Honor Your Commitments
(from Maine Townsman, March 2001)
The following article is a condensed and edited version of the 2001 Federal Issues Paper, published in February by Maine Municipal Association. The Paper was given to Maine's Congressional Delegation and the issues presented in the Paper were discussed with Delegation members at meetings in Washington between March 9th and 13th (see article in this issue). The full text can be found on MMA's website (www.memun.org). Kirsten Hebert of MMA's State & Federal Relations staff coordinated the writing of the Federal Issues Paper.
The Congressional Budget Office has projected a federal budget surplus of $5.6 trillion over the next 10 years. This projection stands in stark contrast with the budget shortfalls and financial constraints confronting the state and local governments in Maine.
As the new Administration and Congress consider a major tax cut and other spending proposals, the Maine Municipal Association strongly urges top priority be first afforded to funding current commitments and mandates, such as special education. MMA also urges redirection of federal programs to recognize and respect the integrity of local government processes and decision-making.
All too often, what happens in Washington might seem remote from the standpoint of the citizens back home. There is, however, a direct relationship between the actions of Congress and the local property tax bill, the water and sewer bill, the cost of health care, and even a community's efforts to deal with sprawl or other land use issues.
The federal surplus is not a real surplus until federal commitments are honored!
Until Congress appropriates its full obligation to special education, the federal budget "surplus" has been overstated. Just as there is no "extra money" in our personal checking accounts if we haven't paid the mortgage or the electric bill or met our other financial obligations, the federal government must fund its obligations before declaring a surplus.
Public schools in Maine paid out $225 million in FY 2000 to meet the cost of federal special education mandates. The federal government participates in that effort to the tune of $22 million, just 9.7% of the total cost. Federal law, at 20 USC, Section 1411, leads the public to believe that Congress will pay 40% of the special education mandates it imposes.
More specifically, the IDEA (Individuals with Disabilities Education Act) formula calls for Congress to pay 40% of the result of multiplying the number of special education students in Maine (35,139 in FY 00) by the national average per-pupil cost ($6,406), which sets Congress' statutory obligation to Maine at $90 million.
The $70 million annual gap between what Congress owes and what Congress pays would provide meaningful property tax relief to the average Mainer. $70 million a year represents almost two-times the property tax relief provided by the (state-funded) Homestead Exemption, enacted in 1998. $70 million represents two-thirds of the property tax relief provided under Maine's (state funded) municipal revenue sharing program. $70 million a year, if fully used by the school districts to reduce their demand on the property tax, would translate into a 5% reduction in the statewide property tax commitment.
To look at it the other way, this single decision by the federal government to ignore its financial obligations to the communities raises all Mainers' property tax bills by 5% on average.
o The small town of Charlotte in Washington County, with a population of less than 1300, has a total school budget of $462,000. The property taxpayers of Charlotte pay $180,000 of that school bill. The special education budget for that small school was $83,600 in FY 2000, or 46.5% of the total local appropriation.
o SAD 3 is an 11-town school district in Knox County, and not one of those 11 towns would be called wealthy. That school district's total budget is $11 million with over $3.5 million being raised from the property tax. The special education budget for that rambling school district is $1.43 million, a sum that represents over 40% of the total local appropriation.
o Up in Van Buren, the school district has a $3.5 million total budget, with a local share of $841,000. In size, the special education budget, at $483,000, is over 57% of the local appropriation. In Eastport, the special education budget of $427,000 is over 54% of the total local appropriation. In Hodgdon it's over 46%.
o Six hundred students attend grades K-12 in Mechanic Falls. Eighty-four of those students (14%) receive special education services. The average annual increase in the special education budget since 1996 in Mechanic Falls is 8.8%, which is twice the annual increase of the education budget for all the students who are not in special education programs.
The numbers jump out at you no matter what school budget is scrutinized.
With respect to special education, the municipalities are caught between what the schools are unable to do and what Congress is unwilling to do.
For Congress' part, the answer is simple. It's called honoring a commitment.
COMBINED SEWER OVERFLOWS (CSOS)
Combined sewer systems have one pipe that carries both sewage and stormwater to the wastewater treatment plant. During normal weather, these systems work perfectly well; however, the onset of wet weather sometimes results in Combined Sewer Overflows (CSOs) which allow untreated wastewater to flow into our rivers, streams and ocean.
CSOs are an environmental and financial problem for Maine communities.
During precipitation events, combined sewer systems receive sewage and stormwater runoff. Stormwater may contain pollutants such as oil, grease, fertilizer, heavy metals, bacteria, viruses, and chemicals. A CSO system releases a mixture of raw sewage, industrial wastewater, and stormwater into the receiving waters of our state. According to the U. S. Environmental Protection Agency, CSOs are one of the leading causes of water quality impairment in the country. Across the nation, CSOs have led to bans on fishing and swimming, beach closings, shellfish bed closures, and threats to public drinking water supplies.
Controlling or eliminating CSO discharges is an enormously expensive proposition that often requires communities to upgrade miles of sewer pipe.
For example, the Town of Skowhegan is currently improving or installing 6300 feet of sewer lines. This will be accomplished at a cost of $186 per foot of line, totaling $1,172,000.
The Augusta Sanitary District is in the early stages of a $30 million upgrade, projected to take 15 years. In 1993, the District designed its Long-Term Control Plan (LTCP) to address its CSO problem. The plan divides the sewer upgrades into a 4-phase project. The first phase, which was completed in 1999, eliminated 44% of the overflow pollution problem. The second phase, when completed, is projected to eliminate an additional 20% of the pollution problem.
Phase I was budgeted as a $12.2 million project that required the Augusta Sanitary District to borrow $9.2 million. Design and construction of Phase II of the LTCP is scheduled to begin in 2001. It is estimated to be a two-year construction project, requiring the District to borrow an additional $10 million.
Since 1993, the Augusta Sanitary District has been forced to drastically increase its rates. In 1993, the average homeowner paid $200 a year for sewage disposal; today, the typical homeowner pays $400. This increase is the result of the mandated compliance with the requirements of the Clean Water Act.
MMA is asking the Congressional Delegation to support any legislation that provides the funding needed to implement the required upgrades and meet this federal mandate. MMA also requests that the Delegation oppose legislation or regulations that seek to require the separate treatment of stormwater for small cities - those under 100,000 population.
FEDERAL AUTHORITY OVER WETLANDS
A recent U.S. Supreme Court decision, Solid Waste Agency of Northern Cook County v United States Army Corps of Engineers, shows a shift in judicial philosophy toward States' rights. This case essentially reined in the authority of a federal agency to regulate intra-state waterways. The full impact of this decision has yet to be determined, but a cursory review of the Court's decision tells us that federal agencies' role in wetland regulation has been curtailed.
In January 1998, the Town of Orono adopted a Comprehensive Plan based on a smart growth philosophy. The plan was developed in an attempt to maintain the rural and small town character of the downtown and residential areas. This plan designated areas prime for development, as well as those areas to be preserved as open space.
In accordance with its comprehensive plan, the Town of Orono hoped to further develop its Research and Development Park. The Town was issued permits for the Research and Development Park in 1984. Orono owned 8 parcels in the R&D Park, while 14 parcels were held in private ownership. To date, 6 of the 8 parcels belonging to the Town have been developed. The two remaining parcels have been designated as wetlands, one of which is a high value wetland.
In an effort to mitigate the damage to these wetlands, Orono was prepared to remediate Ayers Island and dedicate it as Open Space. This particular site is a Brownfield, contaminated with coal ash and clinker, demo debris and textile waste. There is also a reported release of petroleum, however, no PCBs have been detected.
The State Department of Environmental Protection (DEP) approved the fill of the wetlands, as well as the mitigation proposal. Orono voluntarily hosted an informational session with EPA, Army Corps of Engineers, DEP, and Inland Fish & Wildlife. EPA and the Army Corps of Engineers objected to the fill of the two wetland parcels and struck down the proposed development.
The Town of Orono had invested significant amounts of time and financial resources in the development of its Comprehensive Plan. EPA suggested Orono leave the wetlands and build the Park expansion in an area Orono designated as "no growth." EPA's proposed development site is not only inconsistent with Orono's smart growth plan, but it questions the very underpinnings of the plan.
In the wake of the recent Supreme Court decision, Solid Waste Agency of Northern Cook County v. U. S. Army Corps of Engineers, the Town of Orono is seeking clarification and review of EPA's authority to deny its wetland mitigation plan. Orono would like to develop the remaining two parcels in the Research and Development Park and believes this decision takes the issue out of federal agencies' jurisdiction.
MMA would encourage the Congressional Delegation to communicate with EPA and ACOE officials making sure they understand and respect traditional state powers over land and waterways management. This will enable states to use their expertise in deciding matters of local importance and significance without interruption from federal agencies. Restoring control over state lands and waterways will ensure municipalities the flexibility necessary to formulate and implement their comprehensive plans.
One of the fastest growing line items in Maine local government budgets is employee health insurance. Maine municipalities that provide health insurance coverage to their employees have experienced double-digit rate increases in premiums over the past few years and there is no relief in sight. One contributing factor to rising health insurance premiums in our state is cost shifting from health care providers to private payers because of Medicare shortfalls.
The majority of Maine's cities and towns participate in a group, self-insured program, the Maine Municipal Employees Health Trust (MMEHT). The Health Trust provides health insurance to over 9,000 local government employees and retirees from Kittery to Fort Kent. Including dependents, the Trust covers nearly 22,000 Maine individuals.
While the Health Trust offers Maine's local governments the administrative and group purchasing advantages of a pooled health plan, it cannot shelter its members from the many factors driving health care costs and premiums nationally and in Maine. In 1999, Health Trust members experienced an average 11% increase in health premiums. In 2000, the average premium increase was 12% and for 2001 that average increase has jumped to 24.5%. Double-digit rate adjustments are expected for the foreseeable future. For 2001, the Trust projects that its per participant (employee) per month health claim costs will be nearly $460, ten percent higher than last year. Between 1999 and 2000, the Trust's total prescription drug costs increased by nearly $2 million. Prescription drug claims now account for 19% of the Trust's total health claim costs.
According to the Maine Hospital Association (MHA), Maine continues to rank at the bottom of the list of 50 states in terms of reimbursement as a percentage of what it actually costs our hospitals to provide care to older and disabled citizens covered by Medicare.
The Balanced Budget Act of 1997 included $340 million in reduced Medicare payments to Maine hospitals. Over the past two years Congress has restored some of these cuts and recent action will reduce the BBA '97 cuts by more than $80 million. Municipal officials appreciate these efforts. Because the Medicare portion of revenues for Maine hospitals is so significant, any shortfalls in the program require hospitals to increase their charges to other payers, like local government employers.
While municipal officials recognize that the Medicare reimbursement shortfall is but one of many contributing factors to our health care cost crisis, it is a factor that can be mitigated, especially in light of the enormous federal surplus. We urge the members of the Congressional delegation to continue their efforts to increase the level of Medicare reimbursement to Maine's hospitals and other health care providers.
OPPOSITION TO NEW FEDERAL PARK
The State of Maine has earned the title of Vacationland by providing residents and nonresidents alike with miles of scenic shoreline, beautiful mountains, and winter recreational activities. Maine follows only Alaska, California, and Texas in states with the most land dedicated to recreational purposes.
Alaska has 3,289,000 acres dedicated for recreation. California follows with 1, 356,000 and Texas has 629,000 acres. Currently, Maine has 587,000 recreational acres. This acreage is comprised of shorelands, mountains, and the Allagash Wilderness Waterway. Maine has one federal park, Acadia National Park, and 32 state parks. According to the Maine Forest Service, 89% of Maine's land area is forested.
In Maine, a recent proposal to create a new federal park, called the Maine North Woods, has stirred up much debate. The proposed park would encompass 3.2 million acres of forest land. The east-west boundaries of the park would run from Millinocket to the Quebec border. The north-south border of the park would run from Greenville to Clayton Lake. Park boundaries would subsume Moosehead Lake and the Allagash Wilderness Waterway. Though the park would surround Baxter State Park, it would remain a separate entity. If the park were created, it would be the second largest park in the lower 48 states, second only to Death Valley National Park totaling 3.4 million acres.
Creation of the proposed park would be a considerable financial burden on municipalities in this geographic region. Land removed from the municipal tax rolls and placed under federal control causes a strain on municipal revenues.
Under the Payment In Lieu of Taxes (PILOT) program, the federal government is required to pay the incredibly low fee of 75 cents per acre of federal land per year. This 75-cent fee is a set figure that does not correspond to the increased valuation of the land. Under PILOT, the federal government is also required to pay 1% of the Fair Market Value of the land, but this payment is limited to a 12-year term subsequent to the date of acquisition of the land.
This federal obligation, like many other federal mandates, often falls short of the required 1% of Fair Market Value. For example, Bar Harbor is the home of Maine's only federal park, Acadia National Park. The Park occupies approximately 40% of the town's land. Bar Harbor received reimbursement in the amount of $15,692 in 2000. For the last several years, reimbursement checks have come with the disclaimer that the government realizes that the municipalities are entitled to larger shares, but due to the lack of financial resources, they are unable to meet their obligation.
MMA would encourage the Maine Congressional delegation to oppose the creation of the Maine North Woods and to let your congressional colleagues know that you oppose it. Creation of this federal park would be detrimental to the municipalities of that region and overall to Maine's economy.
MMA would also ask that Congress fully fund all PILOT obligations. Again, honor your commitment.
WAIVER ON TRUCK WEIGHT LIMIT
The existing federal weight limits on the national highway system are anything but uniform. In New England, trucks weighing 100,000 pounds are prohibited from traveling on I-95 north of Augusta, while these same trucks can travel on the Maine Turnpike, I-95 from Portland to Gardiner, all of I-95 in New Hampshire and the entire interstate network of Massachusetts.
The municipal concern regarding weight limits on the national highway system is two-fold: (1) public safety and (2) the cost of maintaining the state and local transportation infrastructure.
National highway safety interest groups insist there exist inherent dangers when trucks over 80,000 pounds are forced to share the national highway system with 2,500 pound passenger vehicles. Unfortunately, the solutions recommended by these interest groups are to reduce the weight limits on the trucks traveling on the national highway system and thereby require the heavier trucks to travel on state and local roads. From a municipal perspective the public safety concerns are intensified when trucks carrying heavy loads are forced to travel through Maine communities on the narrower state roads and much narrower and less substantially built local roads.
Maine's highway system is the most important component of its transportation network. The system consists of 22,612 miles of highway, including 8,303 miles that are the responsibility of the Maine Department of Transportation, 13,862 miles of local roads and 447 of "other" road miles which includes the 111 miles on the Maine Turnpike and 336 miles of roads in state and national parks.
According to the Maine Department of Transportation, of the 1,347 national highway miles in Maine, only 116 (8.6%) are in deficient condition. The cost of repairing those deficient miles is estimated to be $129 million. Of the state's 7,283 other arterial and collector road miles, 3,876 (53%) are deficient. The cost to repair those deficient miles is estimated at $1.3 billion. In addition to the state's infrastructure improvement investment, it is estimated that annually municipalities in Maine spend over $140 million on local roads.
Although the Federal Highway Administration admits that the national highway system is designed to carry loads of nearly 100,000 pounds, current federal regulations are forcing heavier trucks on state and local roads at a significant cost to the taxpayers of Maine.
MMA urges Maine's Congressional delegation to listen to the officials of Maine who understand the realities associated with the 80,000 pound weight limit on the section of I-95 north of Augusta. The economic well being of the state is dependent on the ability of goods and services to be delivered to the northern and eastern parts of our state as well as the western and southern parts. Because of this reliance on highway transportation, a waiver of the 80,000 pound limit on all of I-95 makes economic sense.
In 2003 Congress will be asked to reauthorize the TEA-21 program, which will determine the transportation related goals of the federal government in 2003 and beyond. Over the next two years intense conversations about what policies are to be included in the reauthorization process will be occurring. MMA urges our Congressional delegation to insist on a 100,000-pound weight limit waiver on I-95 from Augusta to Houlton to be included as part of the 2003 TEA-21 reauthorization process.
The Environmental Protection Agency and the Army Corps of Engineers share the responsibility of managing ocean disposal of dredged materials in Federal waterways under the auspices of the Marine Protection, Research and Sanctuaries Act (MPRSA). Essentially, management of all dredged activities includes the designation of sites for ocean disposal and the issuance of permits necessary for the disposal. The ACOE is responsible for determining sites that will minimize adverse environmental effects as well as minimize the interference with commercial and marine activity in the waterway.
One of the controversies surrounding harbor dredging is the EPA/ACOE battle over disposal. EPA often refuses to allow the dredged material to be disposed of in sanitary landfills or at off-site facilities. The concern with these forms of disposal is community disapproval of hosting a facility for contaminated dredge spoils. Landfill disposal is also costly.
One of the underlying reasons that the ACOE frequently opposes ocean disposal is the nature and level of the contaminated spoils. For example, the ACOE has refused to accept the dredged spoils that are highly contaminated with PCBs. One concern is that the amount of sediment lost into the open ocean environment during the dumping of the dredge spoils would have an adverse impact on marine life, thus potentially harming the commercial fisheries.
At the federal level, there is disagreement between agencies as to whether contaminated material from dredging should be landfilled or returned to the water. MMA would encourage the Congressional delegation to help work out these differences and to initiate a dialogue with state and local officials in the affected coastal states to come up with an environmentally favorable disposal plan for the dredge spoils. Our state's waterways must be cleaned up to ensure a healthy ecosystem and seafood that is safe to eat. The citizens of Maine are not opposed to dredging which keeps our waterways safe for navigation; however, we must use environmentally sound alternatives that treat and process dredged material for beneficial reuse.
The State of Maine collects approximately $800 million each year from the Sales and Use Tax. This tax source represents approximately 35% of all General Fund revenue. It is the second largest revenue source for Maine state government, following the
Individual Income Tax
Through the State-Municipal Revenue Sharing Program, Maine communities receive 5.1% of General Fund revenue, including the Sales and Use Tax. This program is very important to Maine municipalities because it provides direct property tax relief.
The current Congressional moratorium prohibiting state and local governments from instituting new taxes on e-commerce (Internet sales) threatens the long-term stability of this major revenue source for Maine's state and local governments. The State Tax Assessor of Maine estimates 20-30% of the sales tax base (those items that are taxable and have some likelihood of being purchased via the Internet) is at risk. To date, the impact of Internet sales on State revenues has been modest, but the long-term effects of not taxing electronic commerce could be significant.
Maine Municipal Association recognizes that the taxation of e-commerce is a politically sensitive issue. MMA believes, however, that the final resolution of the matter should boil down to what is fair. Should one form of commerce (electronic) have a tax advantage over other forms of commerce? Should Internet retailers have a tax advantage over Main Street retailers? Should out-of-state companies have a tax advantage over in-state companies? Should those who have Internet access have a tax advantage over those who are unable to afford a computer?
For the long-term, MMA would urge the Congressional Delegation to consider tax equity and fairness as paramount in their decision-making on this issue. For the short-term, MMA is asking the Delegation to support a proposal coming from the National Governors Association that allows states to join together providing a reciprocal, uniform Sales and Use Tax system.
Another costly federal action is the State and Federal Ergonomics Rule. OSHA's final ergonomics standard was issued on November 14, 2000. This rule has the potential of costing municipal governments and other employers large amounts of money and being very time-consuming.
OSHA's promulgated Ergonomic Rule regulates all employers that are covered by the Occupational Safety and Health Act. To date, the Maine Bureau of Labor Standards has not promulgated rules governing MSD related injuries. Therefore, the State must adhere to the OSHA Rule.
The Ergonomics Rule, in its application, is triggered with the reporting of one case of musculoskeletal disorder (MSD) to the employer. Musculoskeletal disorder is defined as stress and repetitive motion injuries, like carpal tunnel syndrome, tendonitis, lower back injuries, and other ailments caused by repetitive motion.
Upon the first reporting of the MSD, the employer is then asked to determine whether the injury is a "MSD incident." OSHA defines this phrase as an MSD that is both work related and would require time away from the job, restricted work schedules or medical treatment. According to OSHA, the MSD is deemed work related if the employee experiences symptoms for more than seven days.
The Ergonomics Rule is all encompassing. It requires those employers with a documented case of MSD to implement a formal ergonomics program. One of the hardest hitting elements of the rule requires state and local government employers to implement a 90-day work restriction protection (WRP) program. The rule instructs the employer to assign the employee to an alternate position requiring less productive work. If the employee is unable to perform any of these duties and is unable to work, the employer is required to pay them 90% of their pay as well as full benefits.
The standard took effect on January 16, 2001. Covered employers must fulfill the communication obligation by supplying employees with basic information concerning MSD disorders. Employers must also respond to employee reports of MSD signs and symptoms.
The Maine Municipal Association would like to see the Ergonomics Rule revisited. Municipal officials believe that the promulgated rule intrudes on the state's right to regulate workers compensation. The municipalities' largest concern is the sheer cost of implementing and complying with the standards set forth in the OSHA Rule. Our recommendation to the Congressional Delegation is to provide municipal officials with a clear analysis of what effect this rule will have on municipalities. Municipal officials are requesting guidance on the steps necessary to have the rule repealed or overturned and re-written with less stringent standards.