Revenue sharing numbers in review

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The March 19 Legislative Bulletin published by the Maine Municipal Association contained a full listing of the state’s projected Revenue Sharing figures, numbers that reflect a 28.5 percent cut from the original state budget.

MMA’s explanation of FY 11 projected revenue sharing figures for the Sun Journal circulation area, a comparison of natural versus proposed cuts, is reprinted with permission of the MMA.

Explanation. As a matter of law, municipal revenue sharing must be used to reduce real estate property tax rates. The program was started nearly 40 years ago and provides limited municipal access to broad-based tax revenue streams in recognition of the high property tax burden, property tax inequities and as an alternative to the direct “local option” sales and income taxes municipalities are authorized to implement in most other states.

The column with the heading “FY 11 Natural Distribution” shows how much revenue sharing would be distributed to each town and city in Maine between July 1, 2010 and June 30, 2011 if the revenue sharing program was not tampered with by the Legislature. As it was originally designed, revenue sharing is funded by a fixed percentage (now 5 percent) of state sales and income tax revenue.  Therefore, in a downturned economy, municipal revenue sharing is “naturally” reduced in the same way and to the same degree as the state’s sales and income tax revenue. This column shows the distribution of that naturally-reduced revenue sharing during the upcoming fiscal year.

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The column with the heading “FY 11 with Legislative Cuts” shows how much revenue sharing will be distributed (according to the most recent revenue projections) after taking into account the “transfe,” whereby the Legislature takes $35 million out of the naturally-reduced revenue sharing program and places it in the state’s General Fund to financially support state programs. This $35 million “legislative transfer” is the most updated version of the FY 11 revenue sharing cut currently within the proposed spplemental state budget (LD 1671).

The municipalities are organized alphabetically according to each county.

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