REFORM POSTPONED

The House debate Thursday night on the two bills that make up a comprehensive tax and education funding reform package is described by Geoff Herman, head of the Maine Municipal Association, as “the most thoughtful, impassioned, self-critical, self-evaluating and insightful debate on the subject that I have ever had the privilege of listening to in the State House.”

Critics of this reform will be quick to note that Mr. Herman’s assessment of the proceedings may have been influenced by the result – a 79-56 bipartisan vote in favor of a key element of the package his association endorses. It is of more importance to note, however, that the House held this debate at all.

The Senate did not. At the same time one chamber of the Legislature was digging in to the most persistent problem facing this state – its tax structure – the other was ducking out. With almost no discussion, the Senate voted 23-9 to “indefinitely postpone” consideration of this package. Lacking the courage to vote on the package itself, the Senate could not even extend to the citizens of Maine the courtesy of taking a roll-call vote.

The reform package, LD 2086 and LD 2087, is controversial and complex, which is hardly surprising with legislation that attempts to tear town the haphazard tax structure Maine has cobbled together over decades and to replace it something actually planned in advance. The specifics of this plan may contain flaws needing correction; there may be elements that a vigorous public debate will reveal as utterly unacceptable. The first step, however, is to have that vigorous public debate.

LD 2086, approved by the House, would do many things: stabilize education funding and provide greater equity; shift the tax burden from property to sales and broaden the sales tax base; replace narrowly targeted and largely ineffective business-assistance programs with an across-the-board tax reduction for all businesses. LD 2087, indefinitely postponed by the Senate, would allow this reform to occur by amending the state Constitution to allow real estate to be taxed for education at different levels – no more than six mills for primary property, up to 12 mills for secondary property, such as camps and summer homes – and it would eliminate the despised excise tax on personal property and business equipment. These ideas are similar to those proposed by state economist Laurie Lachance last month, innovative ideas that attracted a lot of interest everywhere (except, apparently, the state Senate).

Both of the measures would have to be approved by Maine voters at referendum. This would be preceded by a long campaign and a loud public debate. The result might be defeat at the polls – perhaps the shift from property to sales taxes will leave too wide a revenue gap, perhaps taxing property at two levels will be deemed unfair – but at least the longstanding pattern of lawmakers doing little more than muttering about tax reform will have been broken. An added bonus is that this referendum campaign might lead to a much-needed public debate about the other side of the tax equation – spending.

In his statement on the Legislature’s actions Thursday, Mr. Herman all but concedes that tax reform is dead for this session. He asks MMA members to keep in contact with their legislators, particularly in the Senate, and to ask if they have a plan to move the issue of tax reform forward. It’s a question all Maine taxpayers should ask their senators and they should not accept “indefinitely postponed” as an answer.