Hermon bracing for loss of commercial excise tax revenues under LePage budget plan

Trucks drive down Odlin Road Wednesday afternoon in Hermon. Hermon Town Manager Roger Raymond says that Hermon stands to become the hardest-hit town in Maine by Gov. LePage's excise tax plan.
Trucks drive down Odlin Road Wednesday afternoon in Hermon. Hermon Town Manager Roger Raymond says that Hermon stands to become the hardest-hit town in Maine by Gov. LePage's excise tax plan. Buy Photo
Posted March 08, 2013, at 6:53 p.m.
Last modified March 09, 2013, at 10:39 a.m.
Trucks drive through the intersection of Odlin Road and Coldbrook Road Wednesday afternoon in Hermon. Hermon Town Manager Roger Raymond says that Hermon stands to become the hardest-hit town in Maine by LePage's excise tax plan.
Trucks drive through the intersection of Odlin Road and Coldbrook Road Wednesday afternoon in Hermon. Hermon Town Manager Roger Raymond says that Hermon stands to become the hardest-hit town in Maine by LePage's excise tax plan. Buy Photo

HERMON, Maine — Even if he laid off every single municipal employee, Hermon Town Manager Roger Raymond said it still would not be enough to offset the potential loss of revenue that his town receives each year from tractor-trailer excise taxes.

According to the Maine Municipal Association, Hermon ranks No.1 among the Maine cities and towns that stand to lose big under Gov. Paul LePage’s biennial budget plan, which among other things calls for shifting excise taxes paid by tractor-trailer owners from municipal to state coffers.

For Hermon the measure would mean the loss of $547,466 — an amount that represents a big chunk of the town’s $4.4 million municipal budget.

That’s because the small Penobscot County town of about 5,400 people is home to several transportation companies, including Ryder Truck Rental and Leasing, Pottle’s Transportation Inc. and Dysart’s Transportation. To that end, tractor-trailer excise taxes comprise a disproportionate part of the town’s revenue stream compared with most other communities.

“You know how much money that’s worth to the town of Hermon? We are the community in the state of Maine that will be hurt the most by that loss,” Raymond said.

But commercial excise taxes are only part of the town’s state revenue picture, Raymond pointed out in a recent interview.

If the governor’s proposals to suspend the state’s revenue sharing program, make communities pay half of their teachers’ retirement premiums, end the Business Equipment Tax Reimbursement and halt the Homestead Exemption programs come to pass, Hermon’s total revenue loss would amount to $928,421, he said.

That’s more than the $917,223 that the town raised in property taxes this year, Raymond said.

“I’ve been doing this for one year short of 40 years and I’ve never seen a proposal come from our governor or the Legislature that has the potential impact that this one has,” he said.

“These [proposals] really negatively impact the community and it’s unfortunate, you know, that they didn’t do their work and determine what these impacts would be prior to making those proposals,” he said.

“Now here’s the interesting analogy. If I were to try to cover that [loss of revenue] even though I laid off every employee in the town of Hermon including myself, it still wouldn’t be enough to make up the loss,” he said.

While he did not have an exact number of employees, who include anyone who receives a stipend such as elected officials and volunteer firefighters, he did say that all of the town’s paid positions add up to $863,900 — almost $65,000 less than the total amount in state funding the town stands to lose if the governor’s budget proposals pass.

In a radio address in January, LePage countered critics’ claims that his budget would result in massive property tax hikes, saying that is a “local choice.”

“If revenue sharing makes up as little as 2 to 4 percent of community budgets, it is reasonable to request local officials find alternatives,” LePage said. “These are difficult times. We must work together to move Maine forward.”

LePage suggested 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.”

Raymond said that LePage’s budget proposals are unfair.

“Hermon’s probably the best example of conservatism that I’ve ever seen in local government,” he said. “We don’t have our own police department, we contract with the [Penobscot County] sheriff’s department. We only have one full-time fireman, which is our chief. We basically have two public works employees. The rest of [the work] is all contracted out. Our ambulance service is provided by the private sector.

“We have a very low mill rate [at 11.70 per $1,000 in property value] and it’s like the governor is basically punishing those communities that have made a tremendous effort in recent years to be as efficient as they possibly can,” he said. “The concern we have is that the legislators need to understand the impact.”

In what Raymond called “the knife in our chest,” Hermon currently has cost-sharing agreements in place with the Maine Department of Transportation for projects on Wing, Annis and Billings roads and has been using part of its excise tax income to make payments on loans.

During the Penobscot County municipal budget forum in Brewer on Thursday night, Raymond presented an impact statement showing if town officials did not make major budget cuts, property taxes would dramatically increase.

The owner of a $60,000 home would see a 101 percent increase in taxes, while the owner of a $100,000 home would see a 65 percent hike.

Examples of cuts being considered to avoid a property tax increase include:

• Eliminating the town’s recreation department, requiring fees for all programs, which would be run by volunteers, for a savings of $122,000.

• Eliminating paving and road construction projects, which Raymond said would save $241,000 but result in serious road deterioration and potholes.

• Doing away with the town’s police coverage contract with the Penobscot County Sheriff’s Office, which would save $323,628 but mean that deputies would no longer patrol the town and respond only when called. That, he said, would mean longer response times.

• Eliminating the Economic Development Department for a savings of $83,000.

• Scrapping roadside garbage collection, which would save $140,000.

Raymond said that even if the town made all four of those cuts, it still would not be enough to offset the $928,421 potential loss.

Town councilors will be asked to consider signing a resolution opposing the governor’s budget proposals during the next meeting, set for March 14.

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