The Jan. 17 Bangor Daily News article by Jeff Tuttle cited a study produced by the Bureau of Labor Education titled, “Thinking Outside the Box: The Challenge of Maine’s Regional Service Centers.” Tuttle’s article focused mainly on the impact of a local sales tax option, a relatively small part of the Bureau’s report. The emphasis of our study deals with the very important issues and realities that need to be addressed regarding the many challenges confronting Maine’s regional service center (RSC) communities such as Bangor.

Regional service centers comprise 69 cities and towns in Maine which provide jobs and retail sales to surrounding areas, and are centers for services ranging from education and health to cultural, recreational and social services. A groundbreaking analysis by a 1998 Maine Task Force Report, produced by the Maine State Planning Office, analyzes these challenges, which range from inadequate revenue, high property taxes, and increased demands for services, to shrinking population and declining economic well-being overall. As the Task Force report compellingly points out, assuring the well-being of Maine’s regional service centers is in the interest of the entire state, not simply for the residents of those communities, which “account for 75 percent of the State’s jobs, 84 percent of its taxable retail sales and a majority of its social services.”

More recent evidence confirms that many of Maine’s regional service center (RSC) communities, ranging from larger cities such as Portland and Bangor to smaller towns such as Machias, are indeed in trouble, and that trouble may be growing. Unfortunately, while the many issues of regional service centers are complex, much analysis of these problems is based on some troubling assumptions about municipal revenue. Thus, many of the proposed solutions are likely to lead in the long term to further declines in economic well-being and quality of life, both for communities, and for the families and working people who live there.

One of the most common responses to the problems of inadequate municipal revenue, rising property taxes, and declining service center population has been to contrast an easily understood model or picture of how these crucial factors are related. This widely shared model, which we will term the “Closed Loop” model of municipal revenue problems, increasingly used by municipalities to guide local policy concerning economic development, zoning, and other areas of local planning. However, this model is incomplete and too simplistic in its proposed casual explanations, and leaves out crucial factors contributing to these problems. For example, this “closed loop” model assumes that:

. the high tax burden in RSC’s is a primary cause underlying the outmigration of middle-income families to the suburbs;

. this outmigration results in a decline in the tax-paying public and an increase in the needy dependent population, further increasing the need for revenues;

. the revenue problems of municipalities can be addressed by conventional economic development, including the use of corporate tax incentives.

This “closed loop” model overlooks some other important factors:

. that the shift from manufacturing to an information economy, with lower-paying service jobs offering limited benefits, has made workers and families economically vulnerable, resulting in less disposable income to support small businesses, and more demands on social services;

. that increases in health care costs have exacerbated these problems;

. that tax breaks to big business and “double dipping” can further reduce tax revenues in the long term;

. that the Maine State Planning office has determined that high taxes are at the bottom of the list of reasons why families move out to the suburbs;

. that attracting big-box retail can increase ugly sprawl and decrease quality of life in cities, which is at the top of the list of reasons families give for moving out of RSC’s;

. that tax incentives need to be accountable in terms of creating jobs that pay a living wage and offer worker benefits;

. that city governments are faced with new challenges from decreased federal responsibility for the provision of health and other services, increased unfunded federal/state mandates, and the deregulation of key industries in the past three decades;

. that some big-box retail corporations target small business for extinction and can lead to a spiral decline in communities;

. “local option sales tax” can be regressive, but working class and poor families can be protected from negative effects, e.g. by refundable earned income tax credits.

The challenges facing regional service center communities in Maine need to be addressed by creative problem solving which goes beyond the simplistic and flawed assumptions of the “Closed Loop” model of service center revenue. Many existing strategies to increase municipal revenue through tax incentives and inappropriate economic development are often counterproductive to the long-term well being of service center communities and their quality of life. The health of RSC’s is critically important for the well-being of the state as a while, and the taxpayers in these communities should not be expected to assume the entire financial burden of providing needed services and infrastructure for surrounding areas.

Policy-makers, citizens and workers should become informed about the need for comprehensive state and regional solutions that will be equitable and effective, in order to prevent a continuing downward spiral of economic and social decline in service-center communities and in the rest of the state.

John Hanson is the Director of the Bureau of Labor Education at the University of Maine.