The Scarborough Town Council is urging the Maine Legislature to craft a state budget that “prevents a significant increase” in local property taxes.

A council resolution, set to be taken up at its meeting Wednesday, argues that Gov. Paul LePage’s budget proposal, which would eliminate municipal revenue sharing and modify the popular homestead exemption program to apply only to those 65 and up, would have a “direct and deleterious effect on property taxpayers.”

In addition, it says that the governor’s two-year budget “undercuts the historic partnership between the state and local governments of sharing in the responsibility and cost of providing essential services” to residents.

The resolution asks the Legislature to craft a budget compromise that “considers the already high property tax burden” and that “identifies alternative cost savings and tax reforms that would prevent a significant increase in property taxes and protect essential municipal services from detrimental cuts.”

The document further requests that if some or all of the governor’s “proposed tax shifts take place,” that the Legislature allow municipalities to adopt a local option sales tax to take the place of lost revenue.

Such a move, the resolution says, would allow communities to move “away from total reliance on the regressive property tax and consider a more progressive tax structure.”

The council is set to hold a workshop session with Scarborough’s legislative delegation at 6 p.m. on Wednesday, Feb. 18, and then take up the resolution during its regular meeting, which begins at 7 p.m. Both sessions will be held after the Current’s deadline.

Prior to the meeting, Jessica Holbrook, chairwoman of the Town Council, said she is “certainly supportive” of the resolution. She said the document, mainly written by Town Manager Tom Hall and Councilor Jean Marie Caterina, “speaks to the concerns all councilors have” in regard to the governor’s budget proposal.

“We still need to function as a community,” Holbrook added. “All we’re doing is asking (the Legislature) to rethink what they’re doing a little bit. (The budget) would definitely shift costs to property taxes.”

Holbrook said one reason why the council is taking up the resolution is because it is difficult for individual members of the Town Council to make the trip to Augusta, and the resolution allows the town to make its views known.

She said that while LePage’s argument that all government – both local and state – costs too much, there are also many mandates the state places on local communities that cost money and have to be paid for somehow.

According to the resolution, if the Legislature adopts the governor’s proposal to do away with municipal revenue sharing and make changes to the homestead exemption, then the town of Scarborough could lose about $725,000 in revenue for the 2014-2015 fiscal year.

Figures put together by Hall prior to Wednesday’s meeting show that among the various nonprofits in Scarborough, which include the land trust, Camp Ketcha, the Foundation for Blood Research, Hospice of Southern Maine and the Southern Maine Agency on Aging, among others, have a total value of nearly $15.4 million.

Under the state budget proposal, taxing those nonprofits could generate revenue of nearly $232,000, which would still leave a gap of about $500,000 in the municipal budget.

Holbrook said if the state would fund the schools at the 55 percent required by law, then it might be possible for Scarborough and other communities to cut back on local spending, as the governor seems to want.

In addition, she questioned the propriety of the governor’s plan to allow communities to tax nonprofits.

“The Finance Committee is looking at the nonprofit taxation issue right now. But the question is, should you?” Holbrook said.

The loss of more than $700,000 in revenue could lead to a property tax increase of 5 percent for Scarborough residents, the resolution states. And, the document also argues that “any cuts to the current level of municipal services would have a far-reaching and detrimental impact on essential municipal services.”

In Maine, municipal governments and local school departments are mostly supported through the property tax, which varies from community to community based on how much money is received from the state through revenue sharing and general aid to education.

According to the Maine Office of the State Treasurer, revenue sharing is a program that returns money to each municipality based on a formula whose variables include population, state valuations and tax assessments.

The monthly revenue sharing pool receives its funding through the setting aside of a percentage of the sales taxes, as well as service provider, personal and corporate income tax receipts. Most of the money is collected at the local level and then forwarded to the state.

The resolution the Scarborough council is considering calls the governor’s proposal to eliminate revenue sharing, along with a plan to allow communities to tax nonprofits that have property valued at $500,000 or more, “unprecedented.”

“The biennial budget proposal places the municipalities in an untenable and uncertain fiscal position … and threatens to significantly increase the property tax burden,” it says.

In his State of the State address on Feb. 3, LePage said the goal of his budget proposal is to provide “efficient, effective and affordable government,” and said that his budget “takes bold action.”

In his annual speech to the Legislature, LePage argued that his budget proposal, which would also cut income taxes and broaden sales taxes in certain categories, is “not a tax shift. It is a tax cut for all Mainers.”

“An income tax cut puts money back in your pocket. It is a pay raise for all working Mainers. With consumption taxes, you make the choice. You decide where you spend your money. And let me be clear: this plan does not tax funerals. It does not tax car repairs. It does not tax groceries or other necessities,” the governor added.

LePage said that his budget helps “local government identify other sources of revenue. We give them the telecommunications excise tax. We allow local government to collect tax revenue from large nonprofits.”

This week, the Appropriations and Financial Affairs Committee of the Legislature is set to discuss the revenue sharing and property tax portions of the governor’s proposed two-year budget.

On Monday, Feb. 23, at 10 a.m., the committee is set to discuss the sales tax portions of the budget, according to the legislative calendar.


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