WATERVILLE – Steely-eyed and confident, state economist Laurie Lachance stared down a circumspect crowd at Thomas College as she asked them to contemplate life in Maine if the Question 1A property tax relief proposition is passed by voters next month.

Not exactly known around the State House as the “Dirty Harry” of Maine economics, Lachance still managed to intone a chilling challenge to the men and women convened for the recent business breakfast forum sponsored by the college and the Mid-Maine Chamber of Commerce. Using the economist’s logic, the eggs and issues crowd easily could have concluded that before checking off 1A on the ballot, one needed to consider just one question: Do you feel lucky?

“Do you honestly believe that if $245 million is sent to the communities of Maine that every single dollar will translate into property tax relief?” Lachance asked. “Isn’t it just as likely that there will be some temptation to take a portion of it and use it on other desperately needed things, like a new firetruck, a new town hall or some other pressing need? If your answer to my first question is no, then you need to understand that the overall tax burden in Maine will increase.”

Those are the kind of “scare tactics” backers of the citizen initiative for property tax relief maintain they have been rebuffing for months. At Thomas College, Lachance’s characterizations of the 1A plan were countered by Edward A. Gagnon, Winslow’s town manager.

Gagnon essentially asked those in the audience to decide whom they trust more with their tax dollars – the Legislature or their local town or city government.

“I find that as a citizen of Maine this really insults me – I find that we at the local level know the best way to spend our money,” Gagnon argued. “We don’t necessarily believe that the state knows the best way to spend our money. It just doesn’t make sense to me. If a community does have needs for a new firetruck or recreation center and that community chooses to do that, then that’s democracy. We do not need someone else telling us what’s good for us.”

Countdown to Nov. 4

The property tax initiative pits state lawmakers against local municipal officials and teachers against the Maine Board of Education. Propelled to the forefront of public attention by its “Number 1” pole position on the Nov. 4 ballot, the referendum question was conceived and refined within the inner sanctum of the Maine Municipal Association, a powerful legislative lobbying group that also provides technical assistance to local city councils and boards of selectmen.

Gathering 100,000 petition signatures, the MMA crafted what even some of its critics have described as a “brilliant strategy” that confronts voters with a simple question: “Do you want the state to pay 55 percent of the cost of public education, which includes all special education costs, for the purpose of shifting costs from the property tax to state resources?”

This year the MMA initiative exploded over the heads of lawmakers like a cluster bomb, targeting and inflaming long-simmering resentments over the Legislature’s:

. Failure to abide by its 1984 pledge to fund the state’s share of local education costs at 55 percent (the state now funds about 41.3 percent of local education costs).

. Inability to reverse skyrocketing property values across the state or to provide for immediate and significant tax relief.

. Refusal to reform the state’s tax code to provide a less volatile formula for revenue collections now driven by an overreliance on the property tax.

MMA officials have said their proposal is designed to force the Legislature into making needed tax reforms, but the wording left it up to lawmakers to identify ways to fund the state’s additional share of education costs.

Gov. John E. Baldacci’s fledgling administration already was coping with a $1.2 billion budget shortfall, looming plant closures in northern Maine’s papermaking sector, and an unfinished state health care policy when it became clear the MMA initiative would be on the ballot. Efforts were made between the administration and the MMA to find some middle ground that would avoid crafting tax policy at the ballot box, but some of the officials attending those meetings said both sides seemed to lack a fundamental desire to avert a head-on collision at the polls.

“I know people are saying, ‘Why can’t you figure this out, why do we have to do this in a statewide referendum?'” Baldacci said. “But at the same time, people in our state like to be involved and like to make decisions and that’s what the initiative process is all about.”

Convinced he could not wrest the kind of concessions he wanted from the MMA, Baldacci chose to take his chances with the Legislature and called lawmakers in for a special session in August to deal with the issue. With the revisions from legislators, the administration crafted a competing measure that ultimately would become Question 1B and go head-to-head on the ballot with Question 1A. And because of the way the state’s competing measure law is written, voters automatically received the opportunity to vote for a third choice, 1C, which rejects both 1A and 1B.

To pass, Question 1A or 1B must receive more than 50 percent of the vote. If neither gets better than 50 percent, the one that gets the most votes and a minimum 33 percent must be considered again, but this time alone on the ballot. That second vote likely would take place during the next general election in June. If on Nov. 4, however, 1C receives enough votes to deprive both 1A or 1B of at least one-third, than both 1A and 1B are rejected outright and no further votes are necessary.

If proponents of the citizen initiative had shrewdly backed the governor and the Legislature into a corner to confront tax reform under the guise of educational funding and property tax relief, then Baldacci and lawmakers demonstrated equal political agility by making it more difficult for 1A to achieve its ambitious “50 percent plus one” threshold for approval.

“We’ve got two ways to win and one to lose,” said Lee Umphrey, spokesman for the governor.

1A: ‘Tax reform now’

From the day proponents of 1A wheeled their boxes of signature petitions into the secretary of state’s office, there was little doubt that the citizen initiative was well-organized. Led by MMA officials such as Mike Starn, Geoffrey Herman and Jeff Nevins, Question 1A supporters quickly formed a political action committee, Citizens to Reduce Local Property Taxes Statewide. By enlisting the support of municipal officers and teachers unions such as the Maine Education Association, the 1A PAC quickly amassed an impressive campaign war chest of a little more than $830,000 according to the most recent campaign finance reports.

The PAC relied on municipal officials such as Gagnon of Winslow; Dana Lee, town manager for Mechanic Falls; and Jennifer Wixson, a selectwoman from Troy, to provide a ground-level argument for the tax relief plan in the press, in television commercials, and to legislators at public hearings.

“We wanted to be out there first with our message because we believe it is the right message,” Lee said. “Maine needs tax reform now, not to be delayed and deferred. We need it in a lump sum manner.”

1B: ‘Timing is everything’

Baldacci said finding the extra $245 million to $264 million in the state budget to fund education at 55 percent would force him and the Legislature to make wholesale cuts in existing programs or impose tax increases, or both.

To counter 1A, he laid the groundwork for a competing measure that was amended slightly by legislators and now is being offered as Question 1B on the ballot. It promises the same 55 percent goal as 1A, but defers action until July 1, 2005, and phases in the money over a five-year period. Much of the funding to meet the goal would arrive in the last two years of the schedule. Baldacci’s plan also would immediately provide about $40 million through June 30, 2005, to enhance property tax relief now available under the state’s “circuit-breaker” and Homestead Exemption programs.

“While the vision is the same, the path is different, and it is extremely different in how it impacts the state of Maine,” Lachance said. “Some say that the only difference is timing, but as we’ve heard so many times, timing is everything. If MMA passed 1A, it would instantly require this state to come up with $245 million in resources from the FY05 budget, which starts July 1 and is already balanced. There’s no extra.”

Relying on in-the-field support from lawmakers and executive branch staffers like Lachance, Baldacci solicited the backing of Maine’s business community to create 1B’s PAC, Mainers For Responsible Property Tax Relief, which so far has raised a little more than $290,000. Dana Connors, president of the Maine Chamber of Commerce, and Kay Rand, a lobbyist who formerly was chief of staff to Gov. Angus S. King, have taken the lead in promoting the PAC, responding to concerns expressed by Maine’s large and small businesses. The manufacturers and retailers are worried that lawmakers might raid the Business Equipment Tax Reimbursement program – valued at a little more than $60 million annually in the current budget – to fund 1A.

“They know what’s potentially at stake here,” Rand said.

1C: ‘Who knows but them?’

Until recently, Bob Stone has been sort of the “Lone Ranger” in the Question 1 debate. The Lewiston resident decided to form the Common Sense for Maine Taxpayers PAC to promote the idea of rejecting both 1A and 1B, since neither provides a guaranteed mandate for tax reform – an issue he believes is critical to Maine’s future.

Although Stone has collected only $500 for his PAC, Question 1C has managed to win significant endorsements from the Maine Sunday Telegram and from Peter Cianchette, a South Portland businessman and former gubernatorial candidate perceived as the Republicans’ best hope for defeating Baldacci in 2006.

Stone also takes most of the credit for advancing the concession from 1A and 1B proponents that neither proposal can guarantee tax relief.

He takes a particularly dim view of 1A supporters who, he says, attempt to divert attention from the costs of the proposal by inserting the words “revenue neutral” into 1A’s legislation – an implication that Mainers will pay no additional taxes if the question is approved.

“It won’t be ‘revenue neutral’ to the taxpayers who will have to fund the increased state spending absent a dollar-for-dollar reduction in local property taxes,” Stone said. “I fear that the MMA is using ‘revenue neutral’ to make the voters think that the Legislature will not be permitted to raise taxes. Either they don’t understand it – which I don’t believe – or they are misrepresenting the requirements set forth in the measure. Who knows but them?”

For 1A supporters like Gagnon, Stone’s criticisms are simply one more obstacle opponents are placing in the path of the citizen initiative in an attempt to prolong the Legislature’s inaction when it comes to the subject of property tax relief and tax reform.

“Our taxes are among the highest in the nation,” Gagnon said. “1C does nothing and all 1B amounts to is more promises, promises, promises.”

Question 1

(Citizen Initiative and Competing Measure)

1A Citizen Initiative

Do you want the State to pay 55% of the cost of public education, which includes all special education costs, for the purpose of shifting costs from the property tax to state resources?

1B Competing Measure

Do you want to lower property taxes and avoid the need for a significant increase in state taxes by phasing in a 55% state contribution to the cost of public education and by providing expanded property tax relief?

1C Against A and B

Against both the Citizen Initiative and the Competing Measure.