In Bangor excise tax equals road work costs

By Gerry G.M. Palmer Jr.Special to the BDN, Special to the BDN
Posted Oct. 09, 2009, at 6:57 p.m.

At this November’s election, voters will be asked if they want to significantly cut motor vehicle excise taxes on newer vehicles. Those 4 years old or newer would see reductions of between 50 percent and 70 percent. Five-year-old vehicles would be cut by just under 40 percent. Those older than 5 years would see no change. Hybrid and certain high gas mileage vehicles would pay no excise tax for the first three years and a reduced tax for their fourth and fifth years. Many corporate and rental fleets, which pay about one-third of all excise taxes in Bangor, would be major beneficiaries of this change.

In Bangor, about a third of vehicles will see a reduction in the tax; two-thirds will see no change.

The motor vehicle excise tax is paid to and stays with the city or town in which you live. If approved, this measure will have a significant effect on city and town revenues, requiring cutting or eliminating programs and services or increasing property taxes.

Last year, the city of Bangor took in $4.7 million in excise tax payments on just over 26,000 vehicles. If voters approve this change, these revenues will drop by about $1.8 million or 38 percent. To recover this amount through property taxes, our property tax rate would have to increase by 75 cents per $1,000 of assessed value.

While there are no legal restrictions on the city’s use of excise taxes, the amount we receive comes close to covering what the city actually spends on maintaining and constructing Bangor’s roads. Last year, the city spent just over $5 million on roads, including $1.4 million for winter maintenance such as sanding, salting and plowing; $885,000 to repave roads and sidewalks, a clearly inadequate amount given the doubling in asphalt prices over the last four years; about $2 million for all other street and sidewalk work such as patching, striping and sweeping; and $790,000 to maintain and operate traffic signals and streetlights. Maintaining our roads in a safe and passable condition is not cheap given our winters and the damage they do to our roads.

The Bangor City Council has adopted a resolve opposing this measure. It will increase the city’s reliance on the property tax, a tax which is often less related to ability to pay than the excise tax. Only about one-third of those who register vehicles in Bangor will benefit, many of whom are businesses or rental companies. It will result in further reductions in the services we provide to the public, services which were already reduced this year due to the economy and our desire to hold property taxes steady and which are likely to be under even greater pressure next year as the recession continues to push down city revenues. Finally, it could go into effect in the middle of our budget year, a time when our flexibility is limited and layoffs and service reductions are more likely.

Very few of us enjoy paying taxes. At the same time, we have come to expect services to continue — whether it be salting, sanding, and plowing during snowstorms, road paving and fixing potholes, or police and fire services.

State and local governments are under considerable fiscal stress because of the recession and its effect on our revenues. This year the city council cut $1.3 million from the budget originally presented by the city manager and his department heads so that we could hold our tax rate constant. More cuts are likely in the coming year. Reducing the auto excise tax by $1.8 million a year will make these cuts deeper and property tax increases more likely.

We urge all voters to become fully informed about this proposal and how it will affect them and the city of Bangor.

Gerry G.M. Palmer Jr. is the mayor of Bangor. This column was written on behalf of the Bangor City Council.

http://bangordailynews.com/2009/10/09/opinion/in-bangor-excise-tax-equals-road-work-costs/ printed on October 1, 2014