Sen. Dawn Hill and Rep. Peggy Rotundo, the chairwomen of the Legislature’s Appropriations Committee, are starting out this legislative session with a request of lawmakers: Fund municipal revenue sharing. Their bill, which is currently being drafted, would restore $40 million to towns and cities for fiscal year 2015 in an attempt to plug a hole in municipal finances.
The effort picks up where the Tax Expenditure Review Task Force left off. That group was charged by the state budget with recommending $40 million in tax breaks to eliminate or scale back, or else municipal revenue sharing would be cut. The task force fell short of delivering a firm recommendation.
So it’s now up to Appropriations to find a way to get to $40 million, and Hill and Rotundo are making their expectations clear from the start: They will not tolerate further cuts to municipalities. “We don’t want them to experience any additional cuts to revenue sharing, and we made a commitment to them in the biennial budget, which we need to honor,” Rotundo said.
It is a needed effort — for town and city managers seeking some level of certainty as they craft their annual budgets and for residents who depend on municipal services and would be hurt by corresponding property tax increases.
Lawmakers shouldn’t forget that, even with the $40 million, they will still not be funding municipalities at the level dictated by Maine statute. Other bills, sponsored by Senate President Justin Alfond, D-Portland, and Sen. Roger Katz, R-Augusta, look to fix the long-term funding issue; they would, respectively, stop raids of the municipal revenue sharing fund and gradually ramp up funding to the level set in law.
State government is supposed to share 5 percent of its monthly corporate, income and sales tax revenue with municipalities, to ease the property tax burden. Yet that percentage has been decreasing since 2009, accelerating under Gov. Paul LePage. Indeed, his proposed — but failed — budget for 2014-2015 would have eliminated the funding entirely.
Instead of the required 5 percent, towns and cities received 3.59 percent of state revenue in fiscal year 2012 and 3.51 percent in 2013, according to the nonpartisan Office of Fiscal and Program Review. They are estimated to receive 2.39 percent in fiscal year 2014 and a measly 0.73 percent in 2015. If lawmakers restore the $40 million for 2015, it would only bump the percentage of state revenue sent to municipalities up to 2.12 percent.
No good comes of promising to fund municipalities at a certain level and then failing to deliver; it only generates mistrust. And LePage did not help when he told towns it’s a “ local choice” to raise property taxes. Budgets may be decided locally, but state and federal governments require towns to deliver a host of services. If they didn’t, undoubtedly local residents would. Can you imagine your streets not plowed in the winter? Or your schools with no heat?
As Emily Shaw wrote in a Maine Policy Review analysis, excerpted in the BDN, reduced state funding to municipalities has resulted in some cuts to local budgets, including to administration. But it also has resulted in increased taxes and fees, greater debt and reduced services, particularly in code enforcement and human services. We are all in favor of municipalities finding efficiencies, but cutting funding that results in increased local taxes is not efficiency.
Maine towns have not been showered with state funds. The average annual growth in state funding to municipalities and counties between 1996 and 2015, when adjusted for inflation, is 0.1 percent per year. That includes funding not just for municipal revenue sharing but education, criminal justice and economic development. If state government wants to send less money to towns, it should be pursuing a more thoughtful approach that takes into account standards of living and economic health. Indiscriminately slashing funding, and defying the law, is both unfair and unhelpful in turning Maine’s economy around.