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South Portland City Council opposes excise tax initiative, sets new fees for developers

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South Portland City Council opposes excise tax initiative, sets new fees for developers

SOUTH PORTLAND — The City Council unanimously approved a resolution Monday night against a statewide initiative to slash excise taxes on vehicles less than 6 years old.

The council also approved a new policy to charge developers for independent consulting and peer review costs associated with site plan applications and also approved the purchase of a new telephone switchboard.

On Nov. 3, voters throughout the state will be asked to reduce the excise tax on newer vehicles by an average of 55 percent. The initiative would also eliminate sales tax on the purchase or lease of hybrid vehicles that get more than 40 miles per gallon and exempt these vehicles from the excise tax for three years.

Municipal officials around the state are lining up against the initiative, since the excise tax is a major source of revenue for cities and towns. 

City Manager Jim Gailey said excise taxes are the third biggest revenue stream for the city, bringing in about $4.7 million annually for year-round road maintenance.

If voters approve Question 2, he said the city would be faced with a 40 percent, or $1.9 million, reduction in revenue, creating a major budget gap. That gap would have to be closed by raising the local tax rate by 48 cents per $1,000 of assessed value, based on 2008 numbers, Gailey said, or by making substantial cuts to services and staff.

Those decisions would have to be made quickly, since the reduction would be effective in January, halfway through the fiscal year. 

The city contends that corporate and business fleets, which are frequently updated, would benefit the most by the initiative since 68 percent of the vehicles currently on Maine roads are more than six years old. Nearly 30 percent of vehicles currently registered in South Portland would see no reduction in costs, Gailey said. 

The council's unanimous decision on the zoning ordinance amends an ordinance that allowed the city to charge developers only for the cost of technical services not offered by the city.

The new policy requires developers to pay the cost of all third-party reviews before their site plans are considered. The city will deposit the money in an escrow account to pay for services deemed reasonable by the planning and development director. No building permits or occupancy permits will be issued until all review costs have been paid.

Developers will have 10 days to appeal the cost of review services to the city manager.

The new telephone system replaces a 5-year-old switchboard and will cost about $100,000. 

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net