State budget means towns, cities must cut services or raise taxes, MMA says

Posted June 28, 2013, at 7:07 a.m.

AUGUSTA, Maine — The new state budget, and reduction of state money that used to provide property tax relief, will mean that each town and city will have to pick between cutting services or raising property taxes, according to Geoff Herman of the Maine Municipal Association.

Most towns and cities will do both, he predicted Thursday.

“Those are the choices before all municipalities. Not one escapes this choice,” said Herman, who is director of state and federal relations. Municipal officers are discouraged by how the new budget “raids” the General Revenue Sharing program, Herman said.

But, he said, “they also recognize that the budget is a dramatic improvement over Gov. Paul LePage’s proposals, which would have been devastating.”

It was appropriate for legislators in both parties to override LePage’s veto, Herman said.

LePage proposed in his budget to eliminate General Revenue Sharing and the Homestead Exemption.

The Homestead Exemption allows homeowners not to be taxed on the first $10,000 worth of their property, which reduced many household property tax bills by several hundred dollars a year.

After much debate of cutting, keeping or expanding the Homestead Exemption, it was left the same.

But General Revenue Sharing, in which the state gives a share of sales and income taxes to municipalities, was cut from $95 million to $65 million.

How much individual towns and cities get from state revenue sharing depends on population and how much or little means a municipality has of raising income from sources other than property taxpayers.

Figures from the MMA show that Lewiston next year will receive $2.8 million, a $1.4 million reduction. Auburn will get $1.7 million, $881,408 less; Sabattus will get $121,316 less; and Poland, $119,778 less.

Revenue sharing was created in 1972 to provide property tax relief. The state gave 5 percent of sales and income taxes to municipalities.

It was first cut during the Baldacci administration, Herman said, and now during the LePage administration.

“For 30 years it was honored,” Herman said. Under the old law, the state would be giving municipalities $140 million a year compared to the current $65 million.

“It’s kind of jarring to the municipal world what’s happened in the past six years,” he said.

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