AUGUSTA, Maine — Gov. Paul LePage reacted to a widespread revolt over elements of his biennial budget proposal that will eliminate funding for towns and cities by challenging local officials to come up with alternatives.
Raising taxes, as has been proposed by numerous bills in the Legislature this week, is not a viable alternative, according to the governor.
LePage said in a letter he has been sending to municipal officials across Maine that his proposal to cut nearly $200 million in municipal revenue sharing for the next two years was forced by exceedingly tight budgets in other areas. He urged municipal officials to replace their complaints with their own ideas to match government spending with available revenues.
Democrats called the letter “insulting.”
In the letter, which LePage spokeswoman Adrienne Bennett said has been sent to dozens of municipal officials in recent weeks, the governor said he couldn’t cut debt services because the “state must pay its bills” and couldn’t reduce funding for the judicial branch because the state’s courts are running behind schedule.
“Other core state functions — state police, corrections, our natural resources agencies — have been cut to the bone to feed continued growth in education and welfare spending, and they cannot be cut any further without reducing public safety or our future economy,” wrote LePage. “That leaves only the three large pots of money, and I chose revenue sharing.”
Municipal revenue sharing is a mechanism that the state uses to prevent local municipal budgets from relying too heavily on property taxes. When it is fully funded, according to state law, towns and cities receive 5 percent of the state’s income and sales tax receipts, though in recent years the Legislature has reduced that amount to balance the budget. LePage proposed suspending municipal revenue sharing altogether in his biennial budget proposal, which covers the two years beginning July 1 of this year.
To date, the House and Senate have each accepted resolutions from more than 50 towns, cities and school districts in opposition to the proposed budget. According to a group called the Fair Share Now! coalition, which is pushing towns to approve resolutions against the proposed state budget and has a website that tracks which ones have passed or are working on resolutions, more than 70 municipalities have passed resolutions opposing the budget and another 30 or more are considering them.
LePage argues that local governments can make the needed cuts to their budgets, even though he acknowledged it won’t be easy.
“Most letters I receive say we made the wrong choice and that we should restore the $200 million subsidy to municipalities, but they do not suggest other cuts that should be made at the state level,” said LePage. “It is easy to find fault and hard to find solutions. I welcome any suggestions town officials have to cut elsewhere in the state budget, but it is time for everyone to set complaints aside and offer solutions.”
The liberal Maine People’s Alliance attacked LePage for the letter and said that many municipal officials have suggested adjustments to the state’s tax code — such as reversing tax cuts for higher earners which were enacted by LePage and the Republican-controlled Legislature two years ago.
“In the months since the launch of the town resolution campaign, more than 70 town representative bodies have passed resolutions condemning Gov. LePage’s budget proposal and demanding a fairer approach,” said Maine People’s Alliance spokesman Mike Tipping, who is also a blogger for the Bangor Daily News. “More than 40 percent of Maine people now live in a town that has passed a fair share resolution and more are passing each week.”
Senate Majority Leader Seth Goodall, D-Richmond, said most towns and cities have already cut as much as they can since the economic downturn in late 2008.
“You can’t deny the fact that the governor’s budget passes the buck on to our towns and raises taxes,” said Goodall in a prepared statement. “Maine’s municipalities have already been working together for years seeking savings.”
The Legislature’s Taxation Committee started holding public hearings this week on a number of Democrat-sponsored bills that would raise taxes. A hearing Friday will address a bill that calls for a sales tax increase to support municipal sharing.
Mark Brewer, an associate professor of political science at the University of Maine, said he has never seen anything quite like the letter in Maine politics. He said he viewed the letter and the press release circulated Thursday by LePage’s staff as efforts to appease his base.
“I doubt the governor thinks his letter will have any big impact on local officials,” said Brewer. “He’s trying to manage public opinion here, which is not a bad thing to do on his part. It’s actually a pretty smart move. Regardless of parties and political affiliation, he knows that municipal officials across the state are upset about his budget proposals. There has been screaming up and down the state that this is a local property tax shift, which I think it is regardless of what the governor says.”
LePage has argued consistently that municipalities can find enough cuts and collaborations with neighboring communities to avoid affecting property taxes.
Eric Conrad, a spokesman for the Maine Municipal Association, reiterated the association’s argument that LePage’s budget proposal contradicts a 1972 law that calls for a percentage of state sales and income tax revenues to go directly to cities and towns.
“We find something out of sync for the governor to ask cities and towns to help balance the state budget,” Conrad said Thursday. “Town and city officials are elected to balance their municipal budgets and make the tough decisions related to that process.”
Citing studies that show the extent of municipal collaboration in Maine listed on the Maine Municipal Association website, Conrad said municipal officials “collaborate a ton and are frugal.”
However, according to an analysis by the Bangor Daily News, municipal property taxes have increased more than state spending in recent decades, though the growth in both state and local spending has slowed in recent years.
Emily Shaw, assistant professor of political science at Thomas College in Waterville, said LePage’s former role as the mayor of Waterville makes his proposal to cut municipal revenue sharing more eye-catching.
“It’s interesting to have a governor who most recently was a municipal official making this pretty dramatic move that substantially affects the budget in the municipality he was serving just a couple of years ago,” said Shaw, who until now saw LePage’s budget proposal as positioning to negotiate toward a compromise.
“That’s what I would have assumed his intent was, but if he’s doubling down on that, I guess not,” said Shaw.
Brewer said LePage’s stance on both state and local budgets has been a hallmark of both his campaign and first term in office, though it could backfire on him if the state’s residents start seeing big increases in their property tax bills.
“Once we get to that stage it’s not going to be just municipal officials who are angry; it’s going to be Maine citizens who are angry,” said Brewer. “You don’t want to run for re-election if some of the people who support you are angry. Love him or hate him, you’ve got to give the guy credit for being consistent.”
LePage wrote that his budget proposal “was not something I enjoyed putting forward.”
“If towns need flexibility from the state to reduce their own budgets, we are happy to help,” he wrote. “If there are proposals to reduce administration and overhead by sharing services between towns, we will support them. However, if every municipality wants to keep everything — public works, assessors, managers, police, schools, fire, and other services — to themselves, then the voters of that municipality can make that decision. But those local decision have price tags and we can no longer afford to hide from that reality.”
BDN political analyst Robert Long contributed to this report.