State doing its part for tax relief

Next week, voters will decide whether to approve Question 1, the Maine Municipal Association’s plan to immediately spend $250 million more on state school aid. This is a repeat of the question voters faced last November, when 38 percent favored the identical Question 1A. The question needs 50 percent approval this time to become law.

I do not presume to tell voters how they should cast their ballots on June 8, but I know I will be voting against Question 1. It is the wrong proposal at the wrong time. It will not guarantee any true property tax relief, and it will totally disrupt the state budgets we’ve painstakingly put together over the last two years.

There’s a deeper reason why I will be voting no, however, and it is because the Legislature has already made strenuous efforts to keep taxes down. Approving this referendum destroys the careful balance of those efforts by forcing a tax increase, or leads to drastic cuts for health care, public colleges and universities and yes, other property tax relief programs.

It’s not commonly recognized how difficult our work has been. For all the cheap talk about “reckless state spending,” the past session has been nothing like that.

For the past five fiscal years, revenue growth for the General Fund has been just over 2 percent a year – less than the rate of inflation. And for the three fiscal years involved in this Legislature’s budget decisions, General Fund spending has increased less than 2 percent a year – a reduction, in real terms.

You may have heard that revenue growth for the current year, Fiscal 2004, is higher than that, and it is – 9.4 percent. But that’s only because of numerous one-time transfers to the General Fund from other accounts, and one-time events like the sale of the wholesale liquor business. Even considering those one-time sources, total revenues for the last five years are still up just over 2 percent annually. In two of those years, our revenue actually declined.

And this isn’t going to change any time soon. General Fund revenue is expected to increase just 1.2 percent next year.

In short, this has been the most fiscally responsible Maine Legislature in decades. In a similar situation in the early 1990s, lawmakers raised both sales and income taxes – increases it took us the rest of the decade to return to their previous levels. This time, the governor and Legislature stood firm against any increase in sales or income taxes, because that’s what voters wanted.

What does this all have to do with Question 1? Everything. Because there was no money available, we had nothing for new programs, even for tax relief. As most of you know, I introduced legislation to increase both the state homestead and circuit breaker – programs that would have delivered targeted relief directly to property taxpayers. This idea achieved broad support throughout the Legislature.

The agreement fell apart, however, over the issue of funding. We couldn’t provide more property tax relief without raising state sin taxes, and we didn’t have the votes to do that. This is not surprising. Voters want property tax relief, but if we have to raise other taxes to do it, the consensus disappears.

Ultimately, only by keeping spending under control can we reduce taxes overall. And I know that the Legislature has done its part. When we leave office, General Fund spending will be lower, in real terms, than when we were sworn in.

Towns and school districts are still preparing their budgets, but I haven’t seen many that come in at 2 percent. Property taxes depend to some degree on the amount of state school aid, but they depend to a much greater extent on local spending decisions.

Maine is about average in its number of state employees, but eighth in the nation in the number of local government employees. School enrollment is declining statewide, but school budgets are not.

In coming years, we will get a handle on school spending through the Essential Programs and Services Act, which will prescribe, for the first time, what Maine school districts should be spending to make sure students get a good education. But we don’t have that discipline now, which makes this a particularly poor time for Question 1.

It is not as if the Legislature hasn’t done its best to increase aid to education. Since I joined the Legislature, we increased state aid by 5 to 6 percent every year, until this session. Even now, state aid is growing in proportion to the overall budget, while many other important programs have been cut.

Voters seeking property tax relief should be asking the same questions of their local officials as they do of us. Is spending under control? Are budgets being prepared with due concern both for taxpayers and those who benefit from government programs?

In the long run, responsible budgeting will do a lot more for tax relief than any number of referendum questions.

Pat Colwell is the Maine House Speaker.