CONTRIBUTORS

Municipal revenues took dramatic hits last year

Posted Nov. 01, 2011, at 3:54 p.m.

Local government across Maine received an overall 6 percent reduction in operating revenue from all sources last year, causing municipalities to cut back on targeted services including general administration, code enforcement, libraries, parks and recreation and human services.

This trend was recorded in 2010 Municipal Fiscal Survey, which was released by the Maine Municipal Association on Oct. 31. The survey is conducted every year in cooperation with the U.S. Census Bureau and provides a comprehensive look at municipal revenue collection and expenditures over the most recently completed fiscal year.

The survey uses categorized financial data voluntarily provided by municipalities to project total statewide revenue and expenditures. More than 220 municipalities participated in this year’s survey, a healthy participation rate of 45 percent of all towns and cities in Maine.

The survey found that in 2010, municipalities statewide collected an estimated $3.5 billion in federal, state and local revenues, expending $3.4 million in the array of governmental services provided at the local level. That means revenues were down by 6 percent from the previous year. Specifically:

• Total municipal revenue sources (including property taxes, motor vehicle excise taxes, licenses, permits and service fees) dropped by 4 percent between 2009 and 2010. The hardest-hit local revenue sources were those that are generally more discretionary in nature, such as permit and service fees. That said, municipalities also collected less property tax revenue in 2010, accounting for a nearly 3 percent reduction.

• Total state revenue sources (including education subsidy, revenue sharing and homestead exemption reimbursement) were down more dramatically, falling 8 percent. As expected, one of the biggest hits to municipalities was the 21 percent decrease in state revenue sharing funding between 2009 ($116 million) and 2010 ($92 million).

• Less federal, surplus and reserve-trust fund revenues were available to help fund municipal services as well. In 2009, these sources generated $139 million compared to $111 million in 2010.

Expenditures also reduced. Between 2009 and 2010, estimated total local government expenditures were reduced by 1 percent. Although some critics of government spending might classify this spending reduction as modest, the residents who elect their town and city councilors as well as those who participate in town meetings believe that some municipal spending items — public safety and winter and summer road maintenance, to name two — are too vital to cut.

Instead, cuts were made to programs that our residents need and enjoy, but are deemed less critical during economically challenging times, such as administration, parks and recreation programs and libraries, to name a few. Specifically:

• Public safety expenditures (including law enforcement, fire, emergency management services and street lighting) increased by 6 percent. This growth was due in large part to a 10 percent increase in law enforcement expenditures. Between 2009 and 2010 expenditures for fire and EMS services decreased by 17 percent and 13 percent respectively.

• Road expenditures were up by 6 percent in 2010. Investments in capital improvements as well as winter road maintenance were the primary causes of the increased expenditures.

• General administration expenditures (including employee benefits, administrative offices, legal, economic development and government building maintenance) in 2010 were down by nearly 7 percent.

• Code enforcement and human services expenditures (including land use permitting procedures, General Assistance, social service contributions) fell by 8 percent.

• Parks, recreation and library expenditures dropped nearly 7 percent.

• Property tax assessments for county government services increased by nearly 3 percent. Property tax assessments for K-12 education remained flat for the period, at $1.2 billion each year.

For full details, please see the Maine Municipal Association’s 2010 Fiscal Survey Report, which is posted on MMA’s website at www.memun.org.

Kate Dufour is the legislative advocate for the Maine Municipal Association.

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