AUGUSTA — A bill changing where utility companies pay excise taxes on their vehicles has been signed into law by Gov. Paul LePage, a shift that’s expected to cost the city of Augusta about $250,000 a year but lead to a smaller boost in revenue for other municipalities.

The bill, L.D. 514, which was approved by the House and the Senate earlier this month, was sponsored by Rep. Andrew Buckland, R-Farmington. It changes where utilities such as Central Maine Power Co. pay excise taxes on their vehicles from where their headquarters is located to where the vehicles are kept overnight.

Augusta officials and legislators fought the change because it is expected to cost the city about $250,000 a year in lost excise tax revenue from CMP, which is headquartered in the city and registers its entire statewide fleet of 494 vehicles there. The change takes effect in January 2017.

“It’s going to create a big shortfall for us,” Augusta Mayor David Rollins said Wednesday. “We’re going to have to make cuts to accommodate that.”

However, the legislation was favored by many officials of municipalities other than Augusta, especially those where utility vehicles are kept regularly and contribute to the wear and tear on local roads.

Joshua Reny, town manager of Fairfield, where CMP officials said they keep 37 vehicles, previously estimated the change could bring $20,000 to $30,000 in additional tax revenue to the town, though he noted the final figure will depend upon how many vehicles CMP declares to be kept in the community when the law change takes effect.

“They’ve got bucket trucks, pickup trucks, cable reel trucks. They have a sizable fleet in Fairfield,” Reny said Wednesday. “It’s not a big issue, but money is money. When you’re talking upwards of $20,000 a year, that’s significant for us, a town as small as ours.”

Reny said the issue is one of fairness. He said utilities should pay excise taxes to the municipalities where their vehicles are kept because that is where they will be adding to traffic on roads and contributing to the need for road repairs.

Reny said he’s sympathetic to Augusta officials but believes the new policy will be fairer than the current method.

“If you have a vehicle that is based out of Skowhegan or Portland or wherever, traveling local roads, why is it the city of Augusta should be receiving a substantial amount of money simply because the headquarters are located there?” Reny said. “I completely understand (Augusta) is going to be taking a hit with this, and that’s not a good thing. Obviously all towns are struggling right now.”

The same bill was proposed and rejected in the previous two sessions of the Legislature. This time the bill passed easily with only the three members of the capital area’s legislative delegation — Rep. Matt Pouliot, R-Augusta; Rep. Lori Fowle, D-Vassalboro; and Rep. Donna Doore, D-Augusta — voting against it.

Augusta officials, in an amendment proposed by Sen. Roger Katz, R-Augusta, sought to have the change enacted more slowly, so the financial hit to Augusta doesn’t happen all at once. Katz’s amendment would have delayed the effective date until 2018 and have the law apply only to utility vehicles purchased after that date.

“I was hoping — and what Senator Katz proposed for an amendment — was it would be on new vehicles only, which would have slowed it down, but there didn’t seem to be a palate for that on the committee,” Pouliot said. “And at the end of the day, the vote of the committee was really one that was going to be difficult to overturn. The writing was on the wall with that one early on.”

The Taxation Committee voted unanimously on April 9 to endorse passage of the bill.

“I was very disappointed we didn’t get any support to have it phased in,” Rollins said of Katz’s amendment. “Why other communities didn’t seem to think that was a reasonable request is beyond me. It was very discouraging we couldn’t find a way to have a more gradual hit.”

Rollins said there is little the city can do to prepare for the change, adding that the lost revenue will further exacerbate challenges in next year’s budget. Already, the city is facing the possibility of a major increase in county taxes because of a proposed change in how the state’s county jails are funded.

Last year the bill was part of a fight between CMP and Augusta officials. The company, according to testimony before the Legislature, parks only 113 of its 494 vehicles in Augusta overnight. The rest are parked primarily in a dozen other communities across the state, including Portland, Farmington, Fairfield and Skowhegan.

Augusta officials, in speaking out against the bill, said CMP backed the legislation only as a way to punish the city after CMP’s parent company, Iberdrola USA, didn’t like how the city dealt with Iberdrola subsidiary Maine Natural Gas. After a city bid process that Maine Natural Gas officials said was unfair, the city awarded a contract to provide natural gas to city buildings to a rival gas company, Summit Natural Gas of Maine.

Lance Harvell, a former state representative from Farmington, who previously held the seat now held by Buckland, said last year a CMP lobbyist asked him to sponsor the bill last session.

Buckland said earlier this year that CMP officials didn’t ask him to sponsor the legislation this session, and he sponsored it simply because he thought it was a fairer way for utility companies to pay excise taxes and was good for his constituents.

Keith Edwards — 621-5647

kedwards@centralmaine.com

Twitter: @kedwardskj

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