Wednesday, October 15, 2003

Tax plans offer relief for a price

Published in the Current and the American Journal; co-written with Kate Irish Collins

While Maine property taxpayers may save millions if the Maine Municipal Association’s tax-reform referendum passes Nov. 4, supporters of the governor’s competing proposal say it will lead to tax increases in other areas. And opponents of both ideas say neither will have any real effect on the state’s overall tax burden.

Each side says there is no guarantee the other’s would lead to true property tax reform, although elected officials in area municipalities say any additional state funding would be used to reduce or stabilize property tax rates.

The MMA proposal would require the state to fund 55 percent of the cost of education starting next year. The governor’s proposal would phase the
increase in over five years. The key concern about the MMA plan is where the money will come from.

Preliminary numbers indicate that under the MMA proposal, Westbrook schools would see an increase in state education funding of $3,555,704. Under the governor’s plan, Westbrook would lose $357,571 in the first year. In Gorham under the MMA plan, the town would see an increase in education dollars of $3,221,394 and a decrease of $267,283 under the governor’s proposal in the first year.

Windham is the only regional town that would see an increase under both plans. Under the MMA plan, Windham would get $3,821,269 more and under the governor’s plan the town would get $94,970 more.

School Administrative District 6, which includes Standish, would gain the most under the MMA plan, with an increase of $4,989,105. Under the governor’s proposal, the school district would lose $673,298 next year.

In the 2005-2006 fiscal year, with an overall increase in education funding under the governor’s plan, Westbrook, Gorham and Windham would see an
increase in spending of just over $1 million. SAD 6 would see an increase in funding of over $3 million.

The governor’s proposal will never equal the total school funding dollars offered under the MMA plan because that proposal also requires the state to pay 100 percent of all special education expenses.

The total cost of the MMA plan, next fiscal year, would be roughly $255 million. State Rep. Harold Clough, R-Scarborough and part of Gorham, told the American Journal it is not possible for the state to expend that kind of money without major tax increases or significant program cuts.

The governor’s plan would improve state education spending more gradually and also increase funding to statewide tax relief programs, like the “circuit-breaker” program, which refunds a portion of property taxes and rent paid by low-income Mainers, Clough said.

State Rep. Christopher Barstow, D-Gorham, said he is supporting the governor’s proposal because it takes a progressive approach to increasing state funding of education. But he’s also not strongly against the MMA plan.

“I believe the governor’s measure would be legally binding and that the Legislature would keep its commitment. Both questions are being touted as providing tax relief and, to some extent, they will, but what we really need to do is engage the leadership in reviewing the tax code itself,” Barstow said.

Bob Stone, treasurer of the political action group, Common Sense for Maine Taxpayers, and chairman of the finance committee in the city of Lewiston, has spoken against both plans, and is urging voters to choose “none of the above” on the ballot.

“History tells us that you’re only dreaming” if you believe claims of lower taxes, Stone said. While property taxes may drop, the money will have to be made up from other taxes. He said cutting state spending is the only way to truly lower the state’s tax burden.

Statewide polling shows voters are evenly split among the MMA proposal, the governor’s plan and the “none of the above” option. Gorham Town Council Chairman Michael Phinney told the American Journal Monday the council is backing the MMA proposal. Phinney said it would provide additional money to the town immediately.

He said the governor’s plan would provide less funding from the state for education than what Gorham is currently getting.

“Gorham is one of the towns that would get more money back. From that standpoint it should help out with the property tax level,” Phinney said.

While the MMA plan has come under some fire for not detailing where the funding would come from, Phinney said it would be up to the Legislature and the governor to find the money.

“No doubt it would be a difficult decision. But education should be our first priority. It is in Gorham, and it should be at the state level,” he said.

Westbrook Mayor Don Esty said the city has not taken any official position on the education funding referenda, but said any help the state could provide to help pay for education either under the MMA proposal or the governor’s plan would be appreciated and welcome.

“Should either one pass, we will use the money to keep property taxes as much under control as possible,” Esty said.

Esty said it is his hope that before Election Day, state officials will outline whatever cuts in spending or increases in revenue would be available to support either education funding option. “It’s that missing information that leaves people unsure about how to vote,” he said.