Maine chamber opposes tax cap referendum

AUGUSTA – Gov. John Baldacci on Wednesday praised the Maine State Chamber of Commerce for declaring its opposition to the property tax cap proposal on the Nov. 2 ballot, saying that it’s the wrong road to tax relief.

“I think the chamber is showing leadership in coming out in opposition,” Baldacci said. “To me it’s an extreme proposal.”

But tax cap advocates countered that the business group’s statements show it is missing the message that property taxpayers are fed up.

“Apparently even the state chamber doesn’t understand that government spending is way out of line with the taxpayers’ ability to pay,” said Jen Webber, spokeswoman for TaxCap YES! “That is why so many people support the 1 percent property tax cap.”

Leaders of the chamber, which represents nearly 1,200 businesses, including some of Maine’s largest, labeled the proposal on November’s ballot as extreme and confusing, and promised to unveil the chamber’s own alternative Thursday.

The initiative started by tax activist Carol Palesky of Topsham seeks to cap property taxes at $10 per $1,000 of assessed value, based on values in 1996-97. It also would limit assessment increases to 2 percent a year while the property’s ownership remains in a family.

“Most of the people that I’ve talked to understand that it’s a bad law, that it will result in massive reductions in services in our communities and negative impacts in our schools,” chamber board Chairman David Brenerman said.

The so-called Palesky plan would decrease taxes and spending locally, but would cause state taxes to rise “significantly” to make up the difference in lost local revenues, he said.

Baldacci cast doubt on the ability of state government to fill a revenue void at the local level if the tax cap initiative is approved. “There isn’t that much money hanging around,” the governor said.

While chamber leaders wouldn’t divulge specifics of the proposal, Chamber President Dana Connors said it would improve Maine’s business climate from one of the nation’s worst to the middle of the pack.

Maine House Republican Leader Joe Bruno, R-Raymond, said he was told last month the plan will combine tax and spending caps.

A separate spending cap initiative known as the “Taxpayers’ Bill of Rights,” which would impose limits at the local and state levels, awaits election officials’ final go-ahead so petitions calling a referendum can be circulated.

Meanwhile, the Legislature to be elected in November is expected to refine the wording of a ballot question approved by voters in June to increase state aid for public schools from about 42 percent to 55 percent of total costs.

That proposal, backed by the Maine Municipal Association, was touted as a way to reduce property taxes by shifting more of the cost of local education to the state.

Following passage of the school-funding referendum, Baldacci said he wanted to join forces with the winning side to defeat the Palesky tax cap.