City leaders pitch sales tax proposal Local option plan faces stiff opposition

AUGUSTA – Leaders from the state’s larger cities made their case for a local option sales tax Thursday before a State House gathering of urban lawmakers.

“We’re being strangled,” Bangor City Manager Edward Barrett said, referring to the city’s heavy reliance on property taxes to raise money for regional projects.

Officials from Portland and Lewiston, as well as a number of smaller service centers, also made the trip to Augusta on Thursday to secure legislative support for the proposed tax option, several variations of which have been proposed this session.

Most of the legislation would allow a municipality, pending a local referendum, to add up to 1 percent to the sales tax on items purchased there.

On Thursday, the group, calling itself the Service Center Coalition, outlined its argument for the taxation option to a largely sympathetic gathering of about 20 lawmakers, most of whom hailed from the large cities more likely to support the tax option.

City officials argued that they need to maintain their cities’ aging infrastructures, used by those throughout the region who routinely come into the city to work, shop, dine and the like. On that note, Bangor officials often have raised the need for a new auditorium and civic center, which they argue is used by the entire region but supported by Bangor property owners.

Supporters of the option also pointed to higher property taxes in service center communities, with Portland, Bangor and Lewiston all ranked in the top 20 in terms of tax burden.

“We have now arrived at a point where we have no other alternatives,” said Phil Nadeau, Lewiston’s assistant city manager. “Right now, we can either ask the state for money or raise property taxes.”

The proposal has had a dismal track record in Augusta, making it out of committee only twice in recent memory, both times going down to defeat before the full House or Senate.

The Legislature’s Rural Caucus, as well as business and trade organizations, long has opposed the measure, which traditionally has been seen as a city vs. country issue in a rural state.

“You don’t get much sympathy [in Augusta] representing a big city,” said Rep. Stavros Mendros, a two-term Republican lawmaker from Lewiston.

Rep. Christopher Hall, a Bristol Democrat and member of the rural caucus, said education would be the key to the passage of the local option tax, and asked city officials to make their case before the 50-member caucus.

“Most people’s instinct is no new taxes if they don’t see any clear or present need,” said Hall, who represents seven small towns including Damariscotta, the service center for his district. “But I see, even in our local service center, the pressures on towns that have to provide for communities far beyond the borders of those towns.”

While the Rural Caucus may be key to the bill’s passage, it will likely still face stiff opposition from business organizations wary of being put at a disadvantage when competing against businesses in areas that reject the added tax.

“I don’t think they’ve come up with a way to stop people from crossing city lines to shop someplace else,” said Jim McGregor, executive vice president of the Maine Merchants Association, which represents about 1,500 large and small retailers in the state. “After all the trouble we had getting the sales tax back to 5 percent, I don’t think there’s going to be much support for a new tax.”