MMA Takes Position on November Election Issues
(from Maine Townsman, October 1999)
by Geoff Herman, Director, MMA State & Federal Relations

One of the public policy-related roles that is charged to MMA’s Executive Committee is to review the bond issues and ballot questions that will appear at a state-level election and articulate the Association’s position on those ballot questions that pertain to municipal government.

On September 16, 1999 MMA’s governing board convened for that purpose, and after reviewing the nine separate questions on the ballot, the Executive Committee voted to ask the citizens of Maine to give their strong support for two of the four bond issues and one of the proposed changes to the state’s Constitution. The Executive Committee also voted to ask the citizens to reject one of the proposed constitutional changes. With respect to the remaining five questions on the ballot, the Executive Committee voted to take no position.

Constitutional Questions

There will be two proposals on the ballot to amend the state’s Constitution.

Yes on Question #8. Question #8 proposes to amend the state Constitution so that the vote on a "people’s veto" question will be held at the time of a statewide or general election rather than at a special election held at an unusual time as they typically must be scheduled under the current constitutional scheme. A ‘yes’ vote on this question will line up the vote on this special kind of citizens’ initiative to coincide with the normal November or June (primary) elections that are already scheduled to occur. A ‘yes’ vote will reduce the future municipal costs associated with holding an off-schedule statewide election which was estimated at $350,000 statewide for the last people’s veto election held in February, 1998. It is also a consistent municipal position to advocate for scheduled elections that derive the greatest possible voter participation.

No on Question #9. Question #9 asks the voters the following question:

"Do you favor amending the Constitution of Maine to allow for reduced property taxes on property that will be maintained for historic preservation or for scenic views of significant vistas."

If the voters approve the question, the Constitution will be amended to include a new sub-section which would read as follows:

"The Legislature shall have the power to provide that municipalities may reduce taxes on real property if the property owner agrees to maintain the property in accordance with criteria adopted by the governing legislative body of the municipality to maintain the historic integrity of important structures or to provide scenic view easements of significant vistas."

MMA is asking the voters to reject this proposal for five reasons.

• A misleading question and false expectations. There is a significant disconnect between the question that is presented to the voters and the actual change to the Constitution.

The average voter is likely to read the question to mean that there will be a uniform system of split-rate taxation whereby all property will be assessed according to its market value except property maintained for "historic preservation" or "scenic views".

On the basis of the question alone, many voters will undoubtedly come to expect that their ‘yes’ vote could lead to a reduced assessment of their own property if they own an older home or a property with a scenic view. In fact, a ‘yes’ vote will only put into place an authority for the Legislature to adopt an implementing statute that essentially provides municipalities with "home rule" authority to establish a separate tax scheme for what is vaguely understood as "historic properties" or "scenic vistas".

In all likelihood, even if adopted by the voters and ultimately implemented by the Legislature, municipalities will be reluctant to implement their new-found authority because it establishes a very dangerous precedent with respect to the foundation of property tax policy.

• Equity is the bedrock foundation of property tax policy. Ever since Maine has been a state, and even before, the cornerstone of property tax policy is that all real estate and personal property be assessed "equally according to the just value thereof" (Maine Constitution, Article IX, Section 8). That is the bottom-line principle of property taxation that this proposed question seeks to overturn. The only exception to this obligation to assess property equally according to its market value is a long-standing constitutional authority to assess certain open lands (forest land, farm land, and open space) at their "current use" values.

It is also true that since Maine separated from Massachusetts, the state legislature has granted from time to time a whole or partial exemption from the property tax obligation for certain classes of property, but Question #9 is not creating an exemption from taxation. It is creating an authority for one, several, many, or potentially all of Maine’s 493 towns and cities to establish a local split-rate taxation system whereby all property would be assessed equally with the exception of certain "historic" or "scenic" properties. Such a system by its very nature would lack both uniformity among the 493 Maine communities and equity within the municipal boundaries.

Without uniformity and equity, the foundation of the property tax system begins to crumble. The municipal officials wonder which property interests will want to turn to the Constitution next to obtain their special carve-out from the principle of "equally according to just value?"

• The municipal tax base has been eroded enough. The municipalities of Maine are currently in the process of dealing with a substantial erosion of their tax base that is associated with tax exempt property. Even disregarding federal, church, municipal and quasi-municipal property, there are service center communities in Maine that are hosts to major exempt institutions that have an aggregate property value that equals 10% - 25% of the municipality’s tax base. The underlying principle of property tax collection, however, is that all property owners put their oars in the water and pull in a manner that is proportionate to their property’s value. That principle has been eroded too far already.

• Cure the disease, don’t patch up the symptoms. Every year, and ever more forcefully, different property interests claim they should be relieved of their property tax obligation. Giving each one of these interests a property tax break and eroding the principle of equity that is essential to property tax policy is not the answer. The answer is to lessen the demand on the property tax overall, which can only occur when the Legislature and the Governor agree to honor the 15-year old, as-yet-unfulfilled legislative commitment to pay for 55% of K-12 education.

The property tax simply wasn’t designed to provide the majority revenues for public education in the 21st century. When any tax system is asked to out-perform, it will begin to burst at the weak seams.

The Legislature and the Governor say that although they would like the state to pay a majority share of K-12 education, the state just can’t afford to, so the costs are pushed onto the property tax instead.

MMA asks the policy makers to cure the disease by reducing the overall burden of the property tax. Don’t patch-up the symptoms by creating yet other structural system of property tax breaks.

• There are other, more accountable solutions. A system of split-rate taxation is not the only answer in response to the issue of preservation of historic properties or scenic vistas. In fact, tax reductions are not the best answer by any measure of accountability.

Tax exemptions or reductions in tax assessments become permanent benefits that are provided year in and year out without the benefit of close public scrutiny when circumstances change. Over time, the average taxpayer in a community will likely become unaware that a certain property is assessed at a lesser rate than the taxpayer’s property, and what the real value of that "tax expenditure" might be.

An appropriation of public resources for important purposes, rather than a tax break, is a much more accountable system by which public benefits are procured.

There is nothing stopping a municipal legislative body from purchasing the development rights or specific easements from a private property owner in order to advance a defined public interest. The appropriation of public revenues for that purpose would make for a much more accountable, in-the-light-of-day process to advance the community’s interests in the preservation of historic properties or the protection of scenic views. In addition, the outright purchase of the development rights or scenic easements will last over the long term, in perpetuity.

Providing a tax break today in the hopes a historic property will remain historic can only last as long as the property remains in that ownership. Here today, gone tomorrow.

Bond Issues

The two bond issues for which MMA is seeking strong voter support are Question #3 and Question #4.

Yes on Question #3. Question #3 is the $56 million transportation bond issue that matches $112 million in federal funds and clearly deserves strong municipal and voter support.

Over $19 million of the $56 million package is a proposed Highway Fund bond to be used for general highway and bridge maintenance purposes. The $19.2 million will leverage $48 million in federal funds, and that total will be combined with regular Highway Fund appropriations approved by the Legislature this year to improve over 250 miles of state roadway.

Nearly $37 million of the whole transportation package would be a General Fund bond issue to provide: $19.7 million for rail corridor development; $11.7 million for marine ports and terminals; $3 million for airport infrastructure; $1.44 million for public transport systems; and $1 million for state-owned ferry facilities. The General Fund component of the transportation bond proposal will leverage $64 million in federal funds.

Municipalities throughout the state rely on passage of the transportation bond issue to maintain and improve the state’s road and bridge infrastructure. This investment is key to support economic development and properly maintain the public’s investment in our transportation system.

Yes on Question #4. Question #4 is the $12.5 million environmental bond proposal that would provide needed revenue to support state-level, municipal-level, and state-municipal environmental infrastructure. If approved by the voters, the revenue would be used for: wastewater pollution control ($7 million), capping most of the remaining unlicensed landfills in the state ($2.5 million); drinking water facilities ($1.5 million); remediation resources for some of the state’s hazardous waste sites ($1 million); and tire stockpile clean-up ($500,000).

The $7 million wastewater pollution control element of the bond proposal includes: (1) $2.5 million that matches $12 million in federal funds to recharge the state’s revolving loan fund which is used by some of the state’s largest wastewater facilities to reduce the local cost of borrowing; (2) $3 million for direct grants for wastewater treatment plant upgrades in communities with very high sewer fees; and (3) $1.5 million in the DEP Small Community Grants Program which provides valuable assistance to smaller communities by securing financial assistance to residents who cannot afford to replace their failing septic systems.

The elements of the bond package related to wastewater and drinking water facilities matches $20 million in federal funds.