Maine Voters Support Tax Reform Initiative
(from Maine Townsman, November 2003)
By Geoff Herman, MMA Director of State & Federal Relations

       The citizens’ tax reform initiative cleared yet another hurdle on election day earlier this month when it outpolled the 1B proposal the Legislature and Governor Baldacci advanced as a “competing measure” and easily overcame the none-of-the-above 1C option —  a do nothing alternative that is also part-and-parcel of the competing measure strategy.

       Now that the voters have turned down the Legislature’s slow-motion competing measure and rejected outright the idea of doing nothing about Maine’s staggering property tax problem, the citizen-initiated School Finance and Tax Reform Act of 2003 will finally have its opportunity to be presented cleanly to the voters of Maine, for an up or down vote, without all the competing measure confusion.

       It appears that vote will be held on June 8, 2004, which is the date of the “next statewide election”.  The “next statewide election” is both defined and required by Maine’s Constitution to be the latest possible date for a run-off referendum when a citizens’ initiative survives a competing measure challenge.

       Although the state’s lawmakers are authorized to schedule the run-off referendum at an earlier date, it would appear unlikely that the citizens’ initiative would receive that accommodation from a legislature that is openly hostile to it.  There are even some within the State House complex who advocate holding off on a vote on property tax relief for another full year; until November 2004, but fortunately the State’s Constitution doesn’t tolerate that type of delay.

       So the smart money spots the day of reckoning on the June 8th primary election.  It is then that the voters can decide yes-or-no if they want the state to move forward deliberately and without delay to achieve significant, broad-based property tax relief, comprehensive tax reform, long-term management of Maine’s overall tax burden and common-sense governmental restructuring opportunities.

       Between now and then, municipal leaders and front-line educational workers — the teachers, administrators and school board members who actually educate Maine’s 210,000 public school students — will be preparing for the second campaign.  Although the Legislature, the Governor’s Office and the industrial community represented by the Maine State Chamber of Commerce have displayed their opposition to the deep, broad-based property tax relief, revenue-neutral tax reform and tax burden management opportunities that make up the citizens’ initiative, that opposition has until now been sublimated into support for their slow motion “1B” alternative.  Now that the competing measure has been rejected by the voters, the differences in vision and the differences in implementing that vision can be brought more clearly out in the open between those advocating for responsible education funding and comprehensive tax burden management and those more loyal to the political status-quo.

       There are other events in 2004 that will also have some bearing on the referendum runoff in mid-year. 

       Election year.  2004 is an election year, of course, and it is the first election year after the 2003 legislative redistricting that must be accomplished every ten years.  Relative brevity is typical of a second legislative session, especially just after redistricting, because extending the session too deeply into the primary season doesn’t allow time for campaigning and adjusting to the new districts.  The statutory deadline for adjournment is April 21, and an earlier adjournment date is certainly possible.

       The second legislative session, which according to the State’s Constitution should be devoted only to emergency legislation and bills left over from last year, is also not typically associated with decisions of great political daring or controversy.  A compact, constructive and productive session is most desirable from the legislative perspective.

       The Palesky petition.  About six months ago Carol Palesky of Topsham, head of the Maine Taxpayers Action Network (MTAN), submitted her “Proposition 13” petition to the Secretary of State, to be submitted to the Legislature this upcoming legislative session.  According to Ms. Palesky, the petition has at least 10,000 more signatures than the 50,000 required, but the Secretary has yet to announce whether he will be certifying the petition as valid, and according to state law he has until March 4, 2003 to do so.

       The “Proposition 13” proposal is modeled after a law popularly adopted in California in the 1970’s and would radically change Maine’s property tax law in two ways.  First, it would establish a maximum property tax mill rate for all the municipalities in Maine of 10 mills, or 1% of assessed value.  The current average full value mill rate in Maine is 15 mills, and in many of the state’s more urban or property-poor municipalities, the mill rate is well over 20.  Second, the MTAN initiative would limit the amount the assessed value of property could increase from year-to-year (beginning with 1997 values as a starting point) to either 2% or the annual Consumer Price Index, whichever value is less.

       A combination of the two impacts — the 10-mill rate cap and the dramatic roll back in taxable value — would result in a projected 55% reduction in municipal revenue in 2006, slashing the resources that support local government and Maine’s public schools by over $1 billion a year.  Even when discounting the impacts of rolling back all taxable value eight years in time — a provision that appears to violate Maine’s Constitution — the financial impact of just the10 mill property tax cap would strip-out municipal revenue to the tune of $800 million a year.

       If MTAN did gather enough valid signatures to move its initiative to the Legislature in 2004, it will undoubtedly be rejected in Augusta and consequently appear on a referendum ballot on November 2, 2004, either standing on its own or mixed up with a legislatively crafted “competing measure”.

       Alternatives.  Ballot initiatives, runoff referenda and competing measures regarding property tax relief and tax reform fill the horizon throughout 2004 and beyond.  The question some people are asking is whether the dance can be choreographed in such a way that the very pressing problems of Maine’s property tax burden and educational funding issues can be constructively addressed between a willing Legislature and a constituency desperate for action and results.

       The answer is . . . quite possibly, although it is far too early to tell.  After the election day polling was tabulated and the spin-masters had their 15 minutes in the press, folks from a number of different corners began discussing the possibility of merging some of the core principles and advanced timing of the 1A citizens’ initiative with some of the mechanics of the 1B competing measure.  If such a 1A/1B hybrid could be constructed, the possibility exists of constructing a compromise.  Exactly how such a compromise could be glued together from the drafting table to implementation during this election year, with the “Proposition 13” proposal hanging over the state’s head like the Sword of Damocles, remains to be seen.

       If there is truly a will to solve these pressing taxation issues, however, there is surely a way.

Post-election Update (sidebar)

By Chris Lockwood, MMA Executive Director

        In crafting the citizens’ initiative, MMA sought to put forth a bold plan to address the urgent need for property tax relief, the need to reduce Maine’s overall tax burden, and the need to properly fund our public education system.  The importance of addressing these issues was underscored with Question 1A receiving the plurality in a three-way contest.  Especially in light of the 73% of voters who favored 1A or 1B, it is clear Maine citizens are calling for action.

       We were very pleased to receive an invitation shortly after the election to meet with Governor Baldacci.   Senate President Beverly Daggett also requested a meeting.  Favorable comments to the idea of working together on a tax reform compromise from various legislators and state government leaders have been encouraging.  Representatives from Maine Municipal Association and the Maine Education Association will be working with a team from the Governor’s office in an effort to craft a compromise proposal to bring forward to the Legislature for the up-coming session.  We are committed to working with the Governor and the Legislature as we embark on this process.  We will keep MMA members apprised as we move forward.