Politics

January 12, 2013

Municipal association attacks LePage halt to revenue sharing

The group says the governor's plan to suspend the program for two years places an unfair burden on the budgets of towns and cities in Maine.

By Edward D. Murphy emurphy@pressherald.com
Staff Writer

The Maine Municipal Association on Friday blasted Gov. Paul LePage's proposal to suspend state revenue sharing for the next two years, saying LePage is trying to "balance the state budget on the backs of towns and cities."

click image to enlarge

(File photo) Portland Mayor Michael Brennan confers with Representative Margaret Rotundo at the state house in Augusta in March 2012.

John Ewing/staff photographer

BY THE NUMBERS

Here's what some Maine towns and cities are receiving in state revenue sharing for the fiscal year that ends June 30, according to the state Treasurer's Office:

Augusta
$1,684,107
Bangor
$3,427,127
Biddeford
$1,580,847
Freeport
$518,940
Gorham
$1,081,232
Lewiston
$4,100,556
Portland
$6,169,590
South Portland
$1,862,934
Windham
$1,011,471

The proposal, part of LePage's $6.2 billion budget for the two years starting July 1, reflects a "broken trust" between the governor and municipalities, said Eric Conrad, a spokesman for the association representing Maine's towns and cities.

LePage has often said that Maine's businesses need steady tax and regulatory policies to plan for the future, Conrad said, and that's just as true for municipalities.

"Towns and cities need a predictable financial climate to do their business," Conrad said.

If costs shift to local governments, he said, towns and cities will likely cut spending and lay off workers, further hurting the economy, which LePage blames for the reductions in the budget he proposed Friday.

Eliminating revenue sharing for the next two fiscal years would save the state nearly $200 million.

Critics say that represents only about half of the shift to local taxpayers, because the budget also calls for flat state funding for education, a local share of the cost of teachers' pension plans, and a transfer of financial responsibility for some other services to cities and towns.

Conrad said municipal governments have been coping with tight budgets for years, and "we are disappointed that the governor couldn't come up with a way to save $400 million without forcing that down on the towns and cities."

State revenue sharing is paid from a fund that is supposed to hold 5 percent of the money Maine collects from sales taxes each year.

Towns and cities are allocated money from that fund based on a formula that takes into account population, the state valuation of property and local tax assessments.

A separate, smaller fund is supposed help compensate towns and cities with particularly high tax burdens.

The Maine Municipal Association noted that the past few state budgets have underfunded revenue sharing. Portland, for instance, should have gotten more than $9 million in this fiscal year from revenue sharing, under the state's original formula. But it got just $6.1 million -- about 3 percent of its $202 million annual budget for municipal services.

Eliminating that money "just takes your breath away," said Portland Mayor Michael Brennan. There has "never been anything as radical and far-reaching as this proposal."

Brennan said he expects strong opposition to the suspension.

"At this particular point, I don't think there's going to be any support for this proposal," he said. "Because it affects every municipality across the state and I can't believe legislators would support such a radical proposal."

Conrad agreed, saying his association will mobilize to fight the plan and noting that most lawmakers and municipal officials have strong ties.

Many legislators, he said, serve on town and city boards before running for the Legislature, so they have a strong sense of the challenges that local officials face.

"We're going to work real hard during this session to beat this," he said.

 

Staff Writer Noel Gallagher contributed to this report.

 

Staff Writer Edward D. Murphy can be contacted at 791-6465 or at:
emurphy@pressherald.com

 

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