AUGUSTA, Maine — Gov. Paul LePage on Friday took on Democratic legislative leaders, towns and cities, and other critics as he defended his two-year budget proposal in his weekly radio message, disputing their contentions that his budget will lead to massive property tax hikes and challenging them to come up with alternatives.
“A temporary loss in revenue sharing does not mean that property taxes will automatically go up,” LePage said. “That is a local choice.”
LePage has been facing criticism from Democratic lawmakers and local officials since he introduced his budget proposal earlier this month, which includes a plan to eliminate state revenue sharing with municipalities for the two years covered by the budget. While the move would save nearly $200 million at the state level, budget critics have said the measure would amount to a tax shift to local communities.
“You’ve heard much from the loyal opposition about what they don’t like about my budget proposal, but let me be clear,” LePage said. “You haven’t heard any solutions from them.”
A handful of Republicans have also said they can’t support LePage’s revenue sharing plan, citing the potential effect on property taxes.
State law since the 1970s has required the state share a portion of income and sales tax revenues with municipalities to ease the local property tax burden. Though the law requires the state set aside 5 percent of revenues for municipalities, revenue sharing hasn’t been fully funded in recent state budgets.
The Maine Municipal Association recently issued an analysis that concluded LePage’s budget proposal has $424 million in municipal aid reductions and other measures that local property taxpayers will have to absorb over the course of the two-year budget cycle. LePage called the association’s analysis “not accurate and self-serving” in his radio address.
“The budget is not an assault on cities and towns, it’s a broadside assault on the property taxpayer,” Eric Conrad, a Maine Municipal Association spokesman, said Friday. “Ultimately, we believe there will be some combination of drastically increased property taxes as a result of this proposal and decreased services. You’d pay more in property taxes and get less.”
In addition to revenue sharing, the Maine Municipal Association cites budget measures that would end two property tax relief programs, direct the municipal share of tractor-trailer excise tax revenue to state coffers, and shift about half of teacher retirement system payments to local school districts — though the budget proposal includes an increase in local school aid to make up the difference.
LePage isn’t convinced those changes should lead to property tax hikes. For Bangor, he said, revenue sharing amounted to about 3 percent of the city’s budget last year.
“If revenue sharing makes up as little as 2-4 percent of community budgets, it is reasonable to request local officials to find alternatives,” LePage said. “These are difficult times. We must work together to move Maine forward.”
The governor suggests in his radio address that towns pool their resources rather than maintain separate police and fire departments, school systems and public works agencies.
“There are ways for communities to work together,” LePage said. “However, home rule or choosing to go at it alone is an expensive choice.”
But Maine’s towns and cities have continued to trim their budgets in recent years partially in response to past reductions in revenue sharing, Conrad said, and there are examples throughout the state — the Maine Municipal Association found 550 in a 2011 study — of municipalities collaborating to provide services.
“There’s a lot of municipal collaboration that’s been going on for years, and certainly during tight budget times,” Conrad said, adding that merging local government agencies doesn’t necessarily produce savings. “Bigger government costs much more, and we think Mainers would instinctively agree with that.”
LePage’s budget proposal disproportionately affects middle-class Maine residents and local communities in order to fund tax cuts that took effect at the start of the year that are expected to result in $342 million in foregone revenue during the next two-year budget cycle, Rep. Seth Berry of Bowdoinham, the House Democratic leader, said Friday.
“We want a fairer tax code, and we are prepared to work with the governor when he’s ready and with our colleagues in the Legislature on both sides of the aisle to get that job done,” Berry said. “We are looking forward to working with those who are willing to restructure the tax code more fairly and to make decisions here in Augusta as opposed to shoving them off onto municipalities.”