AUGUSTA, Maine — A bill that would adjust the formula for how the state distributes money to municipalities passed through the Legislature’s Taxation Committee this week.
LD 1835, sponsored by Assistant Senate Minority Leader Justin Alfond, D-Portland, affects the Disproportionate Tax Burden Fund, commonly known as “revenue sharing 2.”
Currently, all municipalities receive a set percentage of revenue sharing from the state from sales taxes and other fees that helps pay for local services. Revenue sharing 2 kicks in for cities and towns that have a property tax rate that exceeds 10 mills.
A mill is equal to $1 of tax per $1,000 of property value. In other words, a homeowner in a town with a mill rate of 10 would pay $2,000 in taxes on a $200,000 home.
Alfond said his bill would restore the revenue sharing 2 portion of the tax code to its original intent by increasing the threshold from 10 mills to the statewide average mill rate, currently 11.76.
This would decrease the number of communities that receive revenue sharing 2 funds, Alfond said, but would help those communities with a higher property tax burden receive more assistance from the state.
Currently, more than 300 of the nearly 500 cities and towns in Maine receive revenue sharing 2 funds, which has in many ways diluted the purpose of those funds.
The one caveat of LD 1835 is that it would be applied only when municipal revenue sharing is fully funded by the state, which means 5 percent of all state revenue. Alfond said that could take a few years.
The bill also was amended in the Taxation Committee to stagger the eligibility threshold over a period of four years to provide a smoother transition for towns.
Currently, $94 million is budgeted for revenue sharing in 2013, but if the program were fully funded, that would jump to $138 million.
Although some communities would lose money and some would gain money from the state under LD 1835, all communities would end up getting more money if revenue sharing is fully funded. The Maine Municipal Association has endorsed the plan.
The measure now goes to the House and Senate.
Great. There goes my property taxes up again. We will lose in our town.
The mil rate does not measure whether a town imposes higher taxes than average. The total taxes in a town depend on the spending, not the mil rate. The mil rate is a derivative calculation based on the total value of property in the town for a given amount of spending — towns with higher property valuations have lower mil rates for the same spending.
Augusta is still using technical manipulation to put patches on top of patches instead of addressing the fundamental problem of high spending causing high taxes. It only give the illusion of reform and the taxpayers are sick of it.
What you say may be true, but doesn’t LD1 force towns and cities to limit the rate of spending increases to 5% unless overridden by a local legislative body vote? I realize that’s not exactly what we’re talking about here(absolute level of taxation) but it’s closely related because it tries to cap yearly budget spending increases. Agreed that the mil rate is the total approved spending budget divided by the total property valuation.
Yes there is supposed to be a vote acknowledging and approving an increase beyond some limit and yes it’s a different issue. State aid (and mandates) cause higher spending.
Revenue sharing is a terrible idea that should be put to death immediately. If there is a true need for a municipal service, the locals will be happy to tax themselves to pay for it. When local officials are permitted to engage in the fiction that ‘Augusta is paying for it’ the result is always waste and abuse.