Mid-Coast communities brace for state budget fallout
TOPSHAM — With the Legislature set to vote on a $153.2 million supplemental budget to close the state budget gap, lawmakers will soon turn their attention to Gov. Paul LePage's biennial budget proposal – one that has raised alarms for local officials.
"It's still early and we'll see how things start to look and see whether we have to do a combination of cuts in services and (property tax) increases," Topsham Town Manager Cornell Knight said.
Knight said if the governor's proposal to suspend the state's municipal revenue sharing program is approved by the Legislature, Topsham could lose as much as $720,000 from that program alone. He said the suspension of revenue sharing combined with other proposed cuts could increase the property tax rate by about a dollar.
Eric Conrad, spokesman for the Maine Municipal Association, which represents more than 200 municipalities in the state, said LePage's budget proposal represents a $420 million shift in costs from the state government to local communities.
"This is really taking state government spending and transferring it to local property tax payers," Conrad said. He said the Legislature's decision to cut income taxes last year accounts for about $300 million of the budget gap the state is trying to address.
To illustrate the possible impact LePage's budget proposal could have on towns, the MMA introduced a new website last Friday called "Tracking the 2014-2015 Budget." The website can be reached at at mainetaxshift.memun.org, and it includes aggregate data on how every town in the state could be impacted by the various budget cuts.
In the Mid-Coast area, Brunswick could be the biggest loser.
According to the MMA, the town could lose more than $2.1 million between the proposed suspension of revenue sharing and changes to excise tax for its fiscal year 2014 budget.
That figure, however, is based on the amount Brunswick is supposed to receive according to state statute, not what it's currently receiving, Town Manager Gary Brown said.
"It's been reduced by the state for every year since the last several years," Brown said.
For the current fiscal year, Brunswick is only receiving nearly $1.6 million from the state revenue sharing program, so the town's potential budget gap from a suspension of revenue sharing would more likely resemble that number, Brown said.
Brown said the town is currently planning to present Brunswick's first draft of the budget on April 22.
While many critics of the LePage budget proposal have characterized it as a major shift in costs to local taxpayers, the governor has defended the proposed cuts.
"A temporary loss in revenue sharing does not mean that property taxes will automatically go up," LePage said during a radio address in January. "That is a local choice."
Brown doesn't buy it.
"I think that's an unrealistic response from the government," Brown said. "For us to cut $1.5 million out of the municipal budget, it would be a reduction of services and programs."
William Giroux, Bath's city manager, said the city isn't acting as if the "sky is falling yet," but if the city decides to cut services in order to decrease the tax burden on its people, "it would have a significant impact on employment."
Giroux said the city's preliminary estimate for projected losses from the suspension of revenue sharing is about $790,000, or about 5 percent of the budget.
"We won't begin the budget process for several weeks and the (City) Council won't be discussing it until April, so there is time to see how this shakes out in Augusta," Giroux said. "The council has not discussed sending a letter of concern. I think the Legislature knows that we're all concerned."
The proposed suspension of revenue sharing and cuts to local excise tax are not the only things towns should be concerned about, Conrad said.
"There are five or six disconcerting parts of (LePage's) budget," Conrad said.
These include proposed cuts to the Homestead property tax exemption for homeowners under age 65, the Circuit Breaker exemption for renters and homeowners under age 65, and General Assistance funds for each town.
The town of Harpswell is currently planning its budget with the assumption that revenue sharing won't be fully suspended, Town Administrator Kristi Eiane said. But because of the town's small size, the proposed cuts to the tax-exemption programs are the larger concern.
According to preliminary numbers from the town, more than 900 residents would lose the Homestead exemption and nearly 160 would lose the Circuit Breaker.
Harpswell's budget goes to Town Meeting voters on March 9, which means the town may have to revisit the budget later, depending on what the state biennial budget looks like when it's finished in June.
"It does make it difficult," Eiane said.
Conrad said MMA's concern is it may be hard for the Legislature to find a good compromise for local communities.
"It's a long way to go between now and June," he said.