AUGUSTA — Gov. Paul LePage sent a letter to Maine municipal leaders Thursday, challenging them to leave “complaints aside and offer solutions” to his proposed more-than $200 million elimination of revenue sharing to cities and towns in the next two budget years.
In the letter, excerpts of which were released by LePage’s office, the governor wrote that “there are only three large budget areas — education, welfare and revenue sharing,” and core state services such as law enforcement and jails have been cut to pay for growth in welfare spending and education.
“That leaves only the three large pots of money, and I chose revenue sharing,” LePage wrote. “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.”
Revenue-sharing proponents have argued that cities and towns already have been hit hard. In the last four years, the Legislature has used some of the revenue-sharing money to fund state services. In 2012 alone, the Maine Municipal Association has said, $44 million that would have gone to municipalities was spent on state services.
Waterville Mayor Karen Heck said Thursday that mayors did offer LePage solutions at a meeting with the governor earlier this month in his cabinet room.
“We suggested that he think about doubling the lodging tax, repealing the income tax cut and increasing the sales tax,” Heck said.
She said that when she testified before the appropriations committee, she recommended repealing the $400 million in income tax cuts and following Florida’s practice of having a higher lodging tax.
“I suggested that they look at increasing the sales tax, 1 to 1 1/2 cents, which is what happened under (Gov.) John McKernan’s administration.”
Heck maintains the current property tax is unfair.
“With good tax policy, there should be equal thirds making up the state’s revenue — a third income tax, a third sales tax and a third property tax.”
Property taxes now make up 43 percent, she said.
“Property taxes are the most regressive taxes we have,” she said.
State law mandates that Maine must send 5 percent of sales-tax and income-tax revenue to municipalities, which use it to offset property taxes. The Maine Municipal Association has said Maine currently dedicates 3.5 percent.
A bill from Assistant Senate Minority Leader Roger Katz, R-Augusta, would move the state, in steps, back to the 5 percent threshold. A bill sponsored by Senate President Justin Alfond, D-Portland, would make revenue sharing a compact between the state and municipalities, a legal arrangement that would make it harder for legislators to reduce funding. Katz is a co-sponsor.
Even so, Katz hasn’t taken an aggressive tone against LePage’s proposal: “For those of us who disagree with the suspension of revenue sharing, it is now our responsibility to come up with other solutions to balance our budget,” he wrote in testimony on his bill.
That approach and LePage’s letter mirror a letter sent by Senate Minority Leader Michael Thibodeau, R-Waldo, to municipal leaders earlier this month. In it, Thibodeau wrote that “it is time for us to all come together and focus on solutions.”
Morning Sentinel staff writer Amy Calder contributed to this report.
Michael Shepherd — 317-6256