After strong debate, Maine House votes to support revenue sharing bill

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AUGUSTA — After a bitter floor debate, a measure to restore $40 million of state funding to Maine cities and towns advanced Thursday after a 114-21 preliminary vote in the House of Representatives.

Republicans used procedural moves four times in attempts to delay a vote on the bill or send it back to committee for revisions, but Democrats were able to force a roll call. In the end, despite loud protests from Republicans who called the bill “irresponsible” and “rushed,” many GOP state representatives ultimately supported the measure.

Additional votes will be held in the House and Senate.

Municipal revenue sharing is the second-largest source of state cash for municipalities. If lawmakers don’t approve the bill or a similar proposal, Maine’s towns and cities will see a 79 percent cut in state funding in just two years.

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If the Legislature is to approve the measure, it will need two-thirds support to overcome the opposition of Gov. Paul LePage, who has called revenue sharing “welfare for municipalities” and promised to veto the bill.

Thursday’s House vote totals would be enough to override a veto. A two-thirds majority also would be required in the Senate.

LD 1762 was drafted by the Democratic chairs of the budget-writing Appropriations Committee, Sen. Dawn Hill of Cape Neddick and Rep. Peggy Rotundo of Lewiston. It was voted out of committee earlier this week in a contentious party-line vote, with the eight Democrats on the committee supporting it and five Republicans opposed.

The biennial budget included the $40 million cut to revenue sharing in 2015 if the Legislature could not find find a way to fill the gap. The budget already reduced revenue sharing by more than $30 million, from about $96 million in 2013 to about $65 million the first year; if the $40 million hole isn’t filled, that will fall to about $20 million in the second year.

The Appropriations bill would fund the restoration with $21 million from the state’s rainy day fund and $4 million from another account designed to accumulate budget surplus until enough is on hand to fund a reduction in the state income tax. The remainder of the $40 million will be funded by new revenue predicted in recent forecasts, a move Republicans have called risky because that money is not yet in state coffers.

In January, dozens of municipal officials testified for hours that they could not absorb the cuts. The revenue sharing funds are a crucial part of local budgets, which cover everything from police and fire departments to parks and recreation, they said, and further cuts will have to be made up by slashing services to the bone or increasing property taxes.

“My communities have let me know this is a No. 1 priority for them,” said Rep. Roberta Beavers, D-South Berwick. “They are already sharing services with other towns and will continue to do that. They can’t cut anymore.”

The measure sparked fiery debate in the House of Representatives on Thursday. Proponents, mostly Democrats, said the measure was crucial to avoiding painful property tax increases for municipalities who are putting together budgets now, and they need to know immediately how much state money they’ll receive.

Opponents, including many Republicans, argued the revenue sharing problem is one for next year, and that the Legislature should focus instead on the shortfall that exists for the current year.

The top Republican on the Appropriations Committee, Rep. Kathy Chase of Wells, told lawmakers that the bill is “irresponsible” because it promises this year’s revenue, which might be needed to fill this year’s budget shortfall, to fund a municipal revenue-sharing cut that won’t take place until next year.

Many other GOP lawmakers, including House Minority Leader Ken Fredette, R-Newport, said there was no need to vote on the bill Thursday, and other issues are more pressing — including a roughly $78 million budget shortfall this year at the Department of Health and Human Services.

“The Appropriations Committee has barely met for a month. We have two and half months left in session,” he said. “We have 2014 bills coming due and payable very soon, mostly to the Department of Health and Human Services. … That is the issue, and I think that’s the issue that should be before us today.”

Rotundo said the bill is being presented at the proper time because the budget called on lawmakers to address the $40 million cut during this session.

“This is part of the biennial budget,” she said. “This is part of the promise we made. This is not rushed.”

LD 1762 includes a plan to restore the money taken from the rainy day fund by adjusting the formula the state uses to invest budget surplus each year. The bill would make the state pay back the rainy day fund before surplus went to any other account.

But Finance Commissioner Sawin Millett has said depletion of the rainy day fund would result in a downgrade of the state’s bond ratings. If $21 million is taken for revenue sharing, the fund will be left with $38.7 million, its lowest point since 2011.

Rep. Joyce Maker, R-Calais, said she didn’t want to to vote on the issue Thursday, but Democrats rushed the issue.

“I’m very disappointed. I have a lot of friends on both sides of the aisle, and I respect them dearly. I just feel that this is somehow a political way of dividing us all,” she said. “I’m supporting this bill but under duress.”

After the initial vote Thursday, representatives will have until 2 p.m. Friday to offer amendments. The bill will be subject to a second debate in the House next week before additional votes in both the House and Senate.

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