What is the real threat to tax reform?

The tax reform deadlock in Maine’s Legislature is being blamed on the “threat” posed by the Maine Municipal Association’s citizens’ initiative. But there’s a much larger, more dangerous threat that needs attention before it’s too late.

The Maine Municipal Association, frustrated by decades of inactivity on the part of past legislatures, gathered more than 100,000 signatures seeking to mandate tax reform by forcing the state to honor its one-time commitment to fund education at the 55 percent level.

But there are at least three problems with this simplistic approach. First, it specifies what must be accomplished but leaves it to the Legislature to determine how it will be done. Second, it leaves unanswered the question of “55 percent of what?” And, third, there’s no real guarantee that reduced local property taxes will result even if the first two issues are appropriately resolved.

So the Legislature has concluded that the MMA proposal is the “enemy” that must be defeated. It has further concluded that the state constitution bars them from passing any legislation having to do with the subject of a citizens’ initiative which, in this case, is the broad subject of tax reform.

Thus handcuffed, the Legislature has been struggling to craft a bipartisan supported alternative to the MMA referendum question. They may or may not succeed in doing so before the middle of August.

But what should be of more concern occurred quietly with little press notice just a few weeks ago. Carol Palesky submitted more than 60,000 signatures (20 percent more than needed) to the Secretary of State’s Office seeking to place her California Proposition 13-style 1 percent tax cap on the ballot in November 2004.

Remember that the MMA is a friendly force in politics, sharing a vision with the Legislature for the efficient and effective delivery of educational and municipal services. It can be argued that this vision is not reflected in Palesky’s tax cap proposal and, almost to a person, legislators and municipal leaders proclaim that passage of her measure would be destructive to state and local governments.

So if the Legislature is having difficulty dealing with the MMA this year, how will it cope with the challenges mounted by Palesky next year? It could be that they’re betting Palesky’s tax cap will either (a) not make it to the ballot or (b) will be rejected by the voters. I wouldn’t take either of those bets.

The Secretary of State’s Office will no doubt spend a great deal of time carefully scrutinizing all signatures to ensure they were willingly written by living voters, so it might be a while before we know if the petitions will be certified. But it is doubtful that Palesky’s group would repeat past mistakes.

And when the tax cap gets on the ballot in 2004, voter discontent with the Legislature’s inability to enact meaningful tax reform may serve to haunt our leaders. As is the case this year, the very presence of the tax cap referendum on the ballot will preclude tax reform for yet another year, and the voters will respond accordingly, as they have done in California, Massachusetts and other states.

My prediction is that next year at this time, the talk around the State House will be about finding a competing measure to go up against Palesky’s tax cap, and that will be a far more daunting task than the MMA challenge has been this year. The Maine Land Bank and Community Preservation Program could provide that alternative.

The Maine Land Bank idea is simple: Owners of land (homesteads, businesses, working waterfront, woodlands, farmlands) who desire to maintain ownership of their land for the long run and presumably pass the land on to future generations could enroll in a program that would establish a land value based on the assessment five years prior and would limit future increases in their assessments.

If the owner has a change of mind and decides to sell the land outside of the family then a substantial penalty would have to be paid. Thus the program is not only voluntary but self-funding. Details of this inno-vative proposal may be found at www.mainelandbank.org.

The Maine Land Bank could successfully compete against the Palesky tax cap and defeat it. But the Legislature will not be able to offer it on the ballot in 2004 unless they enact the enabling constitutional amendment for presentation on the 2003 ballot.

They have the opportunity to do exactly that this summer. Recognizing the potential of the Maine Land Bank, LD 938 and LD 951 were carried over from the last session by the Taxation Committee. It’s not too late to put the constitutional amendment on the ballot in November.

Regardless of how the MMA drama plays out, the Legislature must prepare itself for the even greater challenge presented by Palesky.

I urge all concerned citizens and taxpayers to contact their senators and representatives as well as the governor’s office to let them know that the Palesky threat is not one to be taken lightly. Action now could avoid much future pain.

David R. Hill, of Yarmouth, is a private citizen who has been seeking tax reform through passage of the Maine Land Bank and Community Preservation Program, also known as the “Chebeague Plan.”