AUGUSTA — Gov. Paul LePage has until midnight Tuesday to decide whether he will sign, veto or allow a bill that restores about $40 million in revenue sharing to Maine cities and towns to pass into law without his signature.

The bill, which passed on veto-proof majorities in the House and Senate earlier in February, has been criticized by LePage for using $21 million from the state’s budget stabilization fund — also known as, “rainy day” fund.

LePage and his finance commissioner, Sawin Millett, have said using the fund, will damage the state’s bond rating and cause an increase in interest rates on money the state borrows.  LePage has also issued an order to the state treasurer to withold spending about $100 million in borrowed funding that was meant to go toward a variety of infrastructure improvements statewide.

The bill, LD 1762, also uses $4 million from a fund designed to accumulate budget surplus with the goal of reducing state income taxes; and $15 million from unappropriated new revenue predicted in recent state economic forecasts.

Some Republicans have said the move is not necessary at this point as the revenue sharing in question would be distributed in 2015 and that lawmakers should instead focus on resolving a projected state budget shortfall for 2014 that amounts to about $45 million.

Republicans also say current law will restore the funding for cities in 2015, if the revenues are available.

Democrats say the restoration in funding needs to be secure this year as cities and towns are in the process of crafting their fiscal year 2015 budgets, many of which go before town-meeting voters in March for approval.

If LePage does not veto the measure, it will become law 90 days after the Legislature adjourns some time in April.

Adrienne Bennett, a spokeswoman for LePage, said the governor was still considering his options Tuesday.

Republicans have said the move is not necessary at this point as the revenue sharing in question would be distributed in 2015 and that lawmakers should instead focus on resolving a projected state budget shortfall for 2014 that amounts to about $45 million.

Republicans also say current law will restore the funding for cities in 2015, if the revenues are available.

Democrats say the restoration in funding needs to be secure this year as cities and towns are in the process of crafting their fiscal year 2015 budgets, many of which go before town-meeting voters in March for approval.

“If we break our promise, cities and towns across the state will have to raise property taxes on middle class families and small business or cut funds for our schools, firefighters and police – many will have to do both,” Rep. Peggy Rotundo, D-Lewiston, the House Chair of the Appropriations Committee has said.

Maine’s municipalities typically received 5 percent of all state sales and income tax revenue, which would have been $138 million this year, according to the Maine Municipal Association.

In 2013, lawmakers reduced revenue sharing from about $96 million to about $65 million for 2014; if the $40 million hole isn’t filled, that figure will drop to about $20 million in 2015. Together, the reductions would amount to a 79 percent cut in state funding for municipalities over the two-year period.

According to a recent MMA analysis, a failure to restore the funding level would mean that instead of $2.6 million from the state in 2015, Lewiston would get $881,030.

For Bangor, instead of a little more than $2 million, the city would receive $692,550; and for Portland, the change would be from $3.9 million to $1.3 million.

This story will be updated.

sthistle@sunjournal.com

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