New MMA chief blasts tax plan Lee: Legislature’s proposal ‘deceptive’

AUGUSTA – Dana Lee, a driving force behind the Maine Municipal Association’s property tax relief initiative, on Monday roundly criticized the competing measure approved last week by lawmakers. And he predicted the credibility of the Legislature will be at stake on Nov. 4 when voters decide which tax-relief measure should take effect.

Stymied by what he perceives as nearly two decades of broken promises from the Legislature, Lee, town manager of Mechanic Falls and incoming president of the MMA, dismissed the legislative ballot alternative as “disingenuous.”

“There was no property tax relief there and the proposal for educational funding is downright deceptive,” said Lee.

The Legislature’s competing measure – backed by Gov. John E. Baldacci, all 31 of the senators who voted Friday, and more than two-thirds of 151 House members – is a direct response to the citizens initiative launched by the MMA that attracted nearly 100,000 signatories.

The lobbying group for city and town governments has grown increasingly frustrated with the state’s failure to comply with a 1984 law that guaranteed lawmakers would pay for 55 percent of local education costs. Baldacci said that currently, the state covers about 43 percent of those expenses. Lee says the figure is more like 42.5 percent.

The MMA proposal would require the state to make plans to fund the full 55 percent effective July 1, 2004. How the state would come up with the additional money to meet the 55 percent goal – estimated at $264 million – would have to be determined by the lawmakers no later than March 1, 2004.

Baldacci opposed the MMA plan because he said the state would have to hike taxes or slash social services programs, or take action in both areas to fund the initiative. He also argued that nothing in the legislation compels municipalities to use the money for property tax relief.

The governor’s amended bill increases the state’s share of local education funding to 55 percent, but at a slower, phased-in rate, deferring 100 percent of the funding goal until fiscal year 2010. Baldacci would pay for the increased cost over five years by dedicating to education most of the state’s annual growth in revenues, estimated at about $100 million per year.

The plan employs a new school funding formula known as Essential Programs and Services designed to curb the growth of local education costs. Under EPS the state will determine how much money each school in the state needs to cover the cost of the programs and services required under the state’s new academic standards to give all students a quality education.

Because of inadequate state and local resources, however, Baldacci said EPS will be funded at about 84 percent of its total estimated cost when the program is phased in on July 1, 2004, the beginning of fiscal year 2005. Baldacci said the state that year would provide about 49 percent of the estimated costs of essential programs and services.

“When you’ve had a promise made and you’ve waited 18 years for that promise to be fulfilled and what you get instead is a new promise, to what extent should anyone believe that the new promise is going to be any more meaningful than the old promise?” Lee asked Monday.

Lee described the governor’s math as deceptive, maintaining that under Baldacci’s proposal, municipalities will be receiving less than they did in the previous fiscal year because 49 percent of 84 percent of EPS is actually a net 41 percent.

In crafting the amended competing measure during the special session last week, lawmakers left the EPS phase-in schedule unchanged. But they eliminated all of the language Baldacci had included to impose spending limits on communities and instead sought to confront those who claimed the alternative was devoid of tax relief.

The amended legislation now expands the circuit breaker tax relief program for homeowners and renters and restores the full Homestead Exemption Program to pre-July 1 levels when payments were reduced across the board. The total additional cost for the amended legislation is nearly $15 million in FY05, $25 million in FY06, and $36 million in FY07.

“The circuit breaker only benefits a certain group of people, many of whom find the process of applying for it demeaning,” Lee said. “And to have the Legislature restore the Homestead program is like a parent taking his child’s favorite toy away, only to offer it back to him on his birthday and as a birthday present. I’m sorry, but I don’t buy it.”

Assuming the MMA proposal passes, Lee said, the Legislature should use the opportunity to adopt sweeping new tax reform measures that could apply sales taxes to currently exempt goods and services in an effort to reduce the volatility in the collection of state revenues.

Rep. Thomas J. Kane, D-Saco, countered Monday that if that’s what Lee really wanted, he should have included it in the wording of the MMA question so that voters could understand the full implications of their choice.

With many lawmakers facing re-election next November, Kane predicted few legislators would vote for deep tax increases to produce the kind of revenue the MMA initiative demands. Instead, the House chairman of the Legislature’s Health and Human Services Committee said the additional money would probably be redirected from programs dedicated to assisting Maine’s poorest and most needy residents: the mentally ill and the elderly.

“MMA has crossed the line beyond what we have come to expect in terms of responsible advocacy,” Kane said. “They’ve committed a strategic blunder. I appreciate their frustration, but no one’s going to enter into a process for meaningful tax reform when someone’s pointing a gun to their temple.”