BANGOR – The Maine Municipal Association’s property-tax relief proposal had the most votes early Wednesday morning, but not enough to win outright, as the complicated issue divided voters along rural and urban lines.

With more than 88 percent of the precincts reporting, Question 1A had nearly 38 percent of the vote, while Question 1B trailed at 35 percent. Question 1C, the none-of-the-above option, was at 27.2 percent.

By surpassing the one-third threshold, Question 1A will almost certainly be heading for a second vote next year unless its proponents can reach some level of accommodation with the Legislature.

“I think we won tonight no matter what happens,” said Dana Lee, spokesman for the 1A political action committee. “I’m in hopes that the message was sent that the people want something done about tax reform. We plan to discuss the issue with legislative leadership to find some middle ground. We’re not looking for leverage, we’re looking for a solution.”

Meanwhile, proponents of 1B, the competing measure crafted by Gov. John E. Baldacci and the Legislature, said it was clear that the majority of Mainers wanted the Legislature to work on the complicated issue of tax reform and not be pushed into a hastily crafted response sought by the MMA.

“People want us to adopt a strategy that won’t blow a hole in the budget,” Baldacci said. “And I think it’s clear that my administration and the Legislature are willing to work with 1A proponents to find a strategy that will work.”

Question 1A arrived on the ballot as a reaction to the Legislature’s stated, but unfulfilled, 1984 intention to fund the state’s share of local education costs at 55 percent. Spearheaded by the MMA, a lobbying and consultant group for municipalities, a petition drive attracted more than 100,000 signatures from residents eager to collect on what they perceived as a long-overdue promise of full education funding to curb rising property taxes.

The MMA plan requires the Legislature to identify funding sources to raise the state’s share of local education costs to 55 percent and urges lawmakers to achieve that goal without raising new taxes. Question 1A recommends the Legislature fund the initiative through a “revenue neutral” strategy, leaving it up to lawmakers to define the meaning of the term “revenue neutral.”

The state currently funds education costs at about 41.4 percent. To meet the 55 percent goal, the state would need to find about $250 million more for educational funding to distribute to Maine communities effective July 1, 2004.

The fledgling Baldacci administration was already 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 to avoid crafting tax policy at the ballot box, but some of those attending the negotiation meetings said both sides seemed to lack a fundamental desire to avert a head-on collision at the polls.

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. Supported by the Mainers For Responsible Property Tax Relief political action committee, Question 1B became a competing measure crafted by Baldacci and amended by the Legislature to counter 1A.

Question 1B would phase in additional education funds over a five-year period until the 55 percent goal is reached. Rather than raise new taxes or cut existing programs, the additional money under 1B would be raised by designating about 60 percent of all new revenue growth for education. The plan also provides an additional $40 million through June 30, 2005, to enhance property-tax relief currently available under the state’s “circuit-breaker” and Homestead Exemption programs.

Launched in reaction to both campaigns, the Common Sense for Maine Taxpayers PAC sought support for 1C, which allows voters to reject both the citizen initiative and the competing measure. Under state law, if neither Question 1A or 1B receives a majority, the option getting the most votes will be considered next June as an unopposed question as long as it received at least 33 percent of the total number of votes cast. If 1C receives enough votes to deprive 1A and 1B of at least one-third, than 1C would prevail.

Since 1A appeared Tuesday to have met the one-third requirement and surpassed 1B’s total, the plan will move forward to a 2004 vote. Dana Lee and other 1A proponents would like to see the Legislature schedule a special vote in February since many of the provisions determining funding in 1A’s legislation are triggered early in 2004. But Baldacci and 1B spokeswoman Kay Rand countered that people’s vote clearly indicated that they did not want the Legislature to move that fast.

“What they’ve said was that around 60 percent of the voters support neither 1A or 1B, so it really throws it up in the air and tells us that they want to defer this to the next election,” Baldacci said.

The timing of such an election will be determined by the Legislature, and while the Secretary of State’s Office has stated that June would be the first available opportunity, Rand suggested it might not be the best or only opportunity for a runoff. Instead, she said the Legislature might reason that a June primary would not include all voters and that a November statewide vote would be the most appropriate.

“At least then, voters would be able to weigh a solution that would not force the state into a fiscal crisis,” she said.

Although Question 1B polled well in the state’s urban centers and larger towns, it was the small rural communities that appeared to have sealed the fate of the competing measure. In part, that result was due to the closer bond small boards of selectmen have forged over the years with the MMA, an agency they rely on for all large and small problems. In contrast, large city councils have the advantage of city solicitors for legal opinions, and public works directors and economic development officers to assist them in municipal planning and problem solving.

“I think the elected officials in small towns are more respected by members of the community and are therefore more influential on this issue,” Rand said.

To a lesser degree, time was on the side of 1A, which was able to build momentum for its position almost since the day it delivered its petitions last spring. In contrast, 1B did not even get its PAC up and running until September.

“So I think we did very well under those circumstances,” Rand said. “It was a complicated issue and difficult to educate voters on.”