February 19, 2013

Local tax: Perennial nonstarter gets a push

Even opponents agree that the governor's budget could spawn a municipal tax on goods, services.

By Randy Billings rbillings@pressherald.com
Staff Writer

(Continued from page 1)

Today's poll: Local option tax

Do you want your town or city to have the ability to adopt a local option tax?

Yes

No

View Results

As a Republican, MacDonald said, she is generally opposed to new taxes. But there is a unique need in Old Orchard Beach -- a town of 8,600 residents that swells to 40,000 in the summer -- for a way to cover the costs of all the needed staff and services, she said.

"What this bill would do is help offset that cost," MacDonald said. "The point of this bill is to allow a community to decide by a vote, not just the select board or council."

Just a 1 percent local option sales tax would generate $570,000 for the town, which would help fund those seasonal services, she said.

MacDonald said her proposal is her top priority of the session.

"I know this is not a Republican thing to do, but that is something I need to concentrate on with my own caucus," she said. "It is something I am focused on because my community has been asking for it and asking for it."

While the Maine Innkeepers Association's opposition to local taxes has "absolutely not" changed, Greg Dugal, the group's executive director, said LePage's budget proposal has created a unique opportunity for proponents.

"This will be the most valid attempt to move forward with a local option tax," said Dugal, who believes tax authority should remain with the state. "Of course the game has changed. Certainly the time."

LePage spokeswoman Adrienne Bennett would not comment on the governor's position on local option taxes.

A HISTORY OF REJECTION

Local option tax bills over the last decade have come in all shapes and sizes. But none of them has struck the right chord.

Some have been part of a broader proposal to overhaul the tax code.

A bill in 2003 would have allowed municipalities to enact local option sales, use and income taxes by local referendum. It died in committee.

A local option tax was also part of tax reform proposed by then-Rep. Anne Rand, D-Portland, which would have broadened the tax base and increased the highest income tax rate. It too was struck down.

At least one past bill seems to have been crafted to help a specific community.

In 2007, Sen. Dennis Damon, D-Trenton, proposed a 2 percent sales and use tax that would be used to offset property taxes. The catch? It would have benefited only communities located next to national parks, such as Bar Harbor. That bill was postponed indefinitely, without a public hearing.

Some bills looked regionally for support, whether by promising to distribute the tax revenue between local, county and state governments, or dedicating the funding to infrastructure projects of regional significance.

All suffered a similar fate, however, failing to get out of committee with a recommendation to pass.

A SHIFT IN MOMENTUM

LePage's proposal to eliminate revenue-sharing is expected to save the state $200 million. That, along with other budget cuts, would shift roughly $420 million onto local governments, the Maine Municipal Association told the Press Herald last month.

"I think the momentum around this has been increased simply because of the decision by the governor to basically balance the state budget by cutting all the major portions of state funding to municipalities," Brennan said.

Portland stands to lose $6.1 million in revenue-sharing alone.

At a recent MMA meeting, Brennan said several participants were talking about local option taxes.

"That conversation was different than it was a year ago," said Brennan, noting that the subject is being discussed among the 12-member Mayors Coalition.

Geoff Herman, MMA's legislative liaison, said revenue-sharing was originally designed to lower property taxes by returning 5 percent of sales and income taxes to municipalities.

(Continued on page 3)

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Today's poll: Local option tax

Do you want your town or city to have the ability to adopt a local option tax?

Yes

No

View Results