May 14, 2013

Cities favor state tax hikes over LePage budget

The Mayors' Coalition warns that the governor's plan would lead to sizable property tax increases.

The Associated Press

AUGUSTA — Maine cities responded Tuesday to Gov. Paul LePage's invitation to come up with their own ideas to balance the state budget without suspending revenue sharing.

In a letter to the governor, the bipartisan Mayors' Coalition, representing a dozen cities, said the $6.3 billion, two-year budget proposed by LePage would produce significant property tax increases for Maine residents and businesses.

The letter said the governor's proposed two-year suspension of revenue sharing, a shift of some vehicle excise taxes to the Highway Fund, a reduction of the state's contribution toward teachers' retirement and cuts in General Assistance all would reduce municipal revenues.

"We will continue to tighten our belts, but the Maine municipalities have already absorbed $40 million a year in revenue sharing cuts. The budget will result in significant property tax increases for Maine residents and businesses," says the letter.

In their letter, the mayors suggest suspending income tax cuts that were enacted last session, which they said would avoid a $350 million drain on state revenues. The mayors say it's a revenue loss the state cannot afford now.

The coalition also suggests a temporary sales tax increase from 5 percent to 6 percent, combined with a lodging tax increase from 7 percent to 10 percent. In addition, it calls for comprehensive tax reform to balance sales, income and property taxes.

LePage was not impressed with the cities' suggestions, releasing a statement that said, "The coalition proposed three options: raise taxes, raise taxes or raise taxes. How original."

The coalition sent its letter in response to an invitation by the governor in April to propose ideas to ease the impact of his budget proposals. He has also contended that municipal governments can make the needed cuts to their budgets.

"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," said a statement from LePage.

Through Tuesday, nearly 8 percent of the state's municipalities and school districts had passed resolutions opposing LePage's budget.

In his response, LePage said the cities didn't address the real problem facing the state, which is out-of-control government spending.

"When I was mayor, I was able to reduce taxes without reducing services. I know that it can be done if local officials are willing to make the same difficult decisions I made as mayor," said LePage, who was mayor of Waterville before he was elected governor in 2010.

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