July 1, 2013

The state budget: 5 things you need to know

You will feel the effects of the financial plan approved by the Legislature last week. Here's a glance at you can expect.

By Michael Shepherd mshepherd@mainetoday.com
State House Bureau

and Matt Byrne mbyrne@pressherald.com
Staff Writer

(Continued from page 2)

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Of the 9,375 state workers represented by the union, Quint said 5,962, almost 64 percent, will be eligible for a periodic merit increase this year. The rest aren't eligible.

In another victory for state workers, their health insurance program will receive a $7.7 million boost in the budget.

Quint said that is money the State Employee Health Commission did not expect to receive, and the commission has yet to decide what to put it toward. Reducing co-pays or deductible costs for state workers are options, he said.

"They're going to see their health insurance costs go down. We just don't know how yet," Quint said. 

4. Local services and property taxes

The end of the drawn-out state budget process means there are now tough choices ahead for many cities and towns.

And it means you may eventually feel the state budget's impact in property tax increases or municipal spending cuts that have not even been decided yet.

Municipal revenue sharing -- the money collected by the state and returned each year to local governments -- will be reduced by $75 million statewide. That's a deeper cut than officials in some communities had guessed when they adopted budgets during the spring.

Some towns, such as East Millinocket and Beddington, are estimated to receive as much as 65 percent less in state help than they did last year, the highest year-over-year cut, according to estimates released by the state late last week.

Only seven communities will receive more than they did last year, with most -- 393 of 493 municipalities -- facing reductions of between 20 percent and 40 percent.

Even if towns had planned on losing part of their funding, the state cuts will still force many back to the drawing board to decide what to cut, what to keep, and what programs or services are worth a tax increase.

Portland will see its state revenue sharing drop $1.9 million, leaving a total this year of $4.2 million in state aid. Bangor will lose nearly $1.2 million, meaning it will get $2.25 million, and Augusta will shed $526,000, allowing it to receive $1.16 million in aid.

In Portland, the City Council predicted the city's $1.9 million revenue reduction and decided to make the budget changes ahead of time. The council cut $1.1 million in planned expenses, including the elimination of two vacant jobs, employee raises and reduced overtime.

Many cities and towns, meanwhile, counted on receiving more assistance than the new state budget provides, and meetings may be necessary in the coming months to decide how to close the gap.

In general, towns have until they finalize their tax commitments and set property tax rates to adjust their budgets, potentially stretching the discussion about municipal spending into September for some communities.

"The most common practice was to assume flat funding of revenue sharing, or something more conservative," such as 80 percent funding, said Geoff Herman, director of state and federal relations at the Maine Municipal Association.

"To the average citizen, irrespective of the nuances of how you get there, the result will be the same -- an uptick in the tax rate or a reduction in services, or a combination of both," he said. 

5. Aid to Education

For many school officials around the state, this could seem like a budget season that does not end.

And as the dust settles from the state budget vote, it's going to take time to see how it affects classrooms and school-related property taxes.

(Continued on page 4)

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Today's poll: State budget

Are you satisfied with the state budget?

Yes

No

View Results