Special Education Costs
Internet Tax and Tax Policy
Y2K & Municipal Liability
Combined Sewer Overflows
Reauthorization of the Federal Aviation Administration
Most Beneficial Federal Programs
1999 Federal Issues Paper
Submitted by Maine Municipal Association
As Congress reestablishes its focus, the Maine Municipal Association believes one of the first orders of business should be to honor existing commitments and to rebuild the federal governments partnership with state and local governments. This Issues Paper identifies a number of specific program areas, such as special education funding, in which the federal government has fallen far short of funding the commitment which has "been on the books" for many years. In other areas, such as Y2K legislation and electronic commerce, we urge members of Congress to restore and respect state and local government authority and responsibility.
We appreciate the commitment of members of Maines congressional delegation to uphold Maines strong tradition of local self-government. As you work with other members of Congress, we offer the following guide posts for your consideration:
Before establishing new programs and requirements, ensure that current programs and commitments are fully funded;
As legislation is considered, ask what, if any, role is appropriate for the federal government. Is the issue more appropriately handled at the state or local level? Often the most important contribution from the federal government would be financial assistance that can be utilized efficiently, without cumbersome federal requirements.
Allow for flexibility - the proverbial "one size fits all" difficulty of tailoring legislation to apply to wide ranging needs and situations.
Respect state and local government authority and processes. State legislatures and local elected officials are very close to their citizens and have a solid record of establishing effective programs and processes. In recent years, the federal government has increasingly intruded upon, and in some significant instances, preempted state and local authority.
Dont shift costs and responsibilities.
|Special Education Costs|
|"Outrageous... the singular most crippling cost to affect
our town... special education costs alone represented a 2 mill increase in property tax...
has been absurd for years... out of control... the 40% intention hasnt been
fulfilled by the federal government for special education ... a huge unfunded
"Our school costs here are so high (74% of the budget) that were primarily on our own... Special Education costs take up a good part of the school budget."
"It is a high cost and its unpredictable. You dont know how to budget for out-of-district placements."
|A top priority for Maines Congressional
Delegation should be to honor the commitment of Congress to fund 40% of the per-pupil
costs associated with the special education requirements mandated by federal law.
It is our understanding that when Congress enacted the Education for all Handicapped Children Act, now known as the Individuals with Disabilities Education Act (IDEA), it pledged to back that enactment with meaningful financial support (40% of the per-pupil costs) to our school units. That pledge, to our knowledge, has never been honored. A recent analysis indicates that the level of federal support for the special education programs across the country is 7%, and that same national rate of underfunding special education holds true in Maine.
According to the data available for the most recent year of study (FY 97), the total cost of special education in Maine was nearly $187 million. Of that total, the federal government provided $13 million (7%), the state government provided $21 million (11%), and the local property taxpayers provided $153 million (82%). It is our understanding that some additional dollars were appropriated to IDEA in 1998, but not in an amount that would change these orders of magnitude.
Under the stated intention of Congress, the federal government should be paying 40% of the per-pupil costs of special education. The true per-pupil cost of special education in Maine is $5,300 over and above the base costs of educating all students, which by itself is approximately $5000. There are over 33,000 special education students in Maine. If the federal government were to honor its commitment, Maine would be receiving $70 million a year in special education reimbursement, not $13 million a year.
Federal funding is also needed to help schools meet their obligations that flow from the Americans with Disabilities Act. Under the ADA, schools must provide services to children who have disabilities like Attention Deficit Disorder but who are not eligible for help under the schools special education programs because they are not learning disabled.
The impact of Congress decision to underfund special education programs is extremely significant on the local level in terms of dollars. Special education costs are also completely unpredictable from municipality to municipality in terms of budget impact, and the sharply disparate impact among Maines municipalities is fundamentally inequitable as different school systems, for a variety of reasons, have different special education populations. This can also create tension and unfortunate divisions within a small community when additional local funds must be sought on the floor of town meeting to cover unanticipated special education needs. What is most unfortunate is that Congress decision not to honor its financial commitment in this area breeds bad feelings and distrust on the floor of our town meetings because it seems as though our school departments dont know how to budget for their needs. We should never be put in the position to have a special town meeting to raise the money for sudden special education demands, but that is exactly the position that Congress has put us in.
The top priority of Congress should be to fund existing mandates, including its cost-share commitment for special education. Before Congress and the Administration enact new school related initiatives and funding, we believe it is imperative that current programs and commitments should be fully funded. Congress should be concerned about creating such a far-reaching mandate and not fully funding its cost-share commitment to the various programs that it requires. When the Maine Legislature recognized that the states tax revenues were finally rebounding from their recessionary weaknesses of the early 1990s, the first priority of the Legislature was to "honor its commitments". We only can hope that Congress will be of the same point of view.
|Internet Tax and Tax Policy|
|"There must be no inducements for shopping in tax-free
stores. If theyre paying the same costs... its competition."
"Now were building back again downtown. I wouldnt want to see anything happen to that."
|The recently enacted Internet Tax Freedom Act
provides a three-year moratorium with respect to the application of any new taxes on
Internet transactions. During the moratorium, the new Advisory Commission on Electronic
Commerce will work out, hopefully for once and for all and with respect to both electronic
commerce and mail order commerce, the issue of "nexus". "Nexus" is the
jurisdictional relationship that must exist between the governmental entity that levies a
tax and the person or entity that is liable. Several years ago a U.S. Supreme Court
decision concluded that only Congress could resolve the issue of nexus as it relates to
remote commerce, which at the time was catalogue sales and now includes electronic
In general terms, the original thrust of the Internet Tax Freedom Act legislation was to shelter electronic commerce from taxation on the theory that it was a "fledgling" industry which needed protection from the rapacious taxing appetites of state and local governments. During the course of the legislative process, the tone of the legislation changed from the creation of a necessary tax haven for a weak, start-up industry to the creation of a short-term moratorium for the specific purpose of developing rational and uniform guidelines in light of the rapidly transforming patterns of commerce.
There is no denying that electronic commerce is fast becoming a major force in retail sales. Any claim that Internet commerce is a fledgling industry in need of extraordinary protection is an example of what certain interests will say in order to retain a 1950s-era tax code in America. Between on-line retail sales and business-to-business commerce, sales on the Internet are expected to be in the trillions of dollars by 2003.
MMA has consistently communicated to the Congressional Delegation urging the shortest moratorium possible, with a clear charge to the Commission to focus on both electronic commerce and mail order commerce, particularly in light of the fairness of allowing those types of transactions to avoid a sales tax, when the Main Street retailer may not. The heart and the core of many town and city downtowns in Maine depends on the vitality of Main Street retailers, and that vitality is threatened by the creation of a patently inequitable system of taxation. Furthermore, as the municipalities of Maine are clearly aware, the state is operating on a 1950s sales tax code as it is, and electronic tax-free zones only exacerbate that problem.
At this juncture, we are very concerned about the make-up of the Commission, which appears stacked against Main Street retailers and local government. As the Commission is currently constructed, it is hard to believe the outcome will protect existing retail trade from unfair competition, preserve the tax base for local services, and make sure that taxes will be imposed on the same basis for any kind of transaction.
It is important for Congress to understand the imperative of creating an absolutely equitable tax system that does not disadvantage the Main Street retailers in Maine. It is also important to know that we need help from Congress in developing a clear definition of nexus, but that congressional preemption of the legitimate taxing authority of state and local governments is not appropriate.
Bradley is a thoroughfare between truck-intensive towns. Wed love to see the traffic focused toward the highways which are better built and can sustain traffic of that nature."
""Its killin us, especially on our bridges. Heavy vehicles are really rough on the roads and bridges... We do have a fair amount of trucks that cut right through Denmark. We had a tractor-trailer jackknife in the center of town at the monument. Denmark is used as a `cut-through town for trucks."
A lot of our economy and business growth here is based on the trucking industry... There should be a higher weight limit on I-95 because the interstate should be able to support the high weight limit as opposed to the local roads they cant stand the weight of the large vehicles."
|Trends in Federal Highway Funding
Under the first six-year federal highway-funding program, ISTEA, Maine received $705 million between 1992 and 1997. Under the replacement program, TEA-21, it is anticipated that Maines share of the available federal funds will increase by 5.6% for a total six year (1998-2003) allocation of $745 million. One of the most important differences between the two programs is that except for a one-time adjustment to the cash balance of the Highway Account from the Highway Trust Fund made on October 1, 1998, all gasoline fuel tax revenue will be returned to the Highway Trust Fund. Previously, the revenue generated by 4.3 cents on the fuel tax was used to decrease the federal deficit.
As is illustrated in Table 1, between 1997 and 1998 Maine experienced an 18.5% decrease in federal funding. This occurred for two reasons. First, Maine experienced a 74% decrease in what was called, under ISTEA, "Demonstrations Funds" ($182 million) and what is now called "High Priority Project Funds" ($47 million). These funds are typically used for "special" projects such as the Donald Carter and the Casco Bay bridges. Second, although under TEA-21 the funding formula was changed, the change did not occur until FY 99. The new funding formula requires that states receive 90.5% of all federal fuel tax revenue generated in the state. According to the Maine Department of Transportation, the states TEA-21 allocation is roughly the same amount as the fuel tax revenue generated by the state.
ISTEA & TEA 21
ISTEA 1992 ....... 93,664,000 .........................
1993 ....... 120,421,000 .................. 28.6
1994 ....... 120,150,000 ................... -0.2
1995 ....... 124,131,000 ................... 3.3
1996 ....... 116,304,000 .................. -6.3
1997 ....... 131,231,000 ................. 12.8
TEA 21 1998 ....... 106,990,000 ................. -18.5
1999 ....... 123,325,000 .................. 15.3
2000 ....... 125,391,000 ....................1.7
2001 ....... 127,705,000 ....................1.8
2002 ....... 130,030,000 ...................1.8
2003 ....... 132,337,000 ....................1.8
Over the next six years Maine will receive an average federal Highway Fund allocation of $124 million/year. Maines FY 99 allocation will be distributed in eight different project categories (see Chart 1). Nearly two-thirds (65.5%) of Maines 1999 federal allocation will be spent on surface transportation, the National Highway system and on interstate maintenance.
Interstate Weight Limits
Maines limited highway system provides vital links in a state that is geographically great and lacking in transportation resources that other states enjoy. Adding increased pressure is the 80,000-pound weight limit imposed on federal highway transport. The Federal Highway Administration (FHWA) would impose crippling financial sanctions on Maine if state law is amended unilaterally to increase allowable weights or lengths on the Interstate. The price Maine is asked to pay for continuation of these funds includes dangerous conditions on local roads and the destruction of life and property as heavily loaded trucks are forced to leave the Maine Turnpike at Augusta, where the highway becomes Interstate 95, and travel the local roads of Maine to destinations north, east, and west of Augusta. Close to 2,000 trucks per day have been counted at the intersection of North Belfast Avenue and Bangor Street in Augusta.
Federal law attempts to provide a uniform weight limit on the Interstate System but with myriad exemptions and grandfathering provisions, it is complicated and not at all uniform. While 100,000 pound trucks can not travel on I-95 north of Augusta, they are allowed on the Maine Turnpike, all of I-95 in New Hampshire, the entire interstate network of Massachusetts, including the Massachusetts Turnpike, and many interstate highways of New York, including the New York Thruway.
New Brunswick allows 127,861 pound trucks under certain configurations. Separately, under the North American Free Trade Agreement, the US, Mexico, and Canada agreed to work toward making their transportation standards compatible.
The most straightforward short term statutory change that would benefit Aroostook County, and all of Maine that lies north of Augusta (from Augusta to Fort Kent is 261 miles), would be Congressional action to allow 100,000 pound trucks on I-95 from Augusta to Houlton. In a recent letter (January 11, 1999), Governor Angus King recommended that federal law be amended to "[i]ncrease the gross vehicle weight limit for six axle combination vehicles from 80,000 pounds to between 90,000 and 95,000." We also ask that you support that recommendation.
Maine needs federal action to relieve local streets of this hazard. The 80,000-pound weight limit protects federal highways at the expense of local streets and the citizens who must share roadways and rotaries with these heavy trucks. The Maine Turnpike exemption granted by Congress was extremely controversial and its success was due to the diligent efforts of Maines delegation. Maines municipalities ask you to continue that diligence in developing rational interstate laws that work for Maine.
|Y2K and Municipal Liability|
do think that municipalities deserve some sort of protection."
|Federal legislation should limit liability so that
Y2K problems and issues can be dealt with openly, expeditiously, and with the greatest
shared effort possible. While the "Year 2000 Readiness and Disclosure Act,"
signed into law last fall, will protect municipalities from having Y2K disclosure
statements used against them as adverse evidence in a Y2K lawsuit, the law does not
protect local governments from liability for attempts to remedy the Y2K problem.
The U.S. Chamber of Commerce proposes Y2K legislation that, with suggestions of the municipal community incorporated, has the potential to protect municipalities from lawsuits. The proposed bill would provide these standards for Y2K litigation:
Establish a separate, temporary Y2K court system, based on the current bankruptcy court system, to hear only Y2K cases. These courts would cease to exist on December 31, 2002.
Limit the type of actions that could be brought for Y2K liability against municipalities. No claims for non-economic damages would be heard without clear and convincing evidence of lack of good faith.
Permit cities and towns to bring contract actions against manufacturers for Y2K problems.
Limit attorneys fees.
Provide for mediation for Y2K disputes in order to avoid litigation.
Place an affirmative duty on claimants to mitigate damages.
MMA recommends that the 106th Congress enact legislation to limit municipal liability for Y2K problems, but that does not preempt state laws that may have been enacted to limit such liability.
|Combined Sewer Overflow|
thought out environmental initiatives that come with specific funding are needed.
|Combined sewer systems collect sanitary sewage
during periods of dry weather for conveyance to wastewater treatment plants for treatment.
However, during wet weather events, combined sewers also receive storm water, which
typically causes a hydraulic overload of the system triggering the discharge to receiving
waters of untreated or partially treated wastewater through combined sewer overflow
outfalls. Controlling or eliminating CSO discharges is an enormously expensive proposition
that often requires communities to rebuild some or all of their sewer systems. CSO control
programs generally pose the single largest public works projects in the history of almost
every CSO community. In Maine, at least 53 CSO communities face this requirement.
MMA urges Congress to enact legislation to allow the CSO problem to be addressed in the most cost-effective and expedient manner possible. Legislation proposed for the 106th Congress consideration, the Combined Sewer Overflow Control and Partnership Act of 1999, would provide CSO communities with the flexibility and financial resources required to deal most effectively with this issue. This legislation proposes to make grants to municipalities for planning, design, and construction of facilities to intercept, transport, control, or treat combined storm and sanitary sewer flows. The federal share grants of 55%, detailed in the bill, should not prohibit use of the State Revolving Loan fund money. The most effective means of achieving the important water quality goals of this bill is to allow the combined use of grant funds and loan funds for individual projects.
|Reauthorization of the Federal Aviation Administration|
|The responsibilities of the Federal
Aviation Administration (FAA), which include aviation security, aircraft noise standards,
administration of the airport aid program funded by the aviation trust fund, and safety
standards have historically been reauthorized every three years. The current short-term
FAA extension expires on March 31, 1999. If reauthorization lapses, so will funding for
safety, security, and noise abatement grants. Delayed construction funding will adversely
impact cold weather cities in Maine. Airports are important economic generators for
municipalities and a vital link for Maines citizens for travel within and outside
The Airport Improvement Program provides federal funding for infrastructure improvements to Maines airports. Sources of the funds include jet fuel tax, passenger ticket sales, and taxes paid by package delivery services. In 1997, the Airport Improvement Program provided Bangors airport with $1.5 million in funding, Portlands with $1.7 million, and Presque Isles with $500,000. Currently, Portland plans to use the Airport Improvement Fund revenues for improvements in its runways and lighting in order to ensure safe landings in foggy weather.
It is especially important that airports in Maines small cities and rural towns continue to receive essential air service funding to ensure that all citizens have access to air transportation.
|"Houlton would encourage opposition to any legislation
that would remove local and state appeals processes. Local control is necessary or all
citizens lose. Local people understand problems locally."
"This legislation just provides another avenue to circumvent [local appeals processes]. When you allow them that step, youre circumventing the vision of the local community."
|The National Association of Home
Builders (NAHB) has pledged to support a new legislative effort in the 106th Congress to allow developers to
challenge local officials in federal court without first using local and state appeals
processes. The NAHB maintains that legislation is needed in response to local, state and
federal governments practice of delaying takings claims hearings by forcing property
owners to exhaust administrative remedies before the claim can be heard in federal court.
Maine has implemented a very effective mediation process to address takings claims, and it
would be an act of arrogance for the federal government to preempt the effective review
and appellate procedures that already exist at the local and state level.
"The desire [of developers] to avoid local appeals is understandable but not wise. Local officials dont do that [takings] unless they find it absolutely necessary. Thats what the local appeals process protects."
"Its the case of one shoe doesnt fit everybody. Each town should have the right to choose how they want their land in town to be zoned."
|Many of our constituents have expressed concern with ever expanding public lands acquisition. We should only support public lands acquisition proposals to the extent that they are fiscally responsible, guarantee public access, establish limits on how much land the government will own, and ensure that municipalities are not made vulnerable as state and federal tax exemptions significantly narrow the property tax base.|
|Fair Housing Act Amendments are expected and have the potential to resolve many of the problems municipalities have with the siting of group homes. These problems include over-concentration of group homes, safety, and preemption of local authority.|
general area, we have people who work in the woods industry. There have been some problems
in the area with bonded Canadian labor. Thus, we support any American labor initiative.
Free trade is not free... Here in our area we need to take a closer look at NAFTA to
ensure that we are on equal ground with the Canadians. The federal government should be
looking out for Americans just like the Canadian government looks out for their
NAFTA did a great thing... for Canadians! Were really good neighbors."
|As a border state, Maine faces
neighbor-relations problems unique to states that are similarly positioned. The issues
causing tension along Maines border with Canada include immigration, with its effect
on the labor market and employment, and the North American Free Trade Agreement (NAFTA),
with its impact on Maine businesses.
Maine is a major point of entry for illegal aliens. Many such illegal aliens are deported from Canada through Houlton. These people must be provided with housing and subsistence while their appeals to the Canadian government are processed, an effort that may take many weeks. Maine municipalities also absorb the costs of transporting immigrants to other states in extradition proceedings.
Maines municipal officials expressed these concerns in preparation for Maines Federal Issues Paper:
"Were being killed! As we live right on the border, the only thing free about the free trade agreement is that our citizens are free to shop in Canada. New Brunswick often puts up taxes to make it difficult for their citizens to shop in Maine...It is too easy for a Canadian to work, have a business in the U.S. We work with Woodstock (right across the border)... the U.S. Government is honoring its commitment to Canada while Canada isnt honoring commitment to the U.S. There isnt much constituency at the federal level for this issue (mostly rural areas along the border). With most of Maine being surrounded by Canada, its of special importance, though."
|Most Beneficial Programs|
|These federal programs received the highest ratings
in a survey of municipal officials.
Clean Air Mitigation Program
Community Development Block Grant for new fire station
Small Harbor Improvement Program
Clean Water Act
Help with community parks and recreation