Since the 1980s, we’ve heard about “trickle-down” economics, but today we are also beginning to learn a lot more about another phenomenon: trickle-down taxation.

We have some firsthand experience with municipal budgets as we have both served as chairman of the Hallowell City Council’s finance committee.

The decisions the governor and Legislature make regarding state funding priorities and spending levels significantly affect the budgets of Hallowell and cities and towns statewide. Every time, they cut taxes they have less revenue to meet the state’s obligations. Their state tax cuts result either in cuts to education and other services at the local level, or more often, an increase in the principal municipal funding source — property taxes.

For example, the governor and Legislature have consistently failed to meet the state’s obligation to fund 55 percent of the cost of K-12 education funding mandated under the School Finance Act of 2003 and confirmed by vote of the people of Maine in a June 2004 referendum. In fact, that support actually has been shrinking in recent years.

Hallowell has been a member of Regional School Unit 2 since 2009. During the past six years, RSU 2’s general purpose aid to education funding, the subsidy Maine school systems receive to fund K-12 education, has declined by 24 percent, a total loss of $3.4 million in state support. In addition, the state also has shifted the cost for certain state-mandated programs to local school systems. For RSU 2’s 2016 budget, this includes $200,000 in MaineCare Seed funding and more than $100,000 in teacher retirement costs.

Largely as a result of these state actions, Hallowell’s school spending commitment has increased at an unsustainable rate of 44 percent over the last four years;

And it is not just state school funding shortfalls that have dramatically affected Hallowell’s finances. To relieve the local property tax burden, the Legislature mandated by statute in 1987 that the state government share 5 percent of its monthly corporate, income and sales tax revenue with municipalities. Since 2009, the state has steadily decreased its funding of revenue sharing.

Under Gov. Paul LePage, it has shrunk at a rapid pace, culminating in his proposal earlier this year to eliminate it entirely. Hallowell’s revenue sharing funding has decreased by 64 percent — $190,208 — over the past six years.

Legislators and LePage keep coming up with even more ways to pass costs on to local government. L.D. 186, An Act To Reverse Jail Consolidation, which is pending before Joint Standing Committee on Criminal Justice and Public Safety, would shift $2.6 million in costs to Kennebec County — a 27 percent to 30 percent increase in the county budget. That would raise Hallowell’s county taxes by a projected $63,000.

These past and proposed budget cuts and cost shifting from state to local government are forcing the city of Hallowell, RSU 2 and other municipalities and school systems statewide to reduce municipal services, limit investment in critical infrastructure and implement steep property tax increases on our families and businesses. In all, Hallowell’s property tax rate has risen from 15.3 percent in 2012 to 17.6 percent in 2015.

Reflecting our frustration, Hallowell City Council unanimously passed a resolve on May 11 that appeals to the governor and the Legislature to pass a two-year budget that restores revenue sharing to historic levels and rejects the shift of jail funding to the counties. We also called for a $25 million annual increase in K-12 education funding and reversal of policies that shift teacher retirement costs and MaineCare Seed funding from the state to local school systems and ultimately to local property taxpayers.

On June 1, the Appropriations Committee voted 9-4 to add $25 million to school funding in both 2016 and 2017 — a promising step in the right direction. We urge our legislators and local officials from other communities to join us in calling for a halt to this trickle-down taxation.

Mark Walker is Hallowell’s mayor and Mark Sullivan represents Ward 4 on the Hallowell city council.

Copy the Story Link