DEADLINE FOR TAX REFORM

Having failed over a decade to pass comprehensive tax reform, the Legislature and governor’s office badly need the discipline and deadlines imposed by a property-tax initiative announced last week. The initiative forces a state meandering toward reform to give the subject the attention it deserves.

The Maine Municipal Association, which represents the towns and cities of the state, has waited with growing impatience since the recession of the early 1990s for the state to return to the level of support it offered local education before the budget collapsed back then. A lot has happened since ’91, including the Homestead Exemption tax break, a couple of years of substantial increases to General Purpose Aid to Education and a state commitment to an improved school-funding model, but the underlying problem of too large a burden placed on the property tax remains. In fact, it has grown worse in some ways because of a continued shift from property-heavy manufacturing to a greater reliance on services in Maine’s economy.

The MMA hopes to gather public support to either compel the Legislature to pass reform or place the question before voters in November 2003. Its initiative would require the Legislature to raise the state’s support of K-12 education from 44 to 55 percent of the total; create cash incentives for schools and municipalities to save money through increased cooperation; and direct state lawmakers to develop a plan to lower the state’s tax burden. Special education, a rapidly growing expense made worse by the federal government’s failure to match its mandates with funding, would be paid for entirely by the state, under the initiative.

A couple of legislative and business groups also have been examining Maine’s tax structure in the hope of reforming the system. Each probably would put different emphases on school funding or broadening the sales tax or finding municipal efficiencies. An attractive part of MMA’s plan is that it is written broadly enough, with the exception of the percentage for school funding, that both the teachers’ union and the Chamber of Commerce could support it. Certainly, however, it will require more details as lawmakers debate it.

Future details will be crucial for the state to meet the initiative’s school-funding goals, for instance, because school districts and municipalities will need much more than merely incentives for cost savings. Like the Legislature, they will need their own clear requirements and deadlines to save money to make the funding shift affordable. There is no additional state money otherwise; no rainy day fund, no support for an increase in the tax burden, no expected boom in state revenues.

Maine cherishes the idea of local control, of citizens gathering to steer the direction of a small town no matter where other communities are going. The fact that a municipal organization is pushing hard for state level tax changes indicates how limited local control really is. State and local budgets are inextricably bound together and must be solved together. MMA’s initiative establishes the incentive and deadlines Maine needs to get moving, making it an important contribution to overall reform.