AUGUSTA – Opponents of the proposed statewide property tax cap predicted Wednesday that a new University of Maine study detailing deep cap-precipitated revenue shortfalls should persuade voters to defeat the measure on Nov. 2.

“This study provides an objective and factual analysis of the budgetary and economic impacts of the meat-ax initiative,” said Larry Benoit, of the anti-cap group, Citizens United for Maine’s Future. “Maine citizens, as they always do, are going to carefully look at the facts here. The facts will emerge, provided by educational institutions like the University of Maine that offer a credible independent analysis. That’s very helpful in educating Maine voters.”

The study was released Wednesday by Todd M. Gabe, an assistant professor in the Department of Resource Economics and Policy at UM. Gabe was particularly interested in analyzing the combined effects a property tax relief plan approved by Maine voters in June could have on state finances if the proposed tax cap were also to pass in November.

Potentially, depending on local spending priorities, Gabe said the property tax cap would produce revenue losses of between $372 million and $530 million that would either have to be addressed through state or local spending reductions or tax or fee increases.

“Towns could reduce spending or go to the state and appeal for funding to bridge the gap or you could even see additional taxes,” Gabe said. “Those are things that we will be looking at in a future analysis.”

Gabe conducted the study in an effort to identify the consequences for higher education spending in the aftermath of the recently approved Question 1 tax relief plan and the possible approval of a 1 percent property tax cap proposed by tax activist Carol Palesky and the Maine Taxpayers Action Network.

Under Question 1, which was approved by referendum vote in June, the state will have to return about $250 million annually to municipalities to raise the state share of local education costs from its current 43 percent to the 55 percent goal. The Palesky statewide tax cap would limit property taxes to 1 percent of a property’s value.

“Question 1 will reduce the costs of local education paid by Maine municipalities, while the Palesky tax cap could limit the amount of property tax revenue collected by local governments,” Gabe wrote in his report. “Question 1 has a relatively straightforward effect of increasing state spending on K-12 education, whereas the ultimate effect of the Palesky tax cap on state finances is less clear.”

The analysis presented in the report indicates the Palesky tax cap could lead to an estimated $372.5 million to $529.7 million gap between local spending commitments and property tax revenues.

The lower number, Gabe said, reflects the results of the cap if all Maine municipalities used the money received from the state under Question 1 to reduce local property taxes. The higher figure indicates the revenue gap that would be triggered if towns used some of the extra money they got from Question 1 for other purposes rather than cutting overall expenses.

In either event, Gabe said Maine municipalities would likely make up the deficit through a combination of reduced local services and an increase in services or subsidies from the state. He said state government, in turn, would be forced to satisfy the requests for increased subsidies with tax increases or program cuts.

Benoit, who is building a coalition against the Palesky cap, said the UM study illustrates the immense financial implications of the initiative and its devastating impact on state and local governments.

“Prof. Gabe’s analysis looks at the most conservative estimate that identifies what the Legislature would have to do to make up the lost revenue,” Benoit said.

Efforts to reach cap proponents like MTAN or Tax Cap YES! for comment Wednesday were unsuccessful.

Gabe’s report can be viewed at: www.umaine.edu/rep/facstaff/publications/Effects%20of%20Question%201%20and%20t.pdf.