But you can't turn that all over to the property tax. We can't absorb it anymore," he noted.
Rep. Peterson asked what MMA is offering for alternatives.
Madigan responded, "This year, their whole agenda has simply been to keep the revenue sharing pot intact."
"Keep revenue sharing intact, work toward the 55 percent goal towards the cost of education. There were four things. They (MMA) know their not going to get everything because we're broke. Everybody's broke. But at least try to keep those programs intact for the future," he noted.
Mexico Selectman Reggie Arsenault said, "We are a state that attracts people from other states. They come here and spend their money. We're a four season state, so we could capitalize on it. Maybe we ought to think about raising the sales tax on a few things. Look at the money that could generate."
Madigan added that where sales tax is only 21 or 22 percent of the mix, that is an area for real growth. "When you considering 10 percent down in Massachusetts, it's not going to stop anybody from coming to Maine."
Patrick said an increase of 1 percent on the sales tax would generate $180 million.
"The major thing is an equitable split of the major taxes, and that's a goal worth achieving," noted Madigan. "You can see immediately, there's plenty of room on the sales tax when you compare that to the other New England states."
Patrick said, "I think this is a good step. Trying to get more meetings and dialog is important. I know it's going to be invaluable to me when I go back to return next Tuesday at the causus. I'm going to do more (meetings) between now and the end of the budget."
Sen. Patrick is offering a legislative update by email for anyone interested in signing up. To subscribe and stay informed about what is happening in the Legislature and around Senate District 14, go to: http://www.mainesenate.org/meet-your-senators/senator-patrick/