AUGUSTA — The mayors of two of Maine’s retail hubs were among the officials lobbying the Legislature on Wednesday for legislation that would let them tack on a local sales tax on goods and services.

Portland Mayor Ethan Strimling and Auburn Mayor Jason Levesque joined forces in urging lawmakers to give cities and towns the option of raising local revenue through a means other than property taxation.

Levesque said he was not supporting or opposing actual implementation of such a tax in Auburn, but he said he felt municipalities should be given the option.

Strimling said the state was failing to meet its obligation to share with municipalities 5 percent of the tax revenue it collects, and cities need a way to balance local budgets without turning to increases in property taxes or cuts to public services that cities provide, not only for their own residents, but often for residents in surrounding communities.

“Without the state revenue-sharing program fully funded at the mandated 5 percent, a significant burden has been created on municipalities with property taxpayers left to pick up the tab,” Strimling said in a prepared statement. “Property taxes are too high in Maine. The creation of a local-option sales tax program is a remedy that allows local governments to fund critical programs while providing much-needed relief to property taxpayers across the state.”

The bills before the Legislature allow for a range of sales-tax options, including some that increase the sales tax on all goods and services, and others that switch on and off for Maine’s busy tourism season or focus the increases only on hospitality services, such as restaurants and hotels.

Business owners and advocates pushed back against the proposals, telling members of the Legislature’s Taxation Committee that local-option sales taxes create an uneven playing field and would only hurt Maine, which is already one of the highest-taxed states in the nation.

Lovia Koscinski of the Maine Campground Owners Association said aiming a sales-tax increase only at tourists would hurt small businesses or prompt would-be visitors to go someplace else, causing Maine to lose revenue in the long run.

“How can we compete if our town passes a local tax option and a town two towns over does not?” Koscinski asked the committee. “Our town may get a new firetruck, but it will lose a family business.”

She said tourists could go elsewhere. “New Hampshire, Canada, Cape Cod,” she said. “At some point, enough will be enough and the tourists may decide a vacation in Vacationland just isn’t worth it.”

Also testifying against was the Maine Center for Economic Policy, a left-leaning think tank that advocates for progressive tax policies, and the Maine Heritage Policy Center, a right-leaning think tank that advocates for tax cuts and free market policies. Representatives from both organizations said sales-tax increases disproportionately hit poor Mainers harder.

Auburn’s Levesque said he wasn’t advocating for the tax necessarily, but he wants cities and towns to have the option of creating a local tax if they choose to. Levesque, a Republican, and Strimling, a Democrat, said the issue had both bipartisan support and bipartisan opposition.

Levesque urged lawmakers to also honor Maine’s tradition of local control. “I would really be appreciative if you could put the trust in the people of the individual municipalities to make this decision for themselves,” he said. “The same way you have trusted the people to elect you to the office, so I’m sure you can all agree that their judgment is fairly sound.”

Similar legislation failed to pass last year, but Rep. Mike Sylvester, D-Portland, a sponsor of one of the local-option sales tax bills being considered, said he’s making a renewed attempt to get such a law on the books in an effort to diversify municipal revenue streams.

Sylvester ‘s bill would allow up to a 1 percent sales-tax increase on prepared meals and lodging, but 15 percent of the revenue would be redistributed to other cities to be used on the opioid crisis.

For Portland, which has an annual budget of about $360 million, a 1 percent local tax would generate $16 million a year, according to an estimate by the Maine Municipal Association, which represents cities and towns before the Legislature and has made the proposal a top priority. Bangor would be second, taking in $13.7 million, followed by South Portland with $10.6 million, Augusta with $8.3 million and Auburn with $7.6 million.

Maine is among only 12 states that do not allow local sales taxes, according to the Tax Foundation, a nonprofit Washington, D.C.-based tax policy think tank. Maine’s statewide general sales tax of 5.5 percent is also the fifth-lowest sales tax rate in the U.S., according to a 2017 Tax Foundation report.

Strimling said a local-option tax in Portland could be used to reduce local property taxes by about $500 per home on average based on an average property tax value of $250,000. Levesque said if used to reduce property taxes in his town, a local-option sales tax of 1 percent could be used to lower taxes by about $1,000 on an average home valued at $150,000.

Levesque said for him to support a local-option tax in his city, it would require “some stringent ties on the use of this revenue.”

“I neither support or oppose Auburn having a local-option sales tax,” he told the Sun Journal on Wednesday after speaking in Augusta on the bills. “But, I do support the ability for each municipality to make that determination based upon their unique set of issues or challenges. It might be a great solution for the residents of Portland; it might not be for Auburn.”

Levesque said if Auburn were to pursue the tax, he’d advocate for adding more “safeguards in the language” to require that all revenue generated by the local tax would be used to lower local property taxes.

“There are some great arguments for it, if done correctly,” he said.

He said based on the numbers he’s seen, the average household in Auburn would spend $75 to $100 more annually with the sales tax in place. With the estimated average property tax reduction of $400, he said the tax would “equal a net savings.”

Earlier this month, the city managers of Lewiston and Auburn spoke to the Lewiston Auburn Metropolitan Chamber of Commerce about the idea. Auburn City Manager Peter Crichton said he would support a local-option sales tax in Auburn.

“I know for some of you this is something you don’t want to hear, or you’re resistant to, but we have to do things that are transformative,” he told the chamber audience. “We have to think about what we can do to make big change.”

— Sun Journal writer Andrew Rice contributed to this report.

Copy the Story Link