BIDDEFORD — On Tuesday, with an overwhelming majority, the state senate approved a bill 33-2 to restore $40 million in state revenue sharing to Maine communities. The funds can be used to pay for snow plowing, trash pick-up and other services people look to their municipal governments to provide.

This initial passage of LD 1762 “means a lot for stabilization of taxes for Biddeford,” Biddeford Mayor and State Rep. Alan Casavant.

If the measure receives final passage by the state Legislature, a total of $60 million in revenue from the state will be distributed to Maine’s cities and towns.

“Revenue sharing ensures that our towns have good schools, a strong police force, and other essential services like trash disposal, snow clearing, and emergency response,” wrote Sen. John Tuttle of Sanford, in an opinion piece for the Journal Tribune on Monday. “At the same time, it keeps property taxes down for homeowners and businesses.”

Reducing revenue sharing forces cities and towns to “either reduce services or raise taxes,” said Casavant.

By state statute, revenue sharing, which dates back to 1972, should be $140 million, said Maine Municipal Association spokesman Eric Conrad.

But since 2008, he said, legislatures have whittled away at the funds, transferring some of the money to the state’s general fund in order to pay the state’s bills.

Last year, Gov. Paul LePage called for eliminating the fund altogether for two years. Instead, the Legislature salvaged $65 million in revenue sharing, but for the current budget year only.

If LD 1762 ultimately fails, $40 million from revenue sharing would be transferred to the general fund, and there would be only $20 million to distribute to Maine municipalities ”“ essentially destroying the program, said Conrad.

The MMA feels so strongly about the issue, it started a television advertising and social media campaign calling on residents to contact their legislators and encourage them to vote for the bill. Sanford’s Deputy Mayor Maura Anne Herlihy is featured in the ad as is Alfred Selectman John Sylvester.

Last month, during a public hearing before the Legislature’s Appropriations and Financial Affairs Committee, several Biddeford officials and department heads were among dozens of people who spoke in favor of LD 1762.

Reducing revenue sharing by $40 million would cost Biddeford around $1 million, said Biddeford City Manager John Bubier.

The city would have to reduce staff and cut services, he said, because Biddeford taxpayers cannot afford a significant property tax increase.

“Our property taxes have reached a breaking point,” said Bubier.

Casavant, at the hearing, spoke about an 85-year-old woman living in Biddeford who must continue to work so she can pay her property taxes.

Biddeford Fire Chief Joseph Warren said the loss of additional revenue sharing to Biddeford would affect public safety. Reductions of firefighters and EMT personnel would delay response times to fires and ambulance calls.

“We’re talking about people’s lives here,” he said.

Biddeford Police Chief Roger Beaupre said his department would lose more than $400,000, reducing staffing to pre-1991 levels.

State revenue sharing cutbacks that have already taken place have impacted municipal budgets.

In 2009, Biddeford received $1.9 million from the state, this year it received $1.1 million. During the same time period, state revenue sharing was decreased in Sanford from $2.2 million to $1.2 million, in Saco from $1.4 million to $800,000, and in Kennebunk from $700,000 to $400,000.

If the fund is reduced by $40 million, Biddeford would receive only $366,000, Sanford would get $388,000, Saco would take in $278,000 and Kennebunk would net a mere $135,000.

LePage has “crusaded” against revenue sharing, according to a statement from the Democratic Senate Majority Office, calling it “welfare” for local governments.

The governor has also threatened to withhold bonds, many to be used for transportation improvements, if this bill passes, according to the statement.

“Once again, Gov. LePage is threatening to hold Maine’s economy hostage if he doesn’t get his way,” said Senate Majority Leader Troy Jackson of Allagash. “Today, the Senate sent a message that we will not be held hostage. We will stand up for our towns and cities and keep our funding promise.”

Restoring the $40 million to revenue sharing would be funded with $21 million from the budget stabilization fund, the so-called rainy day fund; $4 million from a reserve account for tax breaks for the wealthy; and $15 million from new revenue.

Department of Administrative and Financial Services Commissioner H. Sawin Millett Jr. has warned the Legislature against removing funds from the budget stabilization fund.

“It is not sound fiscal policy to dip into the State of Maine’s savings account and further diminish our already limited financial reserves,” he said. “Bond rating agencies, such as Moody’s and Standard & Poor’s, have warned of a potential downgrade should we fail to maintain or increase the balance of our budget stabilization fund.

“A change in our ratings could increase interest rates on bonds by as much as 1 percent.”

However, according to the Senate Majority Office, “two representatives from Moody’s and S&P have said utilizing monies from the budget stabilization fund would not lower the state’s credit rating.”

Casavant said he thinks some legislators are concerned about the affect that using budget stabilization funds will have on the state’s credit rating, and that this could cause a problem for future votes on the issue.

Passage of the bill “is not a done deal,” he said, “but it’s a great first step.”

Last week, the state House of Representatives approved the measure 114-21. It passed again Tuesday under the hammer. It will go back to the house for further votes.

— Staff Writer Dina Mendros can be contacted at 282-1535, ext. 324 or [email protected]

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