(UPDATED) Public Responds to LePage FY 2016-17 Biennial Budget (Day 2): Municipal Revenue Sharing

Posted on February 19, 2015. Filed under: Uncategorized | Tags: , , , , , , , , , |

UPDATED: Here is a clip of Bangor’s Ben Sprague providing similar testimony to Appropriations against revenue sharing elimination in 2014.

The 127th Maine Legislature’s Appropriation and Financial Affairs standing committee on Wednesday heard more from the public on the second day of scheduled testimony on the FY 2016-17 biennial budget proposal put forth by the LePage administration last month. Governor LePage and his new Office of Policy and Management (OPM) Director, Auburn Mayor Jonathon Labonte, held a public town hall in Westbrook last week to discuss the proposal.

AFA Committee member Rep. Gay Grant (D-Gardiner) asks a question of DAFS Commissioner Rosen, as Rep. Linda Sanborn, Sen. Linda Valentino, House Chair Rep. Peggy Rotundo and Rep. John Martin look on.

AFA Committee member Rep. Gay Grant (D-Gardiner) asks a question of DAFS Commissioner Rosen, as Rep. Linda Sanborn, Sen. Linda Valentino, House Chair Rep. Peggy Rotundo and Rep. John Martin look on.

Day 2 was focused on how the proposed elimination of municipal revenue sharing, a hot topic in the last legislative session, would adversely affect local budgets and force towns across the state to either cut services or raise property taxes. Many communities have already had to make drastic cuts due to the previous budget’s 32% revenue sharing slashes.

The following statements were part of a press release sent out by Maine House and Senate Democrats late Wednesday.

    Rep. Peggy Rotundo, D-Lewiston, the House chair of the Appropriations Committee: “The state cannot turn its back on local communities. Today we heard about the devastating impact that the elimination of these funds will have on schools, emergency services and property taxpayers, especially seniors trying to get by on fixed incomes and young families. We owe it to our towns and their residents and small businesses to protect these vital funds.”

    Appropriations Committee member Senator Linda Valentino (D-Saco): “We heard repeatedly from town officials across our state that the cuts to revenue sharing are detrimental and miss the mark. We should be looking for ways to reduce property taxes, not shift additional taxes on to homeowners. It was very disconcerting to hear from rural towns about the dire impact revenue sharing elimination would have on their communities since they have nowhere to turn like taxing non-profits as proposed by Governor LePage. No community should have to choose between underfunding and understaffing our public works or police departments in place of rising property taxes.”

    Winslow Town Councilor Ken Fletcher, a former lawmaker and LePage’s former energy chief, testified that the elimination of revenue sharing would result in the loss of approximately $940,000 – an amount that is greater that the town’s public works, police or fire budgets. He expressed concern about the increase in the property tax burden that would result from the loss of revenue sharing and the governor’s proposed elimination of the Homestead Exemption for those under 65.

    “It is generally accepted that property taxes are the most regressive of the three primary tax methods. Please do not place more of a burden on Maine homeowners by underfunding Revenue Sharing and eliminating the Homestead Exemption,”
    Fletcher said in his testimony.

    “Small rural communities like ours don’t have plush budgets. We don’t have administrators. We have no ‘rainy day’ funds,” Perry First Selectman Karen Raye said in written testimony presented to the committees. “People are angry at their increased property tax bills. This is only going to make the situation worse.”

Here are more statements from municipal employees around the state as reported by various Maine media sources:

    Brownville Town Manager Matthew Pineo: “There is no need to keep playing shell games (referencing LePage proposal to let towns tax large nonprofits). I’m in a poor community. We do not have money. I don’t have any taxable charities in my town.”

    Judy East, executive director of the Washington County Council of Governments: ‘There’s already significant regional collaboration on emergency response, dispatch, solid waste management, and there has been for many years. (If revenue sharing is eliminated) Taxes will go up or services will go down. There is no padding left in rural municipal budgets.”

    Kathy Littlefield, chairwoman of Waldo (town) Board of Selectman: (Doing away with revenue sharing would be the “final nail in the coffin” for the town of Waldo, which is already grappling with past cuts and rising costs for education, snow removal and other services) “If another partnership, another trust, another promise is broken, there will be no going back. There are just way too many nails.”

    Republican Bangor City Councilor David S. Nealley: “Since when do you, as Republicans, talk about taking away from the producers and redistributing the income?”

    Vincent Frallicciardi, chairman of the Madawaska Board of Selectmen: (Eliminating revenue sharing would result in the loss of $750,000 and be) “detrimental to our survival.”

    Joseph Slocum, Belfast city manager: “Does anyone in here really think these officials aren’t responsive to the concerns of local residents?”

    Town of Union employee (name unknown): “Another 10-12 hours of this [hearing] and you’ll feel like my public works drivers.”

Many thanks to Bangor City Council’s Ben Sprague for sharing his testimony.

Sprague via Twitter also provided many quotes from those testifying:

Thursday marks the third day of public hearing, so more to follow.

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RELATED:

Public Responds To LePage FY 2016-17 Biennial Budget (Day 1)

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Public Responds to LePage FY 2016-17 Biennial Budget (Day 1)

Posted on February 18, 2015. Filed under: Uncategorized | Tags: , , , , , , , , , , , , , , |

Governor LePage rolls out FY 2016-17 biennial budget proposal

Governor LePage rolls out FY 2016-17 biennial budget proposal

Back in January, Maine Governor Paul LePage and members of his administration presented the FY 2016-2017 biennial budget proposal to the state. Since then, various members of the administration have met with the 127th Legislature’s Appropriations and Financial Affairs standing committee (with other committees, as applicable) on multiple occasions, met with the public, and held numerous press conferences to sway not just members of the public but also their own party to support the proposals.

Now, it is the public’s turn to speak up. Maine House Democrats shared the following summarized testimony presented to the committee on Tuesday.

    Adam Lee, Lee Auto Malls: “The idea of lowering the tax rate for the wealthiest members of society is misguided…When my taxes are lowered it leaves less to be distributed to the municipalities. I get a tax cut and everyone else in town gets to chip in to pay for it through higher property taxes. Doesn’t sound fair? It isn’t…. My business depends on a strong middle class. I sell good old fashioned Dodges, GMC trucks, Nissans, and used cars, as well as other brands. A strong middle class is not helped by tax breaks for the rich. Competitive rates, and tax breaks for the middle class is much more useful. A skilled workforce is the one of the single largest factors determining where a business locates. Invest in education, training, our University and community College System.”

    Veteran and Nurse Richard Bissell of Bangor: “I’m here to oppose these drastic cuts proposed by the Governor for wealthy Mainers and corporations, especially when those cuts come at the expense of the middle class and poor Mainers…Property taxes are an impossible cost for many Mainers, from young couples and families that are in their first home up to seniors try to age in their homes.”

    Small Business Owner Carson Lynch of Gorham Grind: “This plan would cut taxes for the very wealthy while effectively raising taxes on the lower and middle income Mainers. Not only is this morally wrong, it will hurt Maine small businesses and ship money out of state….My small business runs on very small margins. I’m not a Starbucks or Dunkin Donuts. A change to Maine’s tax code could make or break my business.”

    Clam Digger Skip Worcester of Hermon: “I’m here today because I am deeply concerned with the Governor’s proposed cuts to income and corporate taxes in Maine…Corporations are making record profits in Maine but they are not paying their fair share in taxes – their taxes have been less and less and their profits have been higher and higher, it’s the reverse for us middle and lower classes. Our wages have stayed practically the same while the cost of living, heating and eating have gone up.”

Among others who spoke to the committee was Davida Ammerman of Madison, whose testimony is below.

    Representative Rotundo, Senator Hamper, Representative Goode, and Senator McCormick, thank you for having me here today to speak with you.

    I am here today to ask you to oppose the cuts to corporate and income tax in the Governor’s proposed budget. With this proposal, we will see the divisions increase between rural areas that are not so affluent and able to carry the cost, am\nd more affluent ones that will. In a town like Madison where I live, the option to tax non-profits is not a viable source of revenue, forcing the town to increase property taxes to continue being viable.

    Without a fair and balanced budget we will be forcing older people to lose their homes, and rural town are going to have a hard time keeping up with basic services like roads, law enforcement, and schools. Being on fixed income, it is hard to be able to conceive of paying more in sales and property taxes, and for the increase in services that I will need as I age. The Governor’s proposal puts revenue at recession era levels, and it doesn’t add up so that means we are going to see more cuts at the state level in future years. This creates a huge amount of uncertainty for us aging Mainers- we don’t know what we can count on. I don’t know that I will be able to keep my house, or if I will be able to pass it on to my children as planned.

    On the other end this is going to be very hard and discouraging for young people in Maine as well. Our daughter, a single mom just barely making ends meet, would have to sell her house that she has worked so hard to get if her property taxes go, if the Homestead Exemption is cut for Mainers under 65, and she loses the chance to deduct her mortgage payment. Young kids that are already fighting student loans and low wages will lose their chance to get ahead. So many kids are just getting by already- this is making the American Dream even more unattainable.

    If we are going to start taxing non-profits and cutting so many programs in the state budget, how is that going to affect funding homeless shelters and other organizations providing services for people who are just barely getting by and depending on these services for life support?

    I hate to see the American Dream being put out of reach for so many of the population.

    Thank You.

Quinn Gormley of Portland was kind enough to share her prepared testimony as well:

    My name is Quinn Gormley. I’m currently an undergraduate student at the University of Southern Maine in Portland, but I grew up in Damariscotta, where my father, a bus driver, and my mother, the director of our local library, still live and work today.

    For most of my life, my family has proudly belonged to the working class in this state. Growing up, my parents taught me the value of a hard day’s work, as my mother pulled sixty or more hour weeks, often with little to no pay, to keep the doors of the library open, and as my dad, who for my entire life has had to balance three different jobs just to help us make ends meet, waking up at 5 in the morning to drive a school bus, and often working late into the evening to get everything done.

    During the recession we were lucky. A school always needs bus drivers, and the library is valued by our community, so my parents managed to keep their jobs. Many in our town were not so lucky. And I so, as I read the details of this new budget, I am concerned. I am concerned that this budget is shifting the burden onto Middle Class families and families like my own are not going to be able to afford it.

    As a student who is used to examining things critically, when I look at this budget, I see the governor’s tax cuts as forced false choices that prioritize income and estate tax cuts for Maine’s wealthiest individuals and large corporations at the expense of property tax relief for families like my own.

    Every dollar in tax cuts is a dollar that will have to be made up for with spending cuts. It just doesn’t make sense to prioritize tax cuts that disproportionately benefit the wealthy and large corporations and leave the school bus drivers and librarians to fend for their own.

    As I navigate college with the hope to stay in Maine once I graduate, this budget does not seem to pave the way for a state with increased job growth, in contrast, states that have pursued this path in recent years have actually seen worse, not better, economic performance than neighboring states. They’ve had to cut state investments in education, and workforce training. I want to stay, work, and live in Maine but when my state pushes policies that hurt education, job training, and the middle class, I doubt that I can.

    This budget is the wrong path for Maine. It benefits a small percentage of Mainer’s, and the costs will be passed onto those hard working Mainers who are just trying to make it work. And so, I urge you; please oppose the cuts to corporate and income tax in this proposed budget. Thank you for your attention and all you do.

Democrats on the AFA committee later released their own statements:

    Rep. Peggy Rotundo, the House Chair of the Appropriations Committee: “We haven’t been getting the the full story about Governor LePage’s budget. I’m deeply concerned that the ratcheting down of state revenues in the out years will mean fewer dollars in the future for workforce development, education, and many of the very things businesses and workers say we need to succeed. We want a tax reform plan that is paid for now and in the future so we don’t jeopardize our support for Maine families, our schools, or workforce, or for our local firefighters and police.”

    Senator Linda Valentino (Saco): “I support tax reform but this budget sidelines Maine families at the expense of the wealthy and big corporations. We heard a lot of concerns from people today about the elimination of the mortgage interest deduction, the Homestead exemption, and the property tax deduction. If these deductions are eliminated, it will jeopardize Maine’s economic recovery.”

Maine Center for Economic Policy released the following reactions to the budget proposal and information. MECEP economist Joel Johnson’s full testimony can be found here. But these portions jump out:

MECEP economist Joel Johnson speaks before joint AFA, Taxation committees

MECEP economist Joel Johnson speaks before joint AFA, Taxation committees

    The combined fiscal impact of these tax cuts in FY 2019 is about $677 million per year, according to Maine Revenue Services. That’s a tax cut equal to 19% of General Fund revenue forecast for that year. The sales tax increases in the Governor’s budget don’t cover the cost of that tax cut, and as a result, the state must cut spending by $266 million in FY 2019. That spending cut will grow into subsequent fiscal years as the corporate income tax cut fully phases in.

    Approximately $167 million of the governor’s proposed spending cuts will come in the form of the elimination of revenue sharing to towns and cities. Faced with a loss of revenue sharing and struggling to meet obligations to fund K-12 education, state and local governments will have to raise taxes and/or cut spending. That means higher taxes and/or fewer services like snowplowing, public safety, road maintenance, libraries, and parks. The governor’s proposal saves an additional $12 million by eliminating the homestead exemption for most Mainers.

    The governor’s proposal fails to specify the remaining $90 million in state spending cuts it encompasses. In fact, the Governor’s budget only specifies a two-year spending plan while proposing tax cuts that span multiple budget periods. The income and estate tax cuts proposed in the Governor’s budget, combined with revamped arbitrary limits on state appropriation growth, will prevent the state from reaching the statutorily-mandated goal of funding 55% of the cost of K-12 education in the state any time in the near future. Yet the Governor’s budget proposal includes a target of 55% for Fiscal Year 2017 and beyond. That is not a credible, achievable objective given the income and estate tax cuts included in a different section of the same budget proposal.

Other points raised by MECEP for consideration:

    1. The governor’s tax cuts aren’t paid for and are fiscally irresponsible. They set Maine up for future fiscal crises, which will lead to deep cuts to education, health care, job training, and other foundational components of a strong, sustainable economy.

    • By fiscal year 2019, the governor’s plan cuts income, estate, and corporate taxes by $690 million and raises sales and use taxes by $424 million. That leaves a shortfall of $266 million. The governor proposes to make up this shortfall, in part, by eliminating $167 million in state aid to towns for local public services. Legislators will have to make up the remaining balance by additional spending cuts beyond those that have been enacted over recent years.
    • The governor’s plan locks in recession-era levels of revenue putting state spending as a share of the economy at historic lows. That means state funding for education, health care, and other services will continue to fall behind even as the economy recovers. It also means that Maine will have virtually no capacity to absorb unanticipated future expenses or to maintain critical public investments when the next economic downturn occurs.

    2. The governor’s tax cuts force false choices and prioritize income and estate tax cuts for Maine’s wealthiest individuals and large corporations at the expense of property tax relief for middle-class Mainers.

    • Every dollar in tax cuts is a dollar that legislators will have to make up by either raising other taxes or with cuts in spending for education and other services. At a time when the state is already failing to fulfill its commitments to Maine’s students and communities it doesn’t make sense to place a higher priority on tax cuts that disproportionately benefit the wealthy and large corporations. For example, eliminating the estate tax will cost over $37 million by fiscal year 2019 and benefit approximately 150 of the wealthiest estates. This potentially comes at the expense of making progress in funding K-12 education, supporting prescription drug assistance to low-income seniors, maintaining cost-effective health care prevention programs, or providing college scholarships to Maine’s future workers.
    • Part of the governor’s plan includes eliminating the Homestead Exemption for Maine residents under age 65 which is equivalent to raising property taxes between $120 and $160 for hundreds of thousands of Maine families. Additional property tax increases are likely for middle-class Mainers as communities are forced to pick up more of the costs of K-12 education, public safety, and road maintenance as called for in the governor’s budget.
    • While we don’t oppose cutting taxes, we believe it can be done in a way that doesn’t force false choices and that distributes the benefits more evenly across all income groups. Because this plan doesn’t maximize opportunities to export taxes to out-of-state visitors and part-year residents and places higher priority on tax cuts that deliver the greatest benefits to wealthy individuals and large corporations, it falls short in terms of securing adequate revenue and in improving the overall fairness of Maine’s tax system.

    3. The governor’s tax plan is a failed prescription for growing Maine’s economy.

    Note: As there will be weeks of hearings and work on the budget proposal, this will be part of a series of posts. This week’s testimonies will be broken up into daily installments of the highlights.

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    RELATED:

  • Sifting Through The LePage FY 2016/2017 Proposed Budget: DAFS Commissioner Rosen Meets With AFA
  • Sifting Through The LePage FY 2016/2017 Proposed Budget: LePage, MDOT Roll Out Over $430 Million In Projects
  • Sifting Through the LePage FY 2016/2017 Proposed Budget: DACF Meets With AFA, AG Committees
  • Sifting Through The LePage FY 2016/2017 Proposed Budget: DHHS Meets With AFA, HHS.
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(UPDATED x4) Maine Mayors Warn of Revenue Sharing Cuts, Tax Increases and Impact on Communities

Posted on January 15, 2015. Filed under: Uncategorized | Tags: , , , , , , , , , , , , , , |

Auburn Mayor Jonathan Labonte addresses media at Maine Mayors' Coalition press conference, urging lawmakers reject Governor LePage's revenue sharing cuts as part of FY 14-15 budget proposal.

Auburn Mayor Jonathan Labonte addresses media at Maine Mayors’ Coalition press conference, urging lawmakers reject Governor LePage’s revenue sharing cuts as part of FY 14-15 budget proposal.

(Originally posted 11 Jun 2013) Last week a press conference was held at the State House’s Welcome Center where leaders from Portland, Lewiston, Auburn, Augusta, Gardiner, Waterville, Sanborn and Bangor addressed the media and voiced concerns regarding the impact Governor LePage’s proposed zero revenue sharing cuts will have on their communities. Dozens more municipalities across the state have sent resolutions and communications to the Legislature protesting the cuts.

Augusta Mayor Bill Stokes said, “Maine communities have already absorbed a 30% cut in revenue sharing. This year, we are receiving just under $98 million, instead of the $140 million we would have received by law. Now there are proposals to cut that by $20 million a year or more. That will mean a significant property tax increase in Augusta.”

Karen Heck, Waterville’s Mayor, has long been outspoken in her criticism of tax cuts and how those cuts affect municipalities, as was her predecessor, Paul LePage. She laid out a bleak picture:

“Even the best of these (Appropriations and Financial Affairs Committee) proposals means a loss of nearly 50% million to municipalities over the next two years. We have been cutting services and trimming payroll for several years. We simply cannot absorb that kind of cut without raising taxes. Revenue sharing is an obligation, a bill the state should pay.”

She had spoken up the previous evening at a Waterville city council meeting as well, blasting the Governor’s proposal:

heck waterville

“This is really a ridiculous position for all of us to be in,”

      Heck said of the man who was mayor of the city from 2004 until he became governor in 2010.

“When the governor was mayor, clearly he used some profane language to describe exactly what he’s doing to us in a much worse way.”

She continued: “I’m not sure why the governor is interested in making sure hospitals get paid. But the mayors feel that the state needs to pay its bills when it comes to what it’s mandated to pay us in revenue sharing.”

Gardiner Mayor Thom Harnett noted that “we have a revenue problem in Maine and we need to look at additional streams of revenue”:

“We are calling on all legislators to commit to preventing this tax shift to the property tax. As we recommended in a letter to the Governor last month, this tax shift can be prevented by some modest shifts to the sales tax. The Mayors Coalition is supportive of proposals that temporarily raise the sales tax to 6% and raise the lodging tax.”

Jonathan Labonte, Mayor of Auburn, who noted that his city has been working to share services with nearby Lewiston for some time now, added that “Eliminating revenue sharing would effectively undermine the state’s 40 year cooperative agreement with municipalities. These are the revenues that keep your property taxes from skyrocketing and help to pay for municipal services such as firefighters, schools and road maintenance.

Also speaking out were Cathy Conlow (VIDEO), Bangor’s city manager, Maura Herlihy of Sanford and Lewiston City Administrator Ed Barrett for Mayor Macdonald (VIDEO), who mentioned at length the expensive, multiple fires his city had recently endured:

Mayor of Portland Michael Brennan (VIDEO) concluded by asking, “all legislators to work to prevent a property tax increase in virtually every community in the state.”

(Bonus: Q&A clip)

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UPDATE #1: Originally posted in June 2013 and oh, what a difference a year made. In June 2014, Governor Paul LePage selected Auburn Mayor Jonathan Labonte to serve as Office of Policy and Management director, as outgoing head Richard Rosen had been tapped to temporarily take over at Department of Financial Services for the retiring Sawin Millett.

    The chance to serve the state of Maine and the governor was one he (LaBonte) couldn’t turn down, he said.

“When a governor calls and asks you join their team, that’s a unique opportunity,” LaBonte said.

LaBonte said he did not believe his appointment had anything to do with election-year politics.

“If there’s anything political about this, it is the governor was eager to see this office created and is looking to see works delivered out of it,” LaBonte said.

DAFS Commissioner Richard Rosen presents the LePage FY 2016/2017 biennual budget to AFA, 1/13/15.

DAFS Commissioner Richard Rosen presents the LePage FY 2016/2017 biennual budget to AFA, 1/13/15.

Yesterday, the LePage administration continued to roll out the governor’s proposed FY 2016/2017 biennial budget as now DAFS Commissioner Richard Rosen, deputy commissioner Dr. Michael Allen and Labonte sat down with Maine media, a day after Rosen presented the budget to the newly seated 127th Legislative Appropriations and Financial Affairs Committee. This jumps out:

      LaBonte, who also is the director of LePage’s office of policy management, said Wednesday during a briefing with reporters that fears the proposal would decimate municipal finances are overblown.

He said in 2008 revenue sharing only accounted for 5 percent of municipal budgets statewide and that the figure had decreased to 3.5 percent by 2012.

“So revenue sharing is not a large share of those municipal budgets and certainly not a large share of what’s going toward those expenditures,” LaBonte said.

When revenue sharing was first put in place, its intent was to provide property tax relief. Because the funding was directed to municipal government and did not go directly to property owners, they never ultimately benefited, LaBonte said.

On Friday, Governor LePage attempted to minimize the effects of municipal revenue sharing and the impact its removal will have on Maine’s 460 plus cities and towns.

So same as 2013 Governor Paul LePage thought 2009 Mayor LePage wrong* on municipal revenue sharing, apparently 2015 OPM Director/ LePage team player Jonathan Labonte seems to now think that 2013 Auburn Mayor Labonte was making a big deal out of nothing.

*RELATED: Video: Did 2009 Waterville Mayor Paul LePage Rip 2013 Governor LePage For Revenue Sharing Cuts To Towns, Education Funding Failures?

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UPDATE #2: OPM Director/ Auburn Mayor Labonte has responded via Twitter in an interesting exchange as well as Bangor city councilor Ben Sprague:

When the email is received, it will be shared here. ~AP

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UPDATE #3: The February 2013 email exchanges between Auburn Mayor Jonathan Labonte, members of the Maine Mayor Coalition and legal counsel were shared by Labonte moments ago:

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(2/16/15) As Labonte continues to see his own position as not inconsistent, this post is being updated below with more conversations via Twitter today.

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