City’s experience offers a glimpse of Maine’s potential troubles.

In the late 1970s, a respected conservative Democratic City Councilor in my hometown of Saco was upset with the spending habits of his fellow city councilors.

He was frustrated with being on the losing side of so many votes. He witnessed state government, then led by former Gov. James B. Longley, continually shifting the cost of government back to the local communities, especially education costs.

He was upset with a recent property tax re-evaluation that drastically raised property taxes for many of Saco’s more vocal residents. He didn’t like the beginning of the practice of social services and other nonprofit entities demanding local aid. He didn’t like the idea that wealth was judged by the property owned.

He was frustrated that Augusta showed no leadership in enacting meaningful property tax relief legislation.

A good, decent and traditional fellow, City Councilor Bob Cassette had had enough.

The lifelong Saco native had read a few articles and viewed a few news shows about a citizen initiated property tax revolt in California that led to a successful citizen’s initiative referendum to cap property taxes known simply as Proposition 13. Cassette quietly talked about California’s Proposition 13 with his friends, neighbors, fellow church members, a sympathetic new mayor and anyone else who would listen.

With the help of a prominent local attorney, language was crafted similar to Proposition 13 that, in short, would cap property taxes at the level before the most recent re-assessment and would cap future annual increases in assessments at 2 percent.

Armed with the Proposition 13 style proposal, petitions were circulated by a small band of sympathizers who quickly gathered the required number of signatures to force a sparsely used referendum vote. Who wouldn’t sign a petition that promised lower property taxes?

Most Saco residents didn’t pay much attention to this proposal. The only ones who took an interest were the different special groups that might be affected: educators, municipal department heads, city employees and social service agencies.

They all warned of the potential drastic effects a tax cap would have if passed: curtailed capital improvements, reduced government services, bigger classrooms, new and higher municipal service fees, and a lower bond rating, to name a few.

Their arguments were unconvincing. Saco’s version of Proposition 13 comfortably passed with a modest turnout.

Then came the difficult task of implementing the will of the people.

The grim budget reality soon became more than just coffee shop chatter.

The annual budget process brought to the forefront the cause and affect of Saco’s Proposition 13. With an estimated reduction of about 40 percent of municipal revenues, the tough love approach to budget cuts began.

Probably the only positive result initially was a significant increase in the number of city council meeting attendees. Despite the pleas of all the special interests affected by this draconian tax cap, the majority of the city council felt a legal and moral obligation to affirm the initiative referendum process.

During the first budget cycle, property taxes did go down as promised by the tax cap supporters. The taxpayers that benefited the most were the nonresident industrial and commercial taxpayers.

However, just as promised by the groups that initially opposed the tax cap, the mandated revenue reduction caused a drastic reduction in municipal services that most residents felt entitled to and took for granted.

Every municipal department was crippled by the budget cuts. Despite the pleas of the police chief and fire chief, their department budget cuts resulted in layoffs that affected public safety. Saco’s ambulance service was drastically curtailed, which led to dangerous emergency response time situations.

The crime prevention program of the police department was also cut to the bone and the number of police vehicles was reduced.

Much needed fire equipment replacement and maintenance was deferred.

Trash collection and closure plans for the old city dump also fell victim to the tax cap.

A city-wide municipal employee hiring freeze immediately was implemented.

Cuts to the city’s recreation department caused meant fewer activities, especially during the summer months when the programs were used by many residents as child care.

The Saco School Board, probably the most vocal and articulate opponents of the tax cap, were forced to cut the number of teachers, organized sports and other school sanctioned activities. Classroom sizes increased to levels that far exceed the state recommended levels. The School Board pleaded for emergency state aid to fill the budget gap, to no avail.

Fighting between the Saco’s City Council, its mayor, and School Board continued to grab headlines. Saco was forced to borrow money in anticipation of tax revenue in order to continue to operate. Banks were reluctant to lend the city money without extracting a premium interest rate. The bond rating services became concerned and reduced their ratings to one of the lowest allowed.

In an act of defiance, the mayor, on his own, refused to sign revised bonds at higher interest rates in December of 1979 in the Boston Offices of the Bank of Boston caused a technical default. Headlines splashed on the front pages of every newspaper in Maine – and even in the Washington Post – that Saco had defaulted on its loans and technically could be forced into bankruptcy.

Finally, an impressive cross section of Saco residents said enough is enough. In the winter of 1980, these concerned citizens began a tax cap repeal effort. Former mayors and city councilors from both political parties lent their names to this campaign.

By now, most municipal leaders and original supporters of the tax cap admitted that the measure went too far. Saco voters agreed. In late April of 1980, after a well-organized grass roots campaign, Saco experiment with California’s Proposition 13 was soundly defeated.

Fortunately for Saco, the damage caused by the tax cap was not permanent. However, it took my community more than a decade to finally earn a bond rating at the same level as before the tax cap.

On Nov. 2, Maine voters will face the same temptation that Saco voters did 25 years ago in considering the Maine Taxpayers Action Network’s radical tax cap measure. Let’s hope Maine voters will learn from Saco’s ill-conceived property tax relief experiment.

Barry Hobbins is a Saco attorney and political analyst who was a state representative, state senator and chair of the Maine Democratic Party. He can be reached by writing to him at Hobbins & Gardner, LLC, 110 Main St., Suite 1508, Saco, Maine 04072-2895 or by e-mail at [email protected]