The referendum provides a blueprint . . . let the voters decide

(from Maine Townsman, July 2003)
By Christopher G. Lockwood, MMA Executive Director

As this issue of the Townsman goes to press, news reports continue to circulate about the Legislature’s intention to develop a “competing” measure to appear on the November 4 ballot as an alternative to the “School Finance and Tax Reform Act of 2003” (see sidebar article).  The difficulties the Legislature has experienced to date in formulating a competing measure are a testament to the importance of allowing the citizens of Maine to have the opportunity to vote, up or down, on the referendum proposal.  If the voters approve the referendum, it will provide the Legislature with a clear message and blueprint.

The referendum proposal was developed because of the Legislature’s inability over many years to address tax reform, particularly Maine’s over reliance on the local property tax.  The municipal officials who worked on this effort took great care to craft a responsible proposal – one which would reduce property taxes statewide by requiring the Legislature to honor its longstanding intent to fund 55% of the cost of K-12 education, while recognizing the appropriate authority and responsibility of the Legislature to develop the detailed implementation of comprehensive tax reform.

Two other important sections of the referendum should not be overlooked.  The referendum calls on the Legislature to adopt a tax burden management plan that “integrates the efforts of state, county, local governments and schools to reduce unnecessary spending, identifies cost savings in the delivery of governmental services and otherwise addresses the issue of Maine’s overall tax burden.”  A tax burden management plan would establish a framework by which to measure Maine’s tax burden, to set targets to reduce Maine’s tax burden, to ensure the revenue neutrality of the tax reform legislation, and to track how the partners in our state and local intergovernmental system are doing in keeping their commitments and doing their part to achieve the goals of the plan.  Much attention has been focused during the recent Legislative session on Maine’s steps to lead the nation with respect to certain legislation.  The establishment of an overall tax burden management plan could truly be landmark legislation.

Another important section of the referendum would earmark 2% of the monies from existing programs (General Purpose Aid to Education and the Municipal Revenue Sharing Program) to provide funds to obtain long-term efficiencies in the delivery of educational, local and regional services.  The Legislature would establish the guidelines for the administration of these funds.  It would certainly seem appropriate for these funds to be available for feasibility and cost-benefit studies, as well as other uses to facilitate inter-governmental collaboration and efficiency measures.       

The “School Finance and Tax Reform Act of 2003” is truly a comprehensive measure.  It provides a framework and blueprint for the Legislature.  Over 100,000 Maine citizens signed the petition last fall to get a chance to vote this November on a tax reform proposal for Maine.  As will be the case with the other referenda measures on the ballot this fall, Maine voters deserve the opportunity to vote on the “School Finance and Tax Reform Act of 2003” in a straight up or down fashion, without the confusion of a competing question.

It is very important to remember three critical items:

(1) The MMA Proposal is not a new idea - it simply asks the Legislature to keep its promise to fund 55% of the costs of K-12 education. The Legislature made this promise in 1985 and it has gone unfulfilled for 17 years.

(2) If passed by the voters, this referendum could mean property tax relief in every Maine town and city (15% statewide average).

(3) Every voter has the power to make this happen. We can affect the property tax situation ourselves and send a clear message to State policy makers.

If the Legislature acts appropriately, Maine citizens will have an opportunity to vote this November on a tax reform proposal sponsored by the Citizens to Reduce Local Property Taxes Statewide.

The proposal, “The School Finance and Tax Reform Act of 2003,” struck a cord with the voters of Maine as over 100,000 people statewide signed petitions to place the proposal on the ballot. The 100,000 – a new record for the State – dramatically underscores the level of grassroots support for local property tax relief.

The proposal was as result of frustration with the Legislature’s refusal and inability to address tax reform. For decades the Legislature has discussed, debated and studied the problems with Maine’s antiquated tax policy.

Despite cries to change the system during all those years, the Legislature failed to take action. 

Our group decided to take action. Angry property owners told us their local property taxes are too high. Burdensome local property taxes impacts the elderly, young property owners, renters and local businesses. 

Also, local school and municipal officials struggle to find ways to pay for state programs dropped upon them by the Legislature. The tab for these programs almost always ends up on the local property owner’s tax bill. It was obvious that fundamental tax reform is needed to save the future of our State.  

The people of Maine are saying, “Enough is enough.”  No longer are they asking for tax reform, they are demanding it. Our proposal was designed to provide the catalyst to move tax reform ahead. The initiative compels tax reform, creates investments in structural changes to achieve efficiencies in the delivery of governmental services, and accomplishes the development of a comprehensive plan to address Maine’s overall tax burden. It has four key elements:

Ø      It will reduce local property taxes by an average of 15% statewide and force the state to pay 55% of the cost of K-12 education. It simply makes the state fulfill a promise it made 20 years ago. No more 42-43% support from the state!

It will compel the Legislature to engage in comprehensive tax reform to modernize the state’s tax code and make state revenue more predictable. The unpredictability of state tax revenue has for too many years put Maine’s state and local governments on a dangerous budgeting roller coaster. No more boom-and-bust budget cycles!

Ø      It will require the Legislature to adopt a comprehensive plan, involving all levels of government in Maine, to reduce overall government spending.  No more being the highest taxed state in the nation!

Ø      It will give incentives to local schools and towns to do things more efficiently.

This newspaper has called the proposal flawed because it lacks detail. Those who call it flawed fail to understand the urgency of this issue and seem destined to continue delaying tax reform.  

Tax reform is a complicated process. Our proposal does not try to answer every question about tax reform, but offers a blueprint to start the process of reform. The proposal outlines the broad goals and objectives, but it retains for the Legislature the responsibility to pass the proper laws to address the problems of crushing property taxes, unpredictable state revenue, and high tax burden. It provides both the structure to force the Legislature to act, and a design that offers the flexibility to debate, discuss, and develop options to bring tax reform to Maine. 

More than 100,000 people have said they are fed up the status quo. This is not the time to delay action or appoint a “blue ribbon” commission to study the problem.

Some Legislators have discussed the option of attaching a competing measure to our proposal when it is sent to the voters. This will further complicate maters, add confusion to the issue, and increase the likelihood that tax reform will be delayed yet again. 

The Legislature should send this proposal directly to the voters uncomplicated by political games and ploys and cynical measures to delay.

It’s time the Legislature listens to the people, and gives them a chance to vote.