A proposal being considered by the Legislature to make cuts in the state’s revenue sharing program to balance the budget could cause the greatest strain on rural communities.
According to Jeff Austin of the Maine Municipal Association, the proposal being reviewed by the Appropriations Committee is to reduce municipal revenue sharing for fiscal year 2007 by $5 million to prevent the borrowing by bond that was part of the two-year budget the Legislature enacted in March.
Austin, a legislative advocate with the MMA, said Monday that all $5 million would come out of an account, called Revenue Sharing I, that tends to benefit rural communities.
A second account, Revenue Sharing II, “favors high mill rate communities, which tend to be service center communities,” Austin said.
Austin said that the municipal revenue sharing accounts were made up of 5.1 percent of the state’s total sales and income tax revenues.
“Given the choices they have, this will disproportionately affect rural communities,” Austin said.
Several town managers reacted with pragmatic concern to the proposal Monday afternoon.
“If you have less, you do less,” said Norway Town Manager David Holt. He said the town received “a couple hundred thousand dollars” last year from the state’s revenue sharing program.
Holt said the Legislature should never have considered borrowing to balance the state budget in the first place.
“It’s a way for the government to not face the problem.”
Borrowing for day-to-day operating expenses should never have been a realistic option for the state government, Holt said.
“You either cut the service or you raise the money. All of us should recognize we might have to do some hard things.”
Farmington Town Manager Richard Davis said that if the proposal was approved by the Legislature the consequences for Farmington would be simple.
“If we receive less in revenue sharing, then the only options we have are to cut programs or raise property taxes.” Davis added, “We rely on that money from the state.”
Davis said Farmington received nearly $663,000 from the municipal revenue sharing program in 2004.
“People don’t realize this town depends a lot on outside sources of revenue to keep our taxes down,” he said.
Greene Town Manager Charlie Noonan echoed Davis’ sentiment about any reduction in revenue sharing funds.
It would cause “either a reduction of services at the town level or raising taxes at the town level,” Noonan said.
The town of Greene would have no choice but sustain the blow caused by a reduction, he said.
Unfortunately, he said, “we don’t have anyone to shift it to other than our citizenry.”
Noonan said Greene received $366,000 in revenue sharing money from the state last year, but that this year the town only allowed for $345,000 on its budget.
“We took a very conservative approach” regarding expected revenue sharing funds, Noonan said. “There was some concern as to what would be available and what wouldn’t be available from the state,” he added.
Austin of the MMA said the Appropriations Committee was considering a second proposal to push back reimbursements from the state’s Tree Growth program by one or two months, to July or August of 2006. This would mean that municipalities that have fiscal years beginning July 1 would have to find a replacement source of revenue for the amount allowed for “tree growth” revenue, or make cuts to municipal programs. But towns could not raise property taxes to replace “tree growth” funds, Austin said, because of state-imposed “property tax levy limits.”
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