No relief from all those tax plans

One percent is an elegant thought. Anyone can figure out 1 percent of something and all of us assume we can afford 1 percent of all kinds of things. Its symmetrical smallness confers acceptance. When a citizen’s initiative asks whether you’d like to limit property taxes to 1 percent of the value of a home, it’s almost as if a truth has arrived. Of course, you think, 1 percent.

Gov. John Baldacci might have paid closer attention to this beautiful, terrible idea, which voters will see tentatively in November. He would have noticed that while a 1 percent tax cap would be destructive and costly it is also immediately understandable. In contrast, his tax-relief plan, lugged out this week, has so many moving parts and unrecognizable mechanisms that it is undefinable. That is not to say it would fail to act as intended; it is to say, loudly, that it won’t beat a 1 percent tax cap.

What is the governor’s plan? It is a dog’s breakfast of ideas that have been hanging around the Blaine House since the previous administration but not previously dumped into the same bowl. The governor would, first, take away the Homestead Exemption and redirect its money to only those residents who pay at least 4 percent of their income to property taxes. He calls the new fund, which is the current Circuit Breaker, the Homestead Tax Cap, the better to confuse it with the old program. He would raise the state share of school funding to 55 percent over five years, which by 2010 would increase the state portion by about $210 million annually, a long-accepted idea that unfortunately takes some of what could be Homestead money and redirects it to out-of-state vacation homeowners. No doubt they’re grateful for the tax break.

He has a plan to cut special-education costs, but it is not clear what this means to students in special education or to those who would no longer qualify for the services, and he would cut school-bus reimbursements. The governor wants municipalities and county governments to be restricted in their spending, inviting himself to what have been local decisions. And for at least the third time he has proposed repealing the personal property tax on business equipment, an idea universally accepted but never carried out. He wants – get out your calculators – to cap at 9 mills the level of funding effort municipalities must make for education.

Among other sources, Powerball, the nation’s voluntary taxation system, would pay for this relief package. The governor is famously anti-gambling, but said he couldn’t come up with another way of finding revenue, which is eerily similar to what supporters of the casino were saying last fall.

By virtue of this plan coming from the governor’s office, it is now at the top of a heap of plans – the 1 percent cap, the Maine Municipal Association’s school-funding initiative, Speaker Pat Colwell’s Homestead plan, the House Republican spending-restraint plan and a sale-tax increase idea from House Democrats that frightens even them. What distinguishes the governor’s plan is that it is the only one that cannot be identified by what it would do because it does so many different things.

Perhaps we should be relieved by this and assume the administration has forsaken the easy path of proposing something that sounds good for something that, though unattractive, would actually create a fairer tax system while making Maine more competitive for business. Each of the components of his ideas is understandable; it is only when they are taken together that the whole seems less than the sum of its parts, particularly so because much of what it would do occurs five years from now.

More important, however, is that there is widespread, bipartisan concurrence Maine must provide property-tax relief on the way to lowering its taxes overall, but there is no bipartisan plan to achieve this. Legislative Republicans say they weren’t given the details of the governor’s plan until it was announced publicly; worse, Democratic Speaker Colwell, who has been trying for weeks to build support for his own plan, which includes some of the parts in the governor’s, now must either kill that proposal or compete against the leader of his party. That’s not a good way to build support.

Hardly anyone in Augusta thinks the Legislature will adjourn as scheduled March 22, or even by early April. Even so, there is little time for the sort of debate over such details as whether the Homestead Exemption, which gives smaller dollar amounts to all residents, is better than the Circuit Breaker, which better targets relief but does not have as much public support and is open to abuse (transfer a property to a retired parent and hello tax break). This debate and many others are necessary because most of the plans were assembled without the input of likely opponents.

So, with just weeks left in the session and a supplemental budget still to be approved, lawmakers have a half dozen competing tax plans, no clear sense what all the pieces of the leading plan would do, and face a messy debate about what should be included in whatever plan they choose. And waiting on the ballot is that simple 1 percent solution, a ready, simple answer for those tired of the confusion of Augusta.

Todd Benoit is the BDN editorial page editor.