AUGUSTA, Maine — The roughly $185 million generated annually by the motor vehicle excise tax should be reserved for improvements to the state’s roads, highways and bridges, Gov. Paul LePage said Friday.
In a brief interview after a ribbon-cutting ceremony at the recently completed $18.6 million bridge connecting Dresden and Richmond, LePage said he intends to propose a law this year to dedicate excise tax revenue to transportation infrastructure. Currently, excise tax revenue is collected by municipalities, which use it for general services.
“When the excise tax was [created], it was for transportation,” LePage said. “But over the years, it’s gotten to be used for everything else. We have to revisit it.”
LePage said that if he’s unsuccessful in passing the law, he’ll push a more drastic proposal.
“If they don’t do it, we’re going to have the excise tax come to the state,” he said.
That move would effectively move the $185 million in tax dollars from local coffers to Augusta, leaving a hole in municipal budgets statewide.
Geoff Herman, director of state and federal relations at the Maine Municipal Association, said his organization would have several questions about LePage’s excise tax scheme.
For most towns and cities, he said, such a policy change would have no effect. The average municipality already pays more for transportation infrastructure than it collects in excise tax. So the new requirement would be a distinction without a difference.
However, towns that are home to several fleet service businesses such as shipping companies collect far more in excise tax than they spend to maintain their roads and bridges. Those towns, such as Hermon, use the excise tax to pay for other essential services, Herman said.
“If they didn’t have a big enough road budget, what would they do with that remaining motor vehicle excise tax revenue?” Herman said. “Would they have to send that money to Augusta? If that were the case, I’d have a concern.”
Herman said that dedicating the excise tax to a purpose other than general local government services or giving it to the state would be a break from history. The uniform motor vehicle excise tax was created in 1929. Before then, towns taxed cars by applying the local property tax rate, the same way they tax buildings and land. Revenue from the tax has always been used at municipalities’ discretion.
“It’s really just another way to collect what is essentially property tax,” Herman said.
The excise tax effort revives a past LePage initiative to change the state motor vehicle excise tax system. During the last two-year budget cycle, the governor proposed shifting excise revenue for large vehicles such as tractor-trailers from municipalities to the state. Municipal officials cried foul and lawmakers ultimately balked at the proposal.
LePage spoke briefly on Friday to a crowd of about 200 schoolchildren and local residents who assembled to commemorate the opening of the new Maine Kennebec Bridge. The span replaces an 83-year-old swing bridge that had become unsafe.
LePage was joined by U.S. Sen. Susan Collins, who secured $10.8 million from the national Transportation Investment Generating Economic Recovery program, as well as other federal funding, for the new bridge. Gregory Nadeau, a Lewiston native and acting administrator of the Federal Highway Administration, joined other state and local officials for the ceremony.
Collins described the bridge as “absolutely critical” to the area’s economy, providing a connection between two banks of one of the state’s largest rivers.
Follow Mario Moretto on Twitter at @riocarmine.
