Responding to some communities’ difficulty meeting the rising cost of education, Rep. Michael Brennan, D-Portland, has filed a bill that would add an additional three percent sales tax on the value of rental of living quarters in a hotel or lodging establishment.

The money, which Brennan estimated could amount to $60 million annually, would go to fund school construction and K-12 education.

Brennan’s proposal, which has a number of Democratic co-sponsors, is in tandem with a report to be delivered to the Legislature in March that takes a hard look at the current school funding formula, which has been in place for 20 years.

In April 2024, the Legislature tasked the Maine Department of Education and the Maine Educational Policy Research Institute, a nonpartisan research organization funded by the University of Maine and the Legislature, with studying various aspects of the essential programs and services (EPS) formula.

Brennan sponsored the resolve, one of a slate of bills that session calling for changes or review of the funding formula, which critics say penalizes school districts with high property valuations.

One focus of that study is individual communities’ capacity to pay — which Brennan said has long been an issue with the way schools are funded in the state.

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In Maine, the state pays for 55 percent of the overall statewide cost of essential programs and services. The percentage it funds in each district is determined largely by that district’s property values and student enrollment, as well as factors including the number of economically disadvantaged students. Districts with higher property values typically get less help from the state in paying for public education.

Once the state’s contribution is determined, the district is expected to raise the rest, which communities primarily accomplish through property taxes. It’s not uncommon for half of a municipality’s property tax revenue to go to funding its schools.

But property values have risen much faster than incomes in recent years, leaving residents in places with high property values but average or below-average median income levels struggling to fund their local schools.

In the coastal community of Jonesport, for instance, the state was slated to pay for just 24 percent of essential programs and services for the 2025-2026 school year, or $276,470. In Augusta, the state was set to contribute $17.8 million, or roughly 57 percent of the school district’s $31.3 million budget this year.

The median household income is $65,938 in Jonesport and $48,756 in Augusta, according to U.S. Census data, both below the statewide median household income of $73,733.

Lewis Collins, superintendent of the Jonesport Beals school district, criticized the allocations in testimony in 2023, saying that Augusta gets “a bundle more in state funds because they live near a river, not an ocean … How does that make any sense at all?”

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Roy Gott is chair of RSU 24, which covers nine Downeast communities, and supports examining capacity to pay as part of the funding formula. A person with a modest or fixed income who owns a home that has greatly appreciated in value is in a bind, said Gott.

“If you’re not selling the property, it’s not income,” Gott said. “The value of the property should not be looked at as someone’s ability to pay.”

Gott added that, in his estimation, the formula benefits urban areas, “big schools in a small geographic area.” The cost reality, he said, is very different in rural areas where a much smaller number of students come from a much larger geographic area.

“The Department of Education said adjustments are made for rural schools,” he said. “But my opinion is those adjustments don’t begin to make up for the disadvantage of being spread out like RSU 24. We have 700 to 800 kids over nine towns.”

Brennan was House chair of the Education and Cultural Affairs Committee when the panel voted to take an in-depth look at all aspects of the funding formula. Among the targeted topics are state and local subsidy, local residents’ ability to pay and property valuation.

The report could potentially recommend “significant” changes to the funding formula, said Brennan, “the most significant changes since 2005,” when the school funding formula was adopted.

“Communities with higher property valuation are expected to raise more. If two towns have the same property value, they would be expected to raise the same amount of dollars,” said Amy Johnson, co-director of the Maine Educational Policy Institute, which worked on the report.

“Our work is going to include, hopefully, a more digestible version of this…What we are going to be doing is describing all options for revenue,” Johnson said. “A lot of people are hoping for less reliance on property taxes.”

This story was originally published by The Maine Monitor, a nonprofit and nonpartisan news organization. To get regular coverage from the Monitor, sign up for a free Monitor newsletter here.

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