LEWISTON — Mayor Bob Macdonald said Tuesday that he’s prepared to take whatever he can get from the state and move on — even if it means cuts to city programs.
“The state is broke,” Macdonald said. “We can play the blame game back and forth, but that is not going to put money in the coffers. I’m not going to sit up there and preside over a crying contest.”
Local officials across the state continued to react Tuesday to a budget proposal put forward by Republican Gov. Paul LePage.
Among other cuts, it calls for suspending state revenue-sharing for two years, cutting the state’s circuit-breaker program, the Homestead Exemption program and the way the state calculates motor vehicle excise taxes, state aid to education and personal property taxes.
In Lewiston, proposed changes to personal property taxes, excise taxes, state revenue-sharing and Homestead reimbursements target about $9.2 million of the city’s $44 million city-service budget. That does not include changes to the property tax circuit breaker, which is paid directly to taxpayers, or to General Purpose Aid to Education.
“We are going to have to discuss it, and we are going to have to prioritize things,” Macdonald said. “We get our budget and our priorities. When we get to our limit, whatever is not covered will just have to go away. What else can I say?”
In Auburn, those changes could affect up to $6.8 million of the city’s $32 million municipal budget.
Auburn Mayor Jonathan LaBonte said the budget discussion could make it the perfect time to reconsider sharing services with Lewiston.
“Maybe communities that are about to enter their budget season say, ‘Yeah, we are ready to consolidate,'” LaBonte said. “Maybe revenue can show up for those communities that have an appetite to be more efficient.”
Joint studies in Lewiston and Auburn have shown savings to both communities if they share duties and consolidate some services. LaBonte said he would welcome that kind of discussion with Lewiston.
“But I’m not sure how many other municipal officials are ready for that,” LaBonte said. “I’m not optimistic that municipal folks are ready for a policy debate. They want to have a revenue debate.”
Cuts to property tax relief
Geoff Herman, director of state and federal relations for the Maine Municipal Association, calculated those cuts at about $420 million over the next two years. According to Herman, the costs would be shifted to Maine’s cities and towns.
“The idea that municipalities just have to tighten their belts to absorb these impacts is a little hard to take, given that $400 million is being redirected from property-tax relief to fund state government,” Herman said.
“Somebody is going to have to provide the core governmental services,” he said. “If state government is now going to complain about the local government belt-tightening, that’s going to be a little hard to take.”
Herman said several of the cuts seem aimed at programs designed to reduce property taxes, the only tax local governments can levy.
“(These policies) have been effectively using tax revenues, sales and income taxes to blunt the impact of the regressive property taxes,” Herman said. “These programs were all part of a three-dimensional public policy that has been established over 40 years to address the problem of regressive property taxes.”
For example, according to the circuit-breaker program, the state pays Maine residents a partial refund on their property taxes or rent they paid throughout the year. To qualify, owners must pay about 4 percent of their annual income in property taxes. Similarly, renters qualify if they pay about one-fifth of their income in rent.
The Homestead exemption lets residents hide a part of the value of their primary residence from property-tax calculations, reducing their property tax bills. The state picks up that difference, paying the cities and towns the money their residents don’t pay.
Both were designed to shift some of the tax burden for local government operations away from property taxes.
Similarly, the 55 percent education funding directive was approved by voters in 2004 to shift some of the burden of funding schools from local taxpayers to the state. And the excise tax on automobiles and businesses’ personal property taxes are big revenue-producers for Maine cities and towns.
“We are still trying to calculate the actual impacts to people,” Herman said. “Some of them are universal; cuts to revenue sharing will hurt everyone. But others will hurt some municipalities more than others. That’s still being calculated.”