AUGUSTA – Freshman Rep. Bernard “Barney” McGowan says he campaigned for a Maine House seat two years ago on one issue: reducing property taxes.

Since being sworn in, the Pittsfield Democrat has worked tirelessly on that issue, and it’s culminated in legislation that could lead to fundamental changes in Maine’s tax system. Its big test comes this week.

A pair of bills to be taken up by the Legislature as it winds up its 2002 session call for a referendum aimed at lowering property taxes and shifting more of the burden of paying for public schools to the sales tax.

This would be done primarily by removing exemptions that are sprinkled liberally throughout the tax code, said McGowan. The scores of items now exempted from sales taxes range from haircuts to yacht mooring fees.

“If we don’t do something about shifting the burden of how we raise money – if we don’t do tax reform – then we’re going to be back to where we were in the early ’90s, shutting down state government,” McGowan warned.

As a homeowner and former small-business owner, McGowan knows firsthand about the property tax burden. By owning businesses in two different towns, he supported school systems in Pittsfield and Skowhegan.

“It’s been a passion of mine for a long time,” he said. But McGowan is not the first legislator to think about realigning the tax base to ease property taxes.

Since 1980, he said, five legislative studies have suggested broadening the tax base “and nothing has been done.”

McGowan noted that his son Patrick, who served in the House during the 1980s, put in similar legislation to shift the tax burden but it was shot down. The younger McGowan ran for Congress after a decade in the Legislature and later served as regional director of the Small Business Administration.

Buoyed by favorable committee votes on the latest legislation, the senior McGowan has high hopes lawmakers will act more favorably this time.

A special bipartisan panel headed by McGowan studied the issue and submitted a report to the Taxation Committee. The tax panel’s majority favors McGowan’s proposal.

Even the Maine Education Association, which opposes the legislation, acknowledged that it drew more committee support than anyone expected. But the 25,000-member teachers union is nervous about cutting back a stable source of school funding without a solid plan to replace the revenues.

“I like the concept behind it,” said MEA President Idella Harter. But she sees a danger of creating “a crisis without a solution.”

The bill calls for a referendum this November asking voters if they favor the idea of shifting the property tax burden to a broad-based tax.

If it passes, the Taxation Committee that will serve after a new Legislature is elected in November would have to come up with new sources of revenue for public education to make up for the loss in property tax revenues.

McGowan’s proposal calls for maximum property tax mill rates for local K-12 school costs of 6 mills for most primary residential, commercial, agricultural, industrial or undeveloped properties. A 12-mill maximum would be in effect for other properties.

The bill says special consideration should be given to expanding Maine’s sales tax and use tax base, and replacing those taxes with a gross receipts tax.

Also suggested in the bill is an excise tax on personal property and creation of a fund to make sure enough state money is available for schools during periods when state revenues run short.

An accompanying bill – backed by all 13 committee members – seeks constitutional changes, also requiring a referendum, needed to implement the property tax changes.

McGowan calls the changes sketched out in the main bill “a blueprint” for carrying out the shift from the way taxes are raised today. McGowan believes the present system has grown increasingly regressive.

“What has happened to us over the past few years is that we have given so many exemptions that we have a narrow sales tax base,” McGowan said. That leaves most of the burden on lower-income people, who tend not to buy many of the products and services that are exempted, he said.

They are also the people who have no lobbyists in Augusta, said McGowan, adding that the State House hallways are full of lobbyists protecting tax exemptions.

While exemptions have remained protected, the bottom line for property taxes collected statewide for education has grown fatter, from $789 million in 2000 to $841 million last year to an estimated $909 million this year, McGowan said.

A decrease in property taxes could be made up in part by charging sales taxes for services and raising the meals and lodging tax by a penny, McGowan said.

“If we kept the sales tax at 5 percent and broadened the base to what we recommend, it would raise $340 million to $400 million,” he said.

That would be more than enough to fulfill what many lawmakers see as the state’s commitment to pay 50 percent of General Purpose Aid to education, the school subsidy that has slipped to as little as 45 percent in the last few years.

It also would provide enough new, ongoing revenues to meet fiscal challenges such as the state faced this year before passing a supplemental budget that made up for a $160 million shortfall.

“If you look at it in reality, we balanced this budget on one-time moneys. We smoke-and-mirrored it,” said McGowan.

The King administration was analyzing McGowan’s proposal last week and had not yet taken a formal position.

Rep. Janet McLaughlin, D-Cape Elizabeth, a Taxation Committee member who opposes McGowan’s plan, said she is uncomfortable putting a proposal before voters without giving them the details.