Did Paul LePage work a ‘Waterville Miracle’?

By Kevin Miller, BDN Staff
Posted Aug. 20, 2010, at 8:59 p.m.

AUGUSTA, Maine — It has been dubbed by some as the “Waterville miracle” but dismissed by others as something less than spectacular.

Since Paul LePage’s election as mayor of Waterville in 2003, taxes have fallen, the former mill town’s credit rating has improved and the amount of cash in the city’s “rainy day” fund has ballooned from $1 million to $10 million.

Now as LePage jockeys to become Maine’s next chief executive, the Republican gubernatorial candidate has, not surprisingly, made those successes a central theme of his campaign.

Under closer scrutiny, most of the LePage’s talking points ring true and, in some cases, actually exceed the claims offered by the campaign.

“When you look at the big picture, the mayor did have a pretty big impact,” said John McGough, LePage’s deputy chief of staff.

But LePage’s critics accuse him of cherry picking numbers to enhance his resume. And his critics have their own numbers that tell a different story.

“There’s no magic here,” said Ed Karass, the former longtime state comptroller and a public supporter of a LePage rival, independent Eliot Cutler.

The taxman leaveth

One refrain often heard at LePage campaign events is that working with Waterville’s Democratic City Council, the GOP mayor helped bring tax relief to city residents without cutting services.

Exactly how much relief from the taxman Waterville residents received depends on which figures you use, however.

According to the campaign’s figures, Waterville’s property tax rate has declined approximately 13 percent since LePage became mayor in 2004.

According to figures supplied by the state, the actual reduction between 2004 and 2009 was just shy of 12 percent.

It’s important to note, however, that due to a major shift in the way the state funds education, most Maine towns and cities have been able to reduce their local tax load in recent years.

As the state sent more “general purpose aid” for education to towns as a result of the tax reform law known as LD 1, most towns were able to lower their property tax rates.

A BDN analysis of the property tax rates among the 36 Maine towns with a population of 7,500 or more — including Waterville, population 15,000 — showed that the average decrease was 14.7 percent, which is larger than the Elm City’s.

LePage himself hesitates to make such comparisons.

“I’ve never said anything about other communities,” LePage said after a recent City Council meeting. “I’ve been campaigning on what we did in Waterville.”

State tax officials also caution against such comparisons.

David Ledew, director of the property tax division at Maine Revenue Services, said comparing the actual, published tax rates among towns — or even the changes in those rates — is often misleading.

A better way of comparing those rates, he said, is to use the state’s “full value tax rate” for each town.

The state compiles those rates to make up for the fact that some communities don’t base their tax rates on the full market value of the properties. The state rate also accounts for other tax incentives received by the towns.

Property tax rates in some communities also can be affected by county taxes and a town’s share of a regional school budget — both of which are often out of the hands of the town’s voters.

“Using the full value tax rate puts all municipalities at a level playing field, at least,” Ledew said.

So how does Waterville stack up using the more apples-to-apples formula? As it turns out — even better.

After smoothing out for the town-to-town differences, Waterville’s full value tax rate declined by 27 percent between 2004 and 2008, the last year for which all figures were available.

That’s a steeper decline than all 35 other towns analyzed by the BDN and more than three times the average for the contingent. Statewide, the average decrease across all municipalities was 9.7 percent.

Karass, who served as state controller under four Maine governors, did not dispute those figures. But he said it is disingenuous for LePage to claim credit for the property tax reductions when the city — like all Maine towns — was receiving substantially more money from the state.

“The more money you have coming in from outside sources, the easier it is to lower your own contribution,” Karass said on Friday.

Karass also pointed out that Waterville’s total municipal spending increased, not decreased, during most of LePage’s term as mayor. In a July 30 OpEd in the BDN, Karass called the “Waterville Miracle” a myth.

In interviews and in a written response to Karass’s op-ed, the LePage campaign refuted Karass’ assessments and accused him of employing the campaign tactic of “attack your opponent’s strengths.”

“The mayor never once said he performed miracles in Waterville,” McGough wrote. “He just brought a little common sense and business acumen to the job of mayor. The results speak for themselves no matter how his opponents twist the statistics.”

Indeed, while LePage supporters have occasionally used the phrase “Waterville miracle,” the campaign has largely stayed away from it.

Rating Waterville’s bonds

Another oft-repeated fact among LePage supporters is that Waterville’s bond rating with the rating agency Standard & Poor’s jumped two spots — from an A- to an A+ — during his time as mayor.

In an August 2009 summary, S&P analyst Nicole Ridberg described Waterville’s income levels as adequate and the city’s debt burden as low. Additionally, the presence of two colleges in town helps stabilize the city’s employment base, Ridberg said.

Ridberg also pointed to Waterville’s “rainy day” fund, which had grown ten-fold during LePage’s time as mayor.

“We believe the city’s financial position is very strong, with the unreserved fund balance at $10.3 million, or 29.6 percent of expenditures,” Ridberg wrote.

But Waterville’s bond rating with both S&P and Moody’s, the other major rating agency, remains below those of other cities, a fact that Karass said undermines LePage’s claims.

Among Maine’s 14 largest cities, 11 have higher bond ratings with S&P than Waterville while the other two — Auburn and Westbrook — are also rated at A+. Waterville’s rating with Moody’s has not improved during LePage’s tenure but has remained constant.

McGough acknowledged that Waterville’s bond rating is lower than other towns’ but pointed out that the city has made significant progress while LePage has been in office.

“Under the mayor’s leadership, the bond rating increased two-fold from its lowest point, getting closer to those other communities’ bond rating,” McGough wrote.

Savings versus services

LePage’s campaign also touts the fact that Waterville did not cut services during the belt-tightening that LePage helped lead.

Erik Thomas, a member of the Waterville planning board and chairman of the city’s Democratic committee, is one person who offered a less-rosy view of city services during the LePage administration.

While services may not have been cut, they have suffered as a result of LePage’s tax-cutting efforts, Thomas said. As an example, he said it takes considerably longer for downtown sidewalks to be cleared of snow during winter and described the parks and recreation department as being “cut back to a skeleton crew.”

“He is a sort of bare-bones kind of guy,” said Thomas, who said he won’t vote for LePage this November but had yet to decide who will earn his support. “He thinks the city should only do certain things, and I’m not sure parks and recreation is high on his priority list.”

Thomas said he and LePage are friends; they simply have different opinions about how the city should be run. But he also gives LePage credit where credit is due — to a degree.

“I have a lot of respect for Paul. The one thing that he did do for Waterville is we’re in a lot better shape [financially] than when he first came into office,” Thomas said.

But he added: “There are two sides to that because city services do suffer.”

http://bangordailynews.com/2010/08/20/politics/did-paul-lepage-work-a-lsquowaterville-miraclersquo/ printed on July 28, 2014