AUGUSTA, Maine — Lawmakers gave initial approval this week to a bill that would change how the state distributes tax revenue to municipalities.
LD 1835, sponsored by Sen. Justin Alfond, D-Portland, would kick in only once revenue-sharing is fully funded and would affect only the Disproportionate Tax Burden Fund, commonly known as “revenue-sharing 2.”
Currently, all municipalities are supposed to receive 5 percent of state revenue from taxes and other fees to help 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.
“Revenue-sharing 2 should be more than an artificial number but something that has statewide significance,” Alfond said Tuesday.
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, he said.
The Senate passed the bill 19-15 on Tuesday, with four Republicans joining all Democrats in support. The House took up the bill on Wednesday and, after little debate, voted 82-63 to accept the majority “ought to pass” report.
LD 1835 still requires additional votes in both chambers.
Among the concerns is that the proposed change would decrease the number of communities that receive revenue-sharing 2 funds and give more assistance to communities with a higher property tax burden.
Sen. Doug Thomas, R-Ripley, was among those who opposed the measure.
“To fully fund revenue-sharing and then take the bulk of that money and give it to communities that can’t control their spending is a policy decision that’s going to wreak havoc with the whole state,” he said Tuesday. “We don’t need to create incentives for people in the state of Maine to spend more tax money.”
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. 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, Alfond said.
The Maine Municipal Association has endorsed the plan and it passed 10-3 through the Legislature’s Taxation Committee last month.
Follow BDN reporter Eric Russell on Twitter @BDNPolitics.
The problem, as I see it, with using the mill rate as the yard stick is that it is not considering whether the property is properly valued. If a valuation has not been done in recent times, the mill rate may be artificially elevated. As for Senator Thomas’ comment about rewarding communities that can’t control their spending, I say that most local people work very hard to control spending. Yes, there are problems out there, but most towns are having a difficult time what with state and federal funds drying up. I don’t believe it is ever their intent to spend in a irresponsible manner.
How many big spending politicians and pressure groups ever admit to being irresponsible?
Oh my gosh, if you consider local assessors/council members “big spending politicians,” you live in a different universe than most of us Mainers. I am beginning to wonder if you live in Maine.
Local spending and property taxes are outrageous, especially for the bloated, failing government monopoly school system. Some towns are worse than others and some of it is due to state mandates. Those who take these spending levels for granted will not acknowledge the irresponsible burden imposed on taxpayers, just as those who falsely claim that reductions in the high and ever increasing levels of state spending and taxes to which they think they are entitled are “fiscally irresponsible”. Such people always want more and think they are heroically suffering when they “only” get the current high levels.
dl, it’s a complicated formula, but, although your instincts are good, the 10 mil (soon to be 11.76) threshold is based on state valuation, not local, which is the same number used to determine a town’s county and school assessment. Which is a completely different line of BS the state likes to serve! And ms, none of them, but my town’s spending decisions are made at town meeting, if there are ever any big spending politicians there, they don’t say much!
Brain cramp about the valuation being the state valuation. Thanks for setting it straight.
Revenue-sharing is a very good thing for service-center communities like Bangor.
Every day, tens of thousands of people from surrounding towns put wear & tear on our roads and use the services of our police and fire dept and water & sewers. But who pays for it? Only the residents of Bangor. How do we pay for it? By having a high tax rate.
It is not out-of-control spending Mr. Thomas, it is that some of us have to pay for your use of our services. I bet you’ve spent a lot more time in Bangor than I have in Ripley.
Cities tax the businesses there for such services as “roads” and “police”, but most local taxes go to the failing government monopoly school system, for which business owners pay twice — at home and for their business. The “roads”, contrary to the latest leftist slogan, are not the cause of Maine’s high spending and taxes. The drive to tax people for “service centers” where they do not live is another fallacious excuse to impose more taxes and is taxation without representation.
Certainly schools are a large part of a local budget, but all the other stuff adds up, and quickly. Does your town have to have a police force for a daily population of 60,000 when only 30,000 actually live here? Does your town have a sewer treatment plant, and particualrly one that is oversized in order to handle all of the out-of-towners? Does your town provide social services to a region nearly as large as Connecticut? Does your town have to have a bus system to get these people around? Is your town required to provide stormwater treatment for all of the roads and parking lots that are built for the thousands of extra drivers than its actual population?
Thats an awful lot of “extra stuff” that I have to pay for that you don’t. And yet, you get the benefit of all of this each time you visit Bangor. Good for you for getting off cheap, but I really do wish you’d pay your fair share.
“Taxation without representation”, contrary to the latest tea party slogan, is certainly not the situation in this case.
Most of us avoid going to Bangor and in any event have no collectivist “fair share” that you demand, including any duty to pay for your “social services” redistribution. School taxes are typically about 70% of local spending (what is it in Bangor?). For legitimate expenses Bangor has an enormously larger population than rural towns and has businesses that prosper from customers and help pay for the infrastructure there. Imposing taxes on non-residents to subsidize your government is not only taxation without representation, it is the unethical ‘export taxes’ mentality attempting to extend the reach of government power over people who have no say in it.
Apparently you do not understand how this works. When a small town that does not have the essential utilities and has to have a next door bigger town provide this, the little town does not get that for free. Through their taxes the little towns pay for the services they get from the bigger towns. And usually the fees are more then what the citizens of the larger town would pay in taxes. And Bangor has the 95 thru way that is being fully funded by the federal government. Having that interstate 95 allows a great deal of money to filter into Bangor. People from all over spend money in your town and that supports the ware and tear of their trips on your roads. Im sure that Bangor tax base is high but it could be that the education department and the labor and health care cost that the city has to provide their employees, and the cost of just running a city the size of bangor is. Just saying.
There is more to this than cross-municipal service districts.
Bangor’s population almost doubles during work hours. Yes, some of those people live in towns that are charged for using the services (i.e. parts of Hampden and Hermon use Bangor’s sewer plant). Most do not.
So who is stuck with the bill for the other 15,000 or so people not coming from Hampden or Hermon? Bangor citizens. Interstate 95 runs through hundreds of towns in the state that do not provide the services Bangor provides, so that argument is invalid.
When all those none citizens of Bangor are there during work or play hours they drop tons of money on Bangor businesses. And in turn the Bangor businesses pour that money into the coffers of Bangor in one way or another. So I think that your theory of none Bangor citizens costing Bangor gobs of money to repair what ever they are tearing up and in turn raising your tax base to pay for such repairs is a little bit overstated. You need to look else where for other reasons why Bangor’s taxes are so high and i’m sure you will find answers to your over reaching statements. I provided a few in my prior comment above. Education alone is more then half of your tax base. I doubt that road repair is more then 5% of the Bangor tax base.
MAP 14 Police Command Staff 7/1/10 6/30/12: MAP 60 Police Officers 7/1/10 6/30/12: Teamsters 14 Police Support Staff 7/1/10 6/30/11(2): IAFF 87 Firefighters 7/1/08 6/30/11(2): BFPE-AFT 13 Motor Pool 7/1/07 6/30/10(2):
AFSCME 4 Airport Aircraft Mechanics 7/1/11 6/30/12: AFSCME 6 Aircraft Weather Observers 7/1/11 6/30/12: AFSCME 23 Ramp Supervisors & Attendants 7/1/08 6/30/11(2): AFSCME 14 Airfield & Building Maintenance 7/1/11 6/30/12 : MSEA 10 Airport CSRs & PT Ramp Attend. 7/1/10 6/30/12: AFSCME 55 Public Works 7/1/07 6/30/10(2): MEA 250 School Teachers 9/1/11 8/31/12: MEA 34 School Instructional Ass’ts 7/1/11 6/30/12: AFL/CIO 17 School Administrators 7/1/11 6/30/12: MEA 40 School Support Staff 7/1/11 6/30/12
There are a lot of wages and retirement and health care going on here that takes a huge chunk of your tax monies.
You dig a little harder and you will find where your taxes are really being used and that the commuters to your fine city of Bangor are not the ones that are causing your taxes to soar.
This is not a tax cut it is cost shifting. Lair Lepage’s budget is 1/2 a billion dollars higher than the last Governor’s budget .
So typical of Mr. Thomas and so discouraging……
Oh please he is making sense this is another disguise to give tax hikes and spending increases at the local level. Revenue Sharing is a farce most towns end up blowing the money on foolishness and then want more because they can’t stop their spending habits and giving all their friends town jobs. That is why its a shame TABOR in some form never passed . I think you would see alot of the wasteful spending and other pet projects ended and the money would go to what its supposed to do and that is grow jobs, incomes and population.