Baldacci: ‘Significant’ tax relief in funding bill

AUGUSTA – After signing a new school funding bill into law Wednesday, Gov. John E. Baldacci predicted the legislation will offer a more “measured approach” to tax relief than a citizens initiative topping the June 8 statewide ballot.

“It is providing some significant relief, and it does it in an affordable, responsible way,” the governor said. “People want [tax] relief, and they want to know that something’s being done. I’m sending a strong, clear message today that, while this may not be everything, this is significant relief that meets our obligations.”

The bill, LD 1924, received the unanimous support of the Legislature’s Education and Taxation Committees and was approved by both the House and Senate. The governor’s Wednesday morning press conference was an attempt to counter the perception that he and the Legislature failed to provide any meaningful tax relief in the recent session when lawmakers were unable to reach consensus on a single plan.

Some legislators had anticipated bipartisan approval of such an agreement to pre-empt the ballot measure presented by the Maine Municipal Association and the Maine Education Association that will appear on the ballot again this June. While the measure failed to get the more than 50 percent approval required to pass last November, it won more votes than the other two choices and enough to be carried over to this June.

The citizens initiative, which will now appear on the June 8 ballot as Question 1, seeks to increase immediately the state’s share of local education expenses from 42 percent to 55 percent at a cost of nearly $250 million.

The initiative also requires the state to provide 100 percent funding of special education costs in an effort to ease the local property tax burden. The requirement for the instant cash infusion would be a major setback for state government Baldacci said, noting that significant cuts would have to be made in programs that assist education, senior citizens and young people.

The governor also hopes LD 1924 will subvert a second citizens initiative sought by the Maine Taxpayers Action Network that would cap property taxes at $10 per $1,000 of assessed value based on 1996-97 valuations. That proposal, which will be on the ballot in November, threatens to cut local tax revenues in half, according to the governor and the MMA.

“[That’s] a meat-ax approach. It’s not going to be in anybody’s interests, and it will just be very draconian” the governor said.

Modeled closely along the lines of the administration’s and Legislature’s Question 1B that came in behind the MMA plan at the polls last November, Baldacci said LD 1924’s Essential Programs and Services Model for education addresses funding and tax relief in several important ways:

. It ramps up the state’s share of education funding to 55 percent over five years;

. It ramps down the local share of education funding, resulting in a 15 percent reduction in local spending for education by 2010;

. It caps the property taxes that need to be raised for education;

. In fiscal year 2006, as the state share begins to increase, no town will need to raise more than $9 per $1,000 valuation for education;

. By 2010, when the state share hits 55 percent, no town will need to raise more than $8 per $1,000 valuation for education;

. The performance of towns in lowering property taxes based on extra state education funding will be measured and reported on every year by a Municipal Budget Analysis Committee appointed by the governor;

. The law places controls on special education and transportation costs which, by 2010, will save the state a projected $229 million and local property taxpayers $237 million.

The governor provides no money for property tax relief in LD 1924. All funding is completely dependent on the whims of future Legislatures and the projected growth of state revenues. Despite its subjection to the will of future lawmakers, the proposal was endorsed Wednesday by the Maine Board of Education which also stated its opposition to Question 1.

“It’s in statute and we’re committed to it and it will be part of the budget that we submit in January,” said Baldacci, who later added he would veto any budget next year that did not remain faithful to the new law.

Pledges of more funding for education in the future are an old story for Geoffrey Herman at the MMA who said municipalities have been waiting for 20 years for lawmakers to make good on their 55 percent funding promise. While pleased with LD 1924’s cost-cutting mechanisms that reduce the expense of local education, Herman said Mainers still need to approve Question 1 on June 8, if for no other reason than to compel the Legislature to fund education costs fully.

He said the MMA and the MEA would be more than willing to phase in gradually those additional expenses at around $70 million a year for the next four years in order to reach the 55 percent funding target.

“We compromised on that a long time ago and we’re sticking with it,” Herman said.