Last week, a group of residents from rural Caribou submitted a petition to the city clerk’s office announcing their intention to break away into a new town, Lyndon. If the secession succeeds, nearly 80 percent of the city’s taxable property will be in Lyndon, as well as 2,515 of its 8,189 residents — or 30 percent of the population.
Why secede? According to Paul Camping of the Caribou Secession Committee, residents in rural Caribou are dissatisfied with their representation in local government and high property taxes.
“There are disparate needs between the rural residents and those [living] in Caribou,” Camping said.
But this is not just a local issue. The move to secede is emblematic of a larger issue Maine faces: that state policies, in effect, favor suburban and rural communities over the service centers that support them. The end result? Secession is sometimes an appealing option.
Service center struggles
Service centers such as Caribou are home to most of the state’s jobs and businesses that propel the state’s economy, according to a 2003 Maine Policy Review article by John Melrose, a former state transportation commissioner.
Service centers “are the economic engine [of the state] without a question” because they host the largest number of jobs and generate most tax revenue for the state, said Evan Richert, Orono’s town planner and former director of the state planning office.
Not only do the state’s service centers drive economic activity, they also are home to the hospitals, libraries, retail and cultural attractions, and public safety resources on which Mainers in outlying areas depend.
While “surrounding areas depend on them for jobs,” Richert said. “People [also] rely on them for a host of services from libraries to recreation,” as well as social, mental health and medical services.
And the infrastructure required to support the density of businesses and nonprofits on which residents of outlying areas depend, along with the consequences of a range of state policies, has historically resulted in a higher tax burden for these service centers.
The presence of many businesses drives up the local assessed property value, so state funding formulas treat service centers as though they have gained wealth and redistribute the state aid elsewhere, Richert said.
As a result, service centers don’t “enjoy the benefits of all those taxes — some, but not enough to keep tax rates down,” Richert said.
So the cost to maintain the services they offer is “borne by local property taxpayers, not necessarily everyone who uses those services,” he said.
The secession cry
For residents of service centers throughout Maine, high property taxes have often been a point of contention. Much like in Caribou, it has sometimes come to the point where residents cried secession.
Long Island, for example, seceded from Portland in 1993. As in Caribou, the secession movement there was driven by disputes over high property taxes and the level of service the Casco Bay island community received in return.
In 2014, the property tax rate for Long Island was $6.99 for every $1,000 in property value compared with $19.41 for Portland.
Other municipalities that followed suit were Chebeague Island, which seceded from Cumberland in 2006, and Peaks Island, which tried and failed to secede from Portland in both 2007 and 2011. As with Long Island and the section of Caribou that would be Lyndon, high property taxes in the service center fueled these movements.
The final numbers aren’t in, but Camping said that Lyndon could expect a property tax rate of $15.90 for every $1,000 in property value compared with Caribou’s tax rate of $22.30. That’s a 28 percent decrease that could mean huge savings for residents.
“We’re about not taxing our residents a nickel more than we have to,” Camping said.
‘A piece of the pie’ for roads
One of the biggest costs for a service center is maintaining its infrastructure, especially the heavily traveled roads used by more than the community’s residents, Richert said.
An urban compact area such as Caribou shoulders the responsibility for snow removal and regular maintenance and improvement costs for state highways (Route 2, for example), state-aid roads (numbered routes that connect local roads to state highways) in addition to local roads.
Noncompact areas, on the other hand, only have year-round responsibility for local roads. They’re responsible for state-aid roads in the winter, and the Department of Transportation steps in during the summer months, the season for major improvements. The Department of Transportation also is responsible year-round for the state highways that run through them.
Since 1981, all Maine municipalities have received funds through the Local Road Assistance Program to cover some of the cost of road work, according to Pete Coughlan, director of the Maine Department of Transportation’s community services division.
“They all get a piece of the pie,” Coughlan said.
For 2015, Maine’s nearly 500 municipalities will split $20.7 million in local road assistance — $2.4 million less than 2014.
About 22 percent of Caribou’s $8.8 million municipal budget for 2015 is dedicated to public works, with about $320,000 going directly to road repair. To help cover the cost for maintaining state highways, state-aid roads and local roads, Caribou will receive $133,744 in local road assistance, about $20,000 less than in 2014.
Because the cost of maintaining the roads exceeds the amount of state aid, property taxes go up, according to Caribou City Manager Austin Bleess.
“It costs way more for maintaining the roads [than we get in aid],” he said.
Coughlan acknowledged that, for many towns — not just service centers — the aid is not enough.
But for communities outside service centers, the financial burden is lessened because they are responsible only for local roads year-round.
The largest budget line
Another factor that drives up a municipality’s tax bill is education. According to the Maine Municipal Association, as much as 68 percent of property taxes for some towns fund K-12 education.
With the high concentration of businesses increasing local assessed property values, some service centers qualify for less education aid because the state’s school funding formula generally awards less funding to communities with high property wealth, according to Richert.
For Caribou, 41 percent of local property tax revenue goes to the local school system, Regional School Unit 39, while 5 percent goes to Aroostook County and 54 percent to the city itself, according to Bleess.
Since 2010, Caribou’s share of education funding for RSU 39 has risen from $2.9 million to $3.4 million, Bleess said.
Future aid in doubt
Maine’s municipal revenue sharing program has been around more than four decades as part of an effort to lessen the burden on property taxpayers, especially in service centers. Camping said that the Lyndon budget anticipates about $200,000 in such aid.
This, however, could be short-lived. Gov. Paul LePage’s biennial budget aims to flat-fund revenue sharing in 2016 and eliminate it the following year. If that happens, Camping said that Lyndon could see its mill rate rise by a dollar to about $16.90.
Caribou has already felt the effects of reduced revenue sharing. According to Bleess, since 2008, Caribou’s share of revenue sharing has fallen $954,511, about a two-and-a-half mill loss. The 2015 municipal budget anticipates $538,437 in revenue sharing.
Budget cuts have reduced the effect on residents’ property tax bills, Bleess said, but not completely.
“[We’ve] done the best we can to shield [residents] from the actions of the state,” he said.