Towns mull extra sales tax Money would aid notable projects

BANGOR – New taxes always are a tough sell. This legislative session, those behind the latest push for a local option sales tax are expecting nothing less.

As in years past, the Bangor legislative delegation is in the thick of the effort, with city officials tapping Rep. Joseph Perry to sponsor a bill that would allow municipalities to tack up to 1 percent onto the state sales tax on items sold in that community.

Under the bill, still in a draft form, the revenue – which in Bangor could approach $10 million each year – must be used to fund projects of “regional significance.”

In an interview from Augusta late last week, Perry said the time is right to reconsider the legislation, a version of which – sponsored by Sen. Robert “Buddy” Murray, D-Bangor – was soundly defeated in both the House and Senate last year.

“Bangor has a great opportunity with the waterfront and other projects that can have some real regional significance,” said Perry, a Democrat entering his third term in the House. “But the property-tax payers in Bangor cannot afford another penny to support this growth, which really benefits the whole area.”

Specifically, Bangor officials are eyeing the money to replace the aging Bangor Auditorium and Civic Center, a 45-year-old complex that consistently operates at a deficit despite attracting 300,000 people to the city and pumping $30 million a year into the economy.

The $30 million plan to replace the two buildings – the largest capital project in the city’s history – would add an estimated $1.70 to the city’s tax rate of $24.35 per $1,000 in property valuation. The increase roughly translates into an extra $170 in taxes on a property worth $100,000.

Too much, say city officials, who, like their counterparts in the state’s other major service centers, Portland and Lewiston, already face some of the largest property tax burdens in the state.

At the same time, Bangor businesses send between $40 million and $50 million to Augusta each year in sales taxes. The city gets back only about $3.5 million in the form of revenue sharing.

Large cities, however, have gained little sympathy on tax issues from rural lawmakers, many of whom have seen little benefit in giving the state’s larger economies any more financial advantages.

“My first, second and third thoughts are, ‘I don’t think so,'” Sen. Susan Longley, D-Liberty, said of the latest effort to pass the local option sales tax. “Of course, I’m always willing to listen, but I’d rather see us address property taxes by meeting our obligation to fund education.”

Longley was one of 25 senators last year who voted against Murray’s bill, which would have returned a portion of the sales tax revenue to county government.

Longley said Saturday that while she understood the plight of service centers, she believed the Legislature’s recent effort to increase revenue sharing for those cities could be a more effective means of funding regional projects such as the Bangor Auditorium.

“I would be very skeptical of creating more taxes,” said Longley, who represents a rural part of Waldo County. “If anything, we should be going the other way.”

Under Perry’s legislation, the added sales tax would have to be approved by a majority of voters through a referendum. Regional projects also would have to be approved by the state Department of Community and Economic Development.

The cost of projects also would have to create an “undue financial hardship” on local property-tax payers, according to the draft legislation.

Several variations of the local option sales tax are proposed each legislative session, and a select group of lawmakers, mainly from larger cities or tourist destinations, have supported those efforts. In 1997, the plan came closest to passing when an Old Orchard Beach lawmaker linked the new tax to property tax reduction. The measure, while passing the House, was defeated in the Senate.

Sen. Kenneth Gagnon, D-Waterville, chairman of the Taxation Committee, has long been a supporter of the local option sales tax, versions of which are in effect in several states.

The lawmaker said Saturday that he would be more likely to support the new tax if it applied to an entire economic region rather than individual communities or counties.

“We can’t create miniborders all around the state,” said Gagnon, noting that many people in southern Maine often will make the trip to New Hampshire to avoid paying sales tax altogether.

It’s these potential borders that have concerned the business community, which traditionally has been skeptical of the new tax.

Perry acknowledged the importance of persuading the state’s business owners that the new tax would not put them at a disadvantage when competing against businesses in areas that reject the added tax.

“If they’re not in favor, it’s not going to fly,” he said.

Rick Varney, vice president and owner of a local truck dealership, said Sunday that he’s not convinced, noting that consumers are more likely to travel to buy big-ticket items such as vehicles to save a couple of hundred dollars.

“If it were statewide, that would be one thing,” Varney said. “But if we need a new auditorium, it should be a self-supporting entity, and we shouldn’t be making my business or any other business less competitive to do it.”