Among the least responsible budget cuts to come out of Augusta over the last five years has been the state’s steady retreat from its responsibility to fund municipal services.
Cutting municipal revenue sharing, the homestead exemption, General Assistance and the Tree Growth and veterans’ tax reimbursement – all while flat funding education in the face of rising costs – may make the state budget look a little slimmer, and it allows politicians from the governor on down to make speeches about sharing the pain and looking out for the taxpayer. But it forces municipal officials and school boards to make the really tough choices on whether to cut programs or raise taxes.
In many places in Maine, they have had to do both.
Last spring, lawmakers built a $40 million hole in the budget, to be filled by closing loopholes in the tax code. That money would be used to restore some of the cuts to municipal revenue sharing proposed in the governor’s budget.
But seven months later, it has set up an unnecessary showdown between businesses, which stand to lose tax breaks they’d counted on, and cities and towns, which are watching the money they were promised get yanked away again.
But this should not be a conflict between businesses and municipalities – it’s a case of the state government dumping its problems instead of dealing with them. The state should be modernizing its tax expenditure programs and eliminating the ones that don’t return an economic benefit, independent of what it does with municipal revenue sharing. Cutting the program again is not an example of the state government making tough choices. It is just the opposite.
We have enough experience to know what happens when the state cuts aid to municipalities – property taxes go up. Some in the State House argue that cities and town can choose to spend less, but the reality tells us otherwise.
According to research done by former Thomas College professor Emily Shaw, since 2008 municipal officials have cut the budgets they can control, reducing spending for administration, public works, public safety, code enforcement, human services and recreation. But that was not enough to offset increases in county assessments, debt service and school budgets, which are not as easy to control.
The state share of municipal aid fell, both in actual dollars and in the percentage of total spending.
As a result, local property taxpayers paid more, while the state paid less for necessary services like police and road repair. For the governor to suggest, as he did last spring, that it’s the towns that are being irresponsible and that the “state has to pay its bills” is the height of hypocrisy.
There are other ways the state can balance its budget. There are business tax breaks that don’t make sense, such as the business equipment tax rebate for big-box retailers, which deserve consideration. There are services that are taxed in other states but exempt from sales tax here. These include taxes that would be paid mostly by out-of-state visitors.
And there are the governor’s income tax cuts, which gave the biggest benefits to the wealthiest residents who may barely notice the difference. Property tax hits people regardless of their income, and even a small increase can make a big difference in the life of a low-income homeowner.
Lawmakers should be responsible and not just act as if they were. Municipal revenue-sharing cuts should not be part of the budget calculations this time around.