Town official bashes tax cap Palesky proposal ‘anti-business’

DOVER-FOXCROFT – Town Manager Jack Clukey doesn’t have to be a wizard to predict the future of his small community under the Palesky tax-cap initiative.

He envisions a town with a skeleton crew, fewer services, and more user fees to replace the revenue lost under the tax cap.

“It’s really got the potential to create a wave of negative economic consequences,” Clukey said recently.

While Clukey and other municipal officials recognize that Maine residents need property-tax relief, they say that relief should not come at the expense of essential services and local jobs.

“The Palesky concept under the best-case scenario is simply unworkable,” Clukey said.

The tax initiative, which will be on the November ballot, will ask if voters want to limit property taxes to 1 percent of the assessed value of the property. If approved, the maximum tax rate for Maine communities would be 10 mills, or $10 per $1,000 of valuation.

Clukey said proponents of the tax initiative have not explained how reducing his town’s budget by one-half, or $1.3 million, would be workable. Today the town pays more than 10 mills for education and county taxes, so there would be nothing left for the operation of municipal government under the Palesky program, he said.

“A proposal that does not offer a plan to address its consequences is poor public policy,” Clukey said.

Among those consequences would be the loss of jobs and the potential for higher insurance premiums for municipalities, businesses and property owners if the police and fire departments were scaled down.

While property taxpayers would see some tax relief, they likely would pay new user fees for town services and facilities, according to the town manager. He declined to be specific about what those fees may be, saying the selectmen and residents would have a say in what town operations would be funded by fees.

Clukey said he thought these user fees, which could be imposed for fire protection and solid-waste disposal among other services, would send an anti-business message.

The change also would strip a community’s ability to make local decisions, Clukey said. For example, if Dover-Foxcroft residents wanted to put more funds into local road improvement, they would not be able to do so legally if it caused the town to exceed the tax cap.

Another effect of the tax cap would be the incentive to convert tax-exempt property to taxable status, Clukey said. If taxes are capped at 1 percent, the state might not afford to allow existing tax-exempt properties to remain tax exempt, he said.

“Requiring many charitable organizations to become taxable or to pay high user fees will further burden many of our social programs that are barely able to operate under current conditions,” Clukey said. Donations to social service agencies and local organizations also would be affected.

For Womancare Aegis of Dover-Foxcroft, a community-based organization working to end domestic violence, the local funds are critical. Although Dover-Foxcroft no longer donates to the organization, several other communities do support the effort. The local funds serve as seed money for state and federal funds, Cynthia Freeman Cyr, resource development coordinator, said. Since most of the state and federal funds have restricted uses, the local funds also can be used in emergency situations, she said.

There are fair ways to bring about property-tax relief, but this isn’t one of them, Cyr said.

Clukey agrees. “A constructive approach to tax reform is not one that creates a whole set of new problems for our state to address,” he said. “Nor is it one that offers no plan to deal with its severe impacts.”