Area selectmen gauge impact of state budget plan
Area selectmen last week reacted to Gov. Paul LePage’s proposal to suspend municipal revenue sharing for the next two fiscal years in order to help balance the state budget.
The suspension would save the state approximately $200 million over those years, according to the governor’s administration, but towns say it would simply push the burden on to them.
According to the Maine State Treasurer’s website, revenue sharing is distributed monthly to a municipality based on a formula “whose variables include municipal populations, state valuations and tax assessments. The monthly revenue sharing pool is funded by setting aside a percentage of the state government’s sales, service provider, personal and corporate income tax receipts for the month.”
Greenwood Town Manager Kim Sparks said if the measure were to be approved by the Legislature, the town would lose $41,239 in revenue sharing.
But that wouldn’t be all. The governor’s budget proposal also calls for cutting town collections of taxes on personal property to 50 percent, with the rest going to the state. That would mean an additional loss of $2,330 to Greenwood, all due to personal property taxes collected from Mt. Abram, Sparks said.
In addition, excise taxes collected on commercial vehicles would alsogo to the state, an impact of about $7,500 for Greenwood, she said.
Those changes would result in a total revenue loss of $51,069, said Sparks.
“If everything else stayed the same, we’d increase our mil rate (11.65) by .51 mils. But there’s a big piece we don’t’ have information on yet, and that’s how it’s going to affect school funding.”
Greenwood’s total tax commitment this year was approximately $1.85 million.
Another part of the LePage proposal would affect homeowners directly – the Homestead exemption. Many homeowners who live primarily in their residence can deduct $10,000 from their valuation before their property taxes are calculated. The budget proposal would eliminate that exemption for people under 65. For those over that age, the exemption would not only remain in place, but double to $20,000.
Sparks said 154 Greenwood residents would lose the exemption, increasing their tax bills by $116 for that alone.
Another provision in the budget proposal would affect state aid to general assistance. Currently, said Sparks, many towns get a 50 percent reimbursement of the GA costs. But the state is proposing that when state funds run out, the towns won’t be reimbursed. And, she said, “If the state runs out of money, the town does not have to give General Assistance at that point.”
Selectman Amy Chapman offered her perspective on the budget proposal.
“It just seems like they’re trying to make up for the tax breaks that they gave to the wealthiest people by balancing it on the backs of the people who can least afford it, and by putting everything back on the towns, so it’s all going to end up being property taxes, which is the least fair tax.”
The proposal will next go to the Democrat-controlled state Legislature.
“Hang on, it’s going to be a bumpy ride,” said Sparks.
In Bethel, the state budget proposal prompted Town Manager Jim Doar to change the wording of a letter he had earlier drafted to area state legislators.
State Sen. John Patrick and Rep. Jarrod Crockett had asked Bethel for input on upcoming state issues.
Doar had readied a letter for the selectmen’s consideration at their meeting last week. The letter included the request, “Stopping the legislative raids on municipal revenue sharing.”
Doar told the board, “I don’t know that ‘stopping the raids on municipal revenue works when he’s proposing taking all of it.”
Had the proposal, together with the governor’s other proposals, gone into effect this year, “Our tax rate would have been .75 mil higher. It’s a substantial impact to us,” Doar said. The current mil rate is 11.6.
The amount of state revenue sharing for FY’13 amount for Bethel was about $116,000, he said. The town’s tax commitment was $4.8 million.
Board chair Stan Howe said, “I’m really worried about the loss of revenue sharing, plus not funding education as they should. Everything is coming back on the property tax payer.”
In Woodstock, Town Manager Vern Maxfield told selectmen at their meeting last week that suspending revenue sharing “would look like a 4 percent increase in our budget,” and a .47 increase in the mil rate (currently 11.45).
Revenue sharing for Woodstock this year was about $58,000, Maxfield said, and the tax commitment was about $2 million.
Resident Hank Forman, who attended the board meeting, said Woodstock will have to look at how to cut its budget more.
“It’s tough, it’s hard, but the governor is having to make some hard decisions, so we need to start looking at hard things, too,” he said.
Selectman Ron Deegan said much of the Woodstock budget includes items that are not controllable, such as electricity, fuel, insurance and labor costs.
Selectmen Rick Young agreed. “You’re not going to squeeze much more unless you start laying people off,” he said.
Approximate FY’13 revenue sharing figures for other area towns (taken from the state treasurer’s website) are as follows (including the 2010 tax commitment):
Andover: $27,157 ($672,595 tax commitment)
Gilead: $16,750 ($451,804)
Hanover: $7,580 ($329,000)
Newry: $9,879 ($3,441,403)
Upton: $2,583 ($144,842)
Andover selectboard Chair Susan Merrow said her town’s revenue sharing “would be dropping this year with or without the governor’s proposal. We were told that towns that spend more, get more. Andover citizens tend to keep budgets tight and debt low, so we get less revenue sharing than other communities. The total drop from last year to this year is probably around $40,000.”