BANGOR, Maine — Gov. Paul LePage’s proposed $6.3 billion budget — which includes a two-year suspension of the state’s municipal revenue sharing program — would hurt every city and town in the state, local community leaders are saying.
“The effect on Bangor would be [losing] between $3 [million] and $4 million — that’s more than we can afford,” Bangor City Council Chairman Nelson Durgin said Sunday. “It will affect every town in this state. I think most of the Legislators understand that.”
Bangor — one of the state’s three big service centers — has a budget of just over $89 million for city and school operations for 2012-13 and received about $3.5 million in revenue sharing. Lewiston received just over $4 million and Portland was issued just shy of $6 million in revenue sharing funds.
LePage administration officials have repeatedly said unsustainable entitlement spending drove them to propose difficult cuts. The governor’s draft budget for 2014-15 is an increase of $166 million, or 2.7 percent, over the current budget. It balances the state budget and pays for state services without any new taxes, according to administration officials.
It does so in part by taking around $200 million in sales taxes, set aside under the revenue sharing program to help communities offset property taxes, and using it for the general fund.
Under the governor’s proposal, the Queen City and other communities would also lose funding via cuts to the homestead exemption and circuit breaker programs and a cap on municipal general assistance that the governor put on the table when unveiling his budget Friday.
The proposed cuts would increase tax burdens to homeowners and business owners, handicap Bangor’s ability to maintain necessary infrastructure, such as fixing roads, and would decrease public safety departments, former Bangor Mayor Cary Weston said Sunday.
“It was kind of like a tsunami hitting us all at once,” Durgin said.
LePage already cut $12.58 million from state education funding in December, removing $271,000 from Bangor’s school budget revenue, and is now saying that schools will be flat funded for the next year.
“Flat funding at the lower figure is in fact a reduction,” Durgin said.
The governor’s budget also includes taking away revenues from licensing large commercial trucks from towns and shifting the money to the state, which would hurt Bangor and communities such as Hermon, home of Dysart’s Transportation, Pottle’s Transportation and other trucking companies, Weston said.
“The devil is in the details,” Durgin said.
Sixteen cities and towns will lose more than $1 million in revenue sharing funds they have counted on for 25 years, but almost all towns in Maine will feel the pinch, according to the office of the state treasurer.
“We’re going to have to cut services, but what services? We’re working bare to the bone now,” Eddington Selectwoman Joan Brooks, who is chairwoman of the board, said Sunday.
Eddington is set to lose around $98,544 in revenue sharing, which is about 10 percent of the town’s approximately $1,014,000 budget.
“If he cuts all the things he’s saying … our property taxes are going to go sky high,” Brooks said. “For some people, they are not going to be able to pay those taxes and they are going to lose their homes. There is all kinds of ripple effects to this.”
Brooks, Eddington Town Manager Russell Smith and Brewer and Bangor leaders all said they were given no warning about proposed cuts to revenue sharing, a 25-year-old law that sets aside 5 percent of the state’s monthly sales, corporate and personal income tax revenues to help offset property taxes for all Maine residents.
The law was passed “to strengthen the state-municipal fiscal relationship” with the objective “to stabilize the municipal property tax burden and to aid in financing all municipal services,” the 1987 law states.
State leaders have been shifting costs to local municipalities for several years, Brewer City Manager Steve Bost said Saturday, mentioning LD1 that requires the state to pay 55 percent of education costs as an example.
“We have a local saying for what’s happening: shift and shaft,” he said.
Brewer, which spent just over $12 million to operate for 2012-13, would lose close to $900,000 in revenue sharing under the governor’s plan.
“We’re pretty frugal with our budget and to take that away just so he can balance his budget is going to have a draconian effect,” Bost said. “Programs, services and personnel will be affected. And that’s just Brewer. I can’t image what will happen in Bangor and Portland.”
LePage is also proposing eliminating the homestead property tax exemption and circuit breaker programs for anyone under age 65, except veterans, that provide property tax relief for middle- and low-income Mainers, and shifting a portion of teacher retirement costs to cities and towns.
“That is more than half a million for Brewer,” Finance Director Karen Fussell said. “It could be even more than that.”
The proposal is “really just a tax shift” that will hurt property owners all over Maine, especially those fighting to pay their mortgages in a depressed economy, D’arcy Main-Boyington, Brewer’s economic development director, said Sunday.
“It can really [hurt] those in the lower end of the income scale,” she said. “All of those things [LePage is proposing] hurt the taxpayer — anybody who owns property.”
Durgin and Weston both said they believe the governor’s proposal will be changed by legislators in Augusta. Two years ago, the Republican-led Legislature rejected an attempt by LePage to reduce payments to municipalities.
“It’s a strategy and a ploy at this moment,” said Weston. “We all know it will look differently when finalized.”
“The Legislature has a lot of say in this,” Durgin said.
Weston said LePage, who he describes as “doing a good job” and is using “tough love,” is hosting a political game of chess with regard to the budget and revenue sharing.
“My frustration, regardless of party, is we start with trying to break the other party instead of thinking about the common good,” Weston said. “Rather than actually sitting down and talking about the best course of action.”
The Bangor City Council will discuss the governor’s draft budget Monday and must start creating a “worst case scenario” budget just in case the governor’s budget is approved as presented, Durgin said.
“There is no community that won’t be harmed by it,” Main-Boyington said.
BDN writer Robert Long contributed to this report.