AUGUSTA – A second-year status report by the Baldacci administration on the school funding legislation known as LD 1 shows that a state effort to ramp up aid to local schools while setting target caps on local spending has had some success in tamping down property tax increases.

But the results could be much better, Gov. John Baldacci said at a news conference Wednesday, were it not for what he called a “terrible” showing by school administrative units.

Baldacci, who has put forth a sweeping proposal for consolidating the administration of Maine’s statewide network of schools, pointed to findings by the state planning office that suggest 81 percent of school administrative units exceeded recommended growth limits last year.

Nonetheless, Baldacci said the property tax growth rate continued to be lower than it was before the enactment of the school funding legislation.

The law referred to as LD 1 pointed the state’s share of local education funding toward 55 percent by 2009 and established growth limits for the state, municipalities, counties and school systems.

Baldacci administration officials say the state held spending within the LD 1 limit even while boosting school aid. They also say that the estimated state and local tax burden on Maine residents declined in both 2005 and 2006 and that in 2006 property tax savings of $94 million for resident homeowners and $23 million for businesses were attributable to the legislation.

Reiterating his pledge to provide more tax relief, Baldacci declared Wednesday “we must have accountability at all levels of government.”

Singling out school systems that are not meeting growth standards, he added, “I’m very concerned about this. It’s unacceptable. And changes need to be made.”

A summary prepared by Director Martha Freeman of the State Planning Office and State Economist Catherine Reilly found pluses and minuses in the overall implementation of An Act to Increase the State Share of Education Costs, Reduce Property Taxes and Reduce Government Spending at All Levels.

“Last year, Maine made progress toward reaching its tax burden reduction goal. Yet, the evidence was mixed,” Freeman and Reilly wrote.

“State government and a majority of towns and counties stayed within their growth limits, but the reduction of growth was not as dramatic as it was last year. Taxes raised for a new county jail actually increased the overall growth rate of county assessments, and 81 percent of school administrative units exceeded their limits.”

An LD 1 progress report issued by the planning office said that “based on historical trends, the growth of local appropriations for K-12 schools is lower than it likely would have been without LD 1.

“For the 2006-07 school year, the difference between predicted and actual local appropriations was $98 million. State funding was $141 million higher than would have been expected without the push to fund 55 percent of (Essential Programs and Services) costs by 2009.

“According to these estimates, about 70 percent of increased state funding is being used to offset local property tax revenues,” the State Planning Office progress report said.

Debate over fiscal caps, central in recent referendum campaigns, has already broken out repeatedly in the new Legislature.

On Tuesday, Maine Attorney General Steven Rowe told lawmakers his office believes a proposed rule for the full Legislature that would set a super-majority threshold for approving spending above a statutory cap would probably found to be unconstitutional.

In the wake of Rowe’s written advisory, the House of Representatives scrapped a formal proposal that had been approved last week by the Senate.

The House did vote, 139-0, in favor of a pledge to abide by the LD 1 target, but voted against a formal rule, 85-60.

“We have never exceeded our self-imposed spending caps, but we feel it is important to lead by example and send a strong message about abiding by these spending limitations,” House Speaker Glenn Cummings, D-Portland, said in a statement. “We are making it very clear that we are committed to staying below the state spending caps as a part of our effort to ensure responsible and sensible government spending.”

Maine Republican Party Chairman Joe Bruno saw it another way.

“After the rancorous debate over revenue limits last year, voters sent a strong message and expectation of a lower tax burden to elected officials. Every office holder, from the governor to the legislature, claims to have heard the voice of the voter yet, Democrats in the House have failed to take meaningful action on behalf of the voters,” Bruno said in a statement.

The Senate on Tuesday went along with the resolution from the House, 32-0. Then, the Senate voted 30-1 to reaffirm its preference for a formal rule change.

AP-ES-01-17-07 1552EST