Questions have Pittsfield making backup budget

Posted Sept. 25, 2009, at 1:02 a.m.

PITTSFIELD, Maine — Uncertainty about two questions that appear on the November ballot will require the town to create a budget and a backup budget for adoption by the end of the year.

Town Manager Kathryn Ruth told the Town Council recently that “I don’t think we can plan for” the Taxpayer Bill of Rights and that a separate initiative to reduce the amount of excise taxes municipalities can collect would be “devastating” to the town’s operations.

“That we have all of our employees when we come out of this would be a very, very good thing,” Ruth said.

Ruth estimates that the excise tax initiative, which appears as Question 2 on the November ballot, would cost the town, which is spending about $2.9 million this year, approximately $350,000 if it passes. That’s on top of an expected $40,000 dip in excise tax collections associated with the economic recession. For that reason, Ruth has directed department heads to come up with “backup budgets” to implement if Question 2 is successful.

“There’s no way we can cut almost $400,000 from the budget without having devastating effects,” Ruth said during an interview Thursday.

She said the TABOR initiative, which will be Question 4 on the ballot, forces her to be accountable for portions of her budget she has no control over, namely the public schools and Somerset County. Pittsfield, which has a January-December fiscal year, is required by charter to adopt its budgets by Dec. 31. That means the Pittsfield Town Council must adopt a budget some five or six months before it knows what the majority of its expenses will be.

“If we have to go out to referendum because of the new law, we still wouldn’t know what the school expenses will be until the next year,” said Ruth. “Administratively, we can’t figure out how it’s going to work.”

Michael Starn, spokesman for the Maine Municipal Association, which opposes both the TABOR II and the excise tax questions, estimated that at least 300 municipalities in Maine — mostly the smaller ones — use a January-December fiscal year.

“Those towns that are using calendar-year budgets are very nervous,” said Starn. “It’s a difficult position to be in to try to do any type of responsible budgeting.”

Scott Moody, an economist for the Maine Heritage Policy Center, which is leading the effort in favor of the two questions, questioned the wisdom of a town operating on a different fiscal year from its county and school system.

“Maybe some towns are going to have to change [their fiscal years],” said Moody, an economist for the center.

Ruth said changing the fiscal year is a complicated process that could require borrowing to cover expenses during the change. It could also trigger an earlier tax deadline for Pittsfield residents.

“Asking people to move their tax payment up months early so that we can change the fiscal year to comply with TABOR is another burden for taxpayers,” said Ruth.

Both questions, if approved, would go into effect in plenty of time to affect the next municipal budget cycle, including Pittsfield’s. The Secretary of State’s elections division has 20 days after Nov. 3 to tabulate votes and report to Gov. John Baldacci. Baldacci would have 10 days to sign proclamations and both questions would go into effect 30 days after he does so, according to Melissa Packard, the state’s director of elections and commissions.

Question 2 would reduce the excise tax for new motor vehicles by half in the first year, followed by steeper decreases in the following three years. It also would exempt energy-efficient vehicles, such as hybrids, from excise tax for the first three years as well as from all sales taxes upon purchase.

TABOR II, as it is known, would limit state spending increases and require a majority vote of the Legislature and voters statewide for a tax increase. Municipal and county government spending would be similarly limited with larger-than-allowed increases requiring majority votes of the public.

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