AUGUSTA — Further reductions in state aid to Maine cities and towns will result in cuts to essential services and skyrocketing property taxes, municipal officials told lawmakers on Wednesday.
Mayors, city council members and town managers are urging lawmakers to approve a measure that would prevent the reduction of $40 million in municipal aid next year — which is supposed to happen if lawmakers fail to agree on which tax breaks or cuts should be eliminated to find savings in the tax code.
But Republican Gov. Paul LePage’s administration and GOP lawmakers are raising concerns about how the plan to pay revenue sharing would cut some business tax incentive programs or dip into the state’s savings fund.
Maine’s municipalities typically received 5 percent of all state sales and income tax revenue, which would have been $138 million this year, according to the Maine Municipal Association. But significant reductions over the last several years mean that only $20 million will be left next year if these cuts go through, the association said.
Mike Chasse, a city councilor for Presque Isle, told the Appropriations Committee on Wednesday that his city’s budget is already in a “crisis situation.” Since 2008, state aid has been reduced by $1.3 million, or roughly 12 percent of the city’s budget, he said. If $40 million in revenue sharing is cut, the city would lose another $477,000, he said.
The city has had to eliminate full-time employees, shut down its outdoor pool and cut back on police and firefighters, he told the committee.
“We’re at the point of where we really cannot cut anymore without losing significantly from our community,” he said
But the plan to restore revenue sharing is already getting push back from Republican lawmakers and LePage’s administration.
Under the measure, the $40 million in state aid would be paid for by things like putting a 12-year cap on a program that provides tax reimbursements for businesses, eliminating a local property tax reimbursement program for some retail stores and dipping into the state’s budget stabilization, or rainy day, fund.
Taking money out of that fund, currently at about $60 million, will hurt the state’s bond credit ratings, Sawin Millett, commissioner of the Department of Financial and Administrative Services told the committee.
Republican Rep. Tom Winsor of Norway said local and state government needs have to be balanced with those of private sector workers and businesses.
“We heard lots of testimony from town managers trying to protect their budgets, but the people I’m most concerned about are the ones who are hard at work right now in a mill or a food processing plant,” he said in a statement. “Without a strong economy, we’re not going to have sufficient budgets to argue about.”
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