AUGUSTA — Local municipalities will have to tighten their belts under the supplemental budget plan offered by Gov. John Baldacci on Friday. The proposal aims to balance the budget in the face of a more than $400 million revenue shortfall over the next two years.

Among the many cost savings Baldacci suggested were large cuts to General Purpose Aid to Education and municipal revenue-sharing, both of which will affect local governments.

“Any reduction in revenue-sharing generally means an increase in property taxes, unless municipal services are reduced,” Auburn City Manager Glenn Aho said Friday.

“Increasing property taxes is highly unpopular, so we look to reduce services and, lo and behold, that too is very unpopular,” Aho said. “So, it’s a bind for local government when the state reduces its budget by decreasing the amount of revenue given to municipal governments.”

Martha Freeman, director of the State Planning Office, said the cuts to local aid were necessary, given the size of the budget hole.

“Currently, almost half of all state General Fund revenues are paid out to municipalities and counties for local government purposes,” she said.

Municipal revenue-sharing would be cut by about $27 million this year and next in Baldacci’s proposal. State reimbursement for General Assistance would be reduced to 50 percent and reimbursement to municipalities for the Maine Tree Growth Tax Law program would be cut by 10 percent. That’s in addition to more than $70 million in cuts to education, which is a shared cost between state and local government.

Baldacci acknowledged the difficulty towns and cities will have in continuing to maintain the same level of services without raising property taxes, but he said he was giving towns “all the tools necessary” to do so.

“We can keep services available and at less cost, if we move to regionalize local administrations,” Freeman said, adding that Maine has twice as many local government employees as state workers.

The State Planning Office has created a Web site to help municipalities find ways to consolidate services and employ other cost-saving measures, she said.

But Farmington Town Manager Richard Davis said he had already taken steps to consolidate government and work with surrounding communities to reduce costs.

“We on the municipal side have been working on joint purchasing for years,” he said. “There’s no way we can balance our budget at the local level with the loss of municipal sharing without making cuts. Most of the low-hanging fruit was picked a long time ago. I’m hoping we can absorb those cuts without raising property taxes.”

State Rep. Peggy Rotundo, D-Lewiston, who serves on the Legislature’s Appropriations Committee, said most people don’t realize how much money is passed from the state to local governments.

“We can’t be making these (state) cuts without having impacts locally,” she said. “There are people in our community who would say there are savings to be had if there were greater cooperation between Lewiston and Auburn. Whether or not this encourages the two communities to think in those terms, we’ll have to wait and see.”

The governor’s budget must pass the Legislature before taking effect. Lawmakers said they would likely hold public hearings beginning the first week of January to allow Mainers to weigh in on the proposed changes.

rmetzler@sunjournal.com

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