BAR HARBOR, Maine — The idea didn’t get far two years ago — or in its previous incarnations — but the concept of allowing municipalities to adopt local-option taxes is going back to the Legislature again.

Rep. Elsie Flemings of Bar Harbor is working on a bill that would let Maine towns and cities impose an additional sales tax within their borders. Flemings said last week that the proposed bill is in draft form and has not yet been assigned a formal bill number for the Legislature to consider.

The idea, Flemings said, is to allow municipalities to impose an additional sales tax of 1 percent or 2 percent on certain things such as lodging or meals. In larger service center towns and cities that attract tourists or shoppers from across their boundaries, a local-option tax would be a way to raise funds from more people who use local services or infrastructure and to rely less on local property taxes. Revenue from local-option taxes could be used for capital improvement projects or to reduce local property taxes, depending on the wishes of voters in the municipality where the tax would be imposed, she said.

“The key is giving towns the right to decide if it’s right for them,” Flemings said. “This is a tool the towns can use to better meet those needs.”

But Steve Clarkin, a consultant with the Maine State Chamber of Commerce, said Thursday that what is right for one town might not be right for another. Clarkin could not comment on Flemings’ proposal because it has not yet been issued in its final form, he said, but typically the Chamber is not supportive of local-option taxes.

If such a tax were to apply to all retail sales, Clarkin said, it could have a significant impact on the price of more expensive items such as cars or furniture. If Brewer had a local-option tax on such items and Bangor did not, he said, it could drive a lot of people who might do their shopping in Brewer to do so on the other side of the river.

“You’d be encouraging people to cross city lines because they could get a lower price across the bridge,” Clarkin said. “I haven’t heard of anyone in the business community who thinks [allowing local-option taxes] is a good idea.”

Sen. Joe Perry of Bangor, who chairs the Legislature’s Taxation Committee, said Friday that many local-option tax bills have been submitted in the Legislature over the years. Two years ago, a similar proposal fizzled in the wake of several property tax reform bills the Legislature was considering, he said.

“There’s been a whole variety,” he said. “Two years ago we put all of our eggs in the tax reform basket.”

Perry said the only way he could see such a proposal getting support in the Legislature is if it is limited in its scope or duration, or if it is directly connected to reducing a municipality’s property taxes.

“Those are the only two scenarios I can imagine that have any chance,” he said. “There is a hundred different combinations for how the tax would be raised or used.”

Flemings said that, though the wording of her bill is still being developed, she wants it to include some revenue-sharing provisions. Towns and cities would be able to keep half of the revenue they get from a local-option tax, she said, while the other half would be split evenly between the state and the county where the municipality is located.

Flemings said she realizes there might be some concern about how additional taxes might affect business in an affected town, but that the benefits might outweigh the drawbacks. For example, a restaurant customer might not mind paying an extra 20 cents tax on a $20 meal, she said, especially if it helps keep the sidewalk or road in front of that restaurant in good repair.

Conversely, lower prices might not be much of a business draw to people from out of town if the local infrastructure is in poor shape, Flemings said.

“That might be more of a deterrent to tourists than the additional 1 or 2 percent tax,” she said.

Dana Reed, Bar Harbor’s town manager, said Thursday that Bar Harbor generally has supported the concept of a local-option tax for many years. Besides local roads, the town’s water and wastewater systems and its Police Department are other examples of town facilities and programs that get a lot more use in the summer when millions of tourists funnel through town.

“Our resident population goes from 5,000 [people] to 20,000 in the summer,” Reed said. “You can imagine what that does to our staffing needs.”

Ed Barrett, city manager of Bangor, said Friday that Bangor has long supported the concept of local-option taxes for similar reasons. Just an additional 1 percent sales tax in Bangor could generate between $12 million and $15 million annually, he said.

If Bangor had such a tax, some of the resulting revenue could help the city build a new facility to replace the aging Bangor Auditorium, he said.

“This is a significant, expensive project,” Barrett said. “Certainly, it’s one that would benefit the region.”

btrotter@bangordailynews.net

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