All The Way With 1A

(from Maine Townsman, October 2003)
by Geoffrey Herman, MMA Director of State & Federal Relations

As the November 4th Election Day draws nearer, ever louder grows the noise of the debate.

With respect to the first question on the ballot, all of the sound and fury is focused on one central question . . . the essential theme of the citizen-initiated School Finance and Tax Reform Act of 2003.

The question is whether or not the State of Maine, acting deliberately through its elected legislature and according to a carefully designed blueprint, should address the state’s serious taxation problems squarely, straight-on and without delay. To act or not to act, that is the question.

Municipal leaders and the leadership of public education, thousands of school teachers, and in a resounding voice the citizens of Maine, acting directly through the petition process granted to them by the state’s constitution, are saying YES.

On the other side are the proponents of no change (or ponderously slow change) — the industries in Maine that enjoy the BETR property tax rebate, the non-profit (and tax exempt) social services agencies, and the State Legislature…a natural constituency for the business-as-usual/ politics-as-usual approach. Indeed, the industrial-social service alliance, which might seem an unlikely match-up at first blush, is a marriage made in Augusta and consecrated on the shambles of Maine’s tax code. When Congress in Washington and the Legislature in Augusta appropriate property tax revenues to accomplish their public policy goals, it frees-up state and federal tax dollars to bequeath to other constituencies. It is probably entirely natural in the political world for these interest groups to form alliances to block significant and sustainable property tax relief.

In late August, when the Legislature met in a two-day special session and patched together a measure to compete against the citizen-initiated School Finance and Tax Reform Act of 2003, the potential was created to greatly confuse the voters, to confound their understanding of the citizens’ initiative by suggesting the “competing measure” was somehow its equivalent, except on time-delay.

And beyond simple confusion, television advertisements by the 1B supporters abandon any detailed description of what their proposal would actually accomplish, or by when. Instead, the 1B competing measure advertising mischaracterizes responsible tax reform as big “tax increases” and inexplicably suggests that neo-natal clinics would be placed at some sort of risk.

The Machiavellian lessons of referendum politics maintain that if the electorate can be affected by either confusion or fear, it can be moved to embrace a do-nothing position. Could that be the strategies of the 1B supporters? And if so, what is it about the tax reform blueprint — Question 1A on the ballot — that is driving them to such tactics?

Let’s take a look.

The 1A citizens’ initiative is most commonly described by detailing each of the four legs that make up its foundation, the “four Rs” of Relief, Reform, Reduction and Restructuring.

• Meaningful and sustained property tax relief by compelling the state to meet the financial obligation to public schools it established for itself 20 years ago and subsequently disregarded. In honoring that commitment, a 15% reduction in property taxes could be achieved statewide.
• Comprehensive tax reform to rebalance, modernize, and restore equity and predictability to the state’s antiquated and neglected tax code. This reform effort is controlled by a requirement that it be completely revenue neutral.
• Tax burden reduction by requiring the adoption of a plan developed collaboratively among all levels of government that will consciously ratchet down Maine’s overall tax burden according to a schedule and tax cutting strategies that are acceptable to the state’s citizens.
• Investments in restructuring that will allow for the more efficient delivery of governmental services without sacrificing their quality.

People unfamiliar with the terms of the 1A citizens’ initiative are usually surprised to learn of its reform, reduction and restructuring components. The Legislature did not focus on the tax reduction and restructuring elements, and the measure appears to carry too much substance for the simple digestive system of the Maine press. To compare 1A to 1B is a quicker soundbite than a more thorough contrasting of the two proposals might require. Since the 1B competing measure endorsed by the Legislature contains no vision of tax burden reduction, no effort to constructively address governmental restructuring and is straightforwardly anti-tax reform, the narrow comparisons of 1A relief versus 1B relief that make up the newspaper accounts serve to obscure and eclipse the breadth and depth of the 1A citizens’ initiative.

Reference to the “four Rs” – property tax relief, comprehensive tax reform, tax burden reduction and incentives to restructure – is a perfectly adequate way to describe the citizen-initiated measure, but there are four other descriptive terms that serve to describe it just as well — Leadership, Vision, Action and Challenge. These are descriptions that help clarify the sharp contrasts between the peoples’ 1A initiative, the politicians’ do-little 1B competitor and the do-nothingism of 1C.

Leadership. The first term is “leadership,” but it’s a collective, grass-roots leadership of a different stripe than we may be used to. In politics, the characteristic of leadership is typically given to a charismatic elected official who articulates a vision that inspires the citizenry and then translates that vision into action.

In the case of the School Finance and Tax Reform Act of 2003, there are dozens of municipal and educational leaders who have been working tirelessly over the last 18 months to bring this critical public policy question forward. Without taking anything away from the infectious enthusiasm, remarkable personal sacrifice and tireless drive that these local leaders constantly bring to the effort, they would be the first to agree that the leadership behind the 1A initiative does not come from a charismatic “leader” of the political model. The leadership of 1A comes, instead, from Maine’s citizens directly. The elected and appointed municipal and school officials have listened carefully to the needs of their local citizens, taken dictation from their constituents, and translated the citizens’ expressions into a bold action plan. This is what the local folks have heard the people of Maine saying:

• The property tax is seriously overburdened. It is crushing some of our citizens, seriously affecting the lives of our neighbors, distorting the location decisions of prospective home and business owners every day, and ripping apart our communities.
• Property tax relief means lower property tax bills, not (at least as a general rule) rebate checks from Augusta.
• We are tired of broken legislative promises on the state and federal level. Tired is not the word for it…we are completely fed up with shifting the costs of federal and state programs to the local property tax.
• If when fairly measured Maine has the highest tax burden in the nation, that situation needs to be addressed. The complaint of Maine’s business community is legitimate and needs to be dealt with deliberately, collaboratively among all levels of government, and without delay.
• As difficult as it might be politically, Maine’s tax code has to be balanced, made more equitable and predictable, and brought out of the 1950’s and 1960’s — the decades of its design — to the modern day.
• We are not interested in radical changes to our systems of governance, but we are certain that all levels of government can find some efficiencies in the delivery of the services they provide. We are willing to invest in the ideas and changes that will lead to long-term savings.

Vision. To have a broader “vision” is a term that describes a heightened state of consciousness — an ability to see connections between events that happen in the real world. These are interrelationships that typically go unnoticed in the hum-drum of the day, which if deliberately examined and constructively addressed will chart the course to a better future. The School Finance and Tax Reform Act of 2003 is just such a vision, but it is not the proprietary vision of an individual, politician, political party or selective ideology. The 1A initiative is a popular vision, representing the collective insight of the citizens of Maine beyond party lines, beyond politics and beyond business-as-usual. What follows is a partial description of the connections the people of Maine have identified and woven together in a single unifying initiative.

• Property tax relief, unless connected to comprehensive reform, is unsustainable.
• Legislative promises should not be broken — sticking to financial priorities establishes an important type of fiscal discipline.
• All legislatures that oversee a tax code must reform that code from time-to-time to re-establish fairness in changing economic environments.
• Tax reform efforts need to be guided by the principle of revenue neutrality.
• Legislative decisions over school funding have direct impacts on the local property tax.
• Lowering Maine’s tax burden requires planning, collaboration and deliberate action by all levels of government.
• Unfunded federal and state mandates are improper appropriations of real estate taxes by Augusta and Washington.
• Incentives are the key to stimulate the restructuring ideas that will result in efficiencies and cost-savings.

Action. The third term is “action.” The 1A citizen initiative is a bold plan for action and the clearest, most conspicuous difference between the 1A initiative and its 1B and 1C competitors is the call to action. Four months after the November 4th election, if the voters of Maine adopt the blueprint for action, the Legislature will have in front of it a revenue-neutral plan to comprehensively modernize and stabilize Maine’s tax code, an interrelated but separate plan to reduce Maine’s overall tax burden, and two recommended programs to help schools, towns and regional government implement new ways of doing business that will lead to cost-saving efficiencies.

The people of Maine know there are deep-structure problems with Maine’s tax system and they expect immediate action. The cancerous property tax problem will not go into some sort of magical 6-year remission while this Legislature, and the next legislature, and the one after that work ever-so-slowly to fulfill a school funding promise made 20 years ago. And option 1C is the equivalent of saying “there is no problem that needs to be solved…let’s send a message to Augusta to do nothing.”

Challenge. The final term to describe the 1A citizen initiative is “challenge”. Putting into effect these important structural changes to Maine’s broken system of taxation and school funding will not be easy. If the interrelated challenges of revenue-neutral tax reform, ratcheting down Maine’s overall tax burden, rolling-out two new efficiency funds and properly funding K-12 education were easy, these tasks would have been accomplished many years ago.

Many legislators characterize the 1A citizens’ initiative as placing all the burdens of this action plan unfairly and too immediately on the Legislature, which will be ill-equipped in a short session and election year to take up these challenges.

But the vision of the 1A citizens’ initiative requires that challenge to be borne by all of government — by all levels of government — and all of the answers and all of the difficult choices will not be expected to come from a single source, whether that source is the Legislature, the Governor, a particular political party, state government as a whole, the municipalities, the counties or the schools.

The legislative process, to be sure, is appropriately designated by the 1A citizens’ initiative as the public, deliberative process that will put the relief-reform-reduction-restructuring plan into effect; indeed, there is no other process that is remotely appropriate in the democratic governmental system that we are privileged to enjoy. At numerous places throughout the plan, however, the collaborative efforts of municipal government, regional government and the schools is required.

For example:
• The section of the 1A citizens’ initiative that could be characterized as the “legislative intent” of the proposal reads as follows: “In carrying out its duties under this Act, the Legislature and its joint standing committees shall act to provide substantial property tax relief statewide in a manner that is sustained over time, reduce unnecessary spending, provide tax reform, avoid adding to the overall burden of the citizens of this State and coordinate those efforts among the school administrative units and local and regional governments.”
• “Revenue neutral” tax reform, of necessity, will require fiscal discipline throughout the entire intergovernmental system. Passing-the-buck through unfunded mandates or cost shifts up-or-down any intergovernmental direction can no longer be tolerated.
• The citizens’ initiative specifically calls upon all levels of government to collaborate in the development of the longer-term strategies of tax burden management.
• The management programs to distribute the funds established to root-out more efficient educational, municipal and regional service delivery systems will need to be developed with the obvious collaboration of the municipal, county and school communities.

Part of the reason that very little gets accomplished year after year on these critical taxation issues is because the political process often fragments the efforts of the various partisan and intergovernmental constituencies. Even if a common problem is identified, there is always enough disagreement about both the cause of the problem and the way to solve it between the Houses, between the parties, between the levels of government to ensure the frustration of any straightforward solution. Many of those internal governmental tensions are there by design to ensure healthy debate, the production of good information and data, and to carefully test proposed solutions before the larger public and its electorate.

There comes the time, however, when the political process cannot overcome a frustrating paralysis and action needs to be taken. With respect to the interrelated taxation issues that have been ignored for too long in this state, the time to act has come. 100,000 citizens of Maine have put a responsible blueprint for action before the entire electorate. The action plan contains every tool that the people of this state, acting through their Legislature, need to relieve the property tax, modernize and rebalance the overall tax code in an entirely revenue-neutral manner, collaboratively manage Maine’s overall tax burden, and put cost-saving restructuring plans into motion.

Failing to act will absolutely condemn us to more of the same. Please get the message out in your communities and vote 1A.