AUGUSTA — When you add it all up, the city of Augusta would lose somewhere north of $2 million from city and school budgets next year if Gov. Paul LePage’s state budget is adopted as proposed.
City Manager William Bridgeo has composed a memo to city councilors giving some details about the effect of the proposed cuts:
• A $1.6 million annual loss because the city would receive no revenue sharing funds;
• Between $250,000 and $350,000 in additional cost because local schools would be required to pick up half the cost of teacher retirement contributions;
• The loss of about $115,000 because the state now wants to keep excise tax revenue from tractor trailers.
Those numbers do not include money that could be lost because the state is proposing to change a business tax reimbursement program and institute a cap on General Assistance reimbursements.
The combined city and school budget is about $51 million.
“So as you can see,” Bridgeo wrote to councilors, “with gross insensitivity on the governor’s part to the plight of Maine’s 496 communities, we have entered into a fiscal crisis circumstance where council’s options look to be dramatic increases in property tax rates (which I fully appreciate are a very bad thing) or cuts in valued services to a community that has already struggled in this regard over the past four years, or some ‘worst of both worlds’ combination of the two.”
The numbers would double if calculated to reflect the state’s two-year budget cycle.
Also, Bridgeo used the revenue sharing figure based on what the city received last year, which was 3.5 percent of sales and income tax revenue collected. Traditionally, the state has shared 5 percent with cities and towns. Figures released Friday by the Maine Municipal Association show that Augusta’s two-year receipt of revenue sharing at the 5 percent rate would be more than $5 million.
For local property taxpayers under 65, other factors also could increase tax bills.
The state budget proposes to limit two property tax relief programs only to senior citizens, which will mean others who now get a discount would see their property taxes increase.
The state budget proposes to make the homestead exemption apply only to those over 65 or veterans. In Augusta, it’s estimated that 2,800 people no longer will be able to get the exemption. Those who no longer would be eligible for it would pay 9 percent more in property taxes. Bridgeo’s numbers show that an average single-family home in the city is valued at $123,000.
Also, LePage is proposing to eliminate the Maine Residents Property Tax and Rent Refund Program — commonly known as the “circuit breaker” — for anyone under age 65. This state-run program is for those whose property tax is more than 4 percent of household income or the rent they pay is more than 20 percent of household income. Bridgeo said he does not have statistics about how that would affect city residents, but he said Friday that “hundreds” of people who live in the city will lose benefits if the program is eliminated for everyone under 65.
Sawin Millett, LePage’s budget commissioner, said during a recent budget briefing that the state is trying to deal with declining revenue and increasing costs at the Department of Health and Human Services. He said the governor included an extra $16.8 million in the budget, which is money he hopes will be applied to revenue sharing as lawmakers work out the details of the budget.
“We’ve had to make some difficult choices in this budget,” he said. “Revenue sharing suspension for two years was the last decision we had to make and wish that we didn’t have to.”
Millett said at their core, revenue sharing, general purpose aid to education, the homestead exemption and the circuit breaker are all attempts by state government to help lower property taxes at the local level.
He said he doesn’t think they are working.
“When you think about it, we could put all kinds of funding out there; but the ultimate decision-makers on whether there is relief or not are those who approve local budgets,” he said. “We haven’t done a good job of delivering tax relief. We’ve spent a lot of money and put a lot of programs together, but over the years, we haven’t really produced real, measurable tax relief to the extent I think a lot of people hoped for.”
Bridgeo countered by saying that in the last 10 years in Augusta, the average property tax increase has been less than 1 percent, the city workforce has been cut 10 percent, and workers have had no raises for several years.
“I don’t know how much more folks — including Sawin, for whom I have much respect — would think we can do,” he said. “I really don’t think it’s fair to suggest our elected officials in Augusta or other municipal officials aren’t being rigorous in containing costs and meeting our responsibility to provide basic services.”
Already at the State House, discussions are under way for alternatives to the budget proposals. Rep. Lori Fowle, D-Vassalboro, told Vassalboro selectmen Thursday night that some lawmakers are talking about increasing the lodging tax to help bring in more revenue.
Selectman Lauchlin Titus asked whether there was talk of a sales tax increase.
Fowle said a lot of ideas are being floated and that she expects to see changes in the budget.
“I don’t know how the budget (LePage has) proposed is going to pass,” she said. “(Vassalboro) taxes went up a whole mil last year. I don’t know how you absorb that.”
Similar conversations are taking place across the state as all cities and towns crunch the numbers to see what they would lose under the proposed budget. The Maine Municipal Association is preparing to fight the proposals at the State House and is arming members with statistics they can provide to state lawmakers as they push for alternatives.
The association estimates that the statewide effect of all the proposed changes, including direct cuts to cities and towns and the narrowing of the property tax relief programs, adds up to $424 million.
Education Commissioner Stephen Bowen said the state decided to call for local schools to share in the cost of teacher retirement for current employees because it was a more equitable way to spread the expense.
“Essentially you have a system now where the state is paying 100 percent of those pension costs for the very wealthiest communities in the state and 100 percent of the pension cost for the very poorest communities in the state,” he said.
Susan Cover — 621-5643