November 07, 2024
Column

Debt question appears on Bangor ballot

On Nov. 2, Maine residents will have the opportunity to vote on Question 1, the Palesky tax cap. The residents of Bangor will also have the chance to vote on Municipal Question 2, which will legally approve Bangor’s current debt and ensure that Bangor will be treated fairly and equitably should Palesky pass. Under Palesky, only voter-approved debt is exempt from the 1 percent limit on property taxes.

Most communities in Maine operate under a system where residents at town meeting must approve town borrowing. For those communities, their annual debt service payments will be exempt from the tax cap. Rather than a $10 limit, the tax rate in these communities will be higher depending upon the additional amount needed to pay off debt.

In Bangor and most of the larger communities in the state, borrowing is authorized by action of the City Council in accordance with a voter-approved charter. Since this debt is not directly approved by the voters at town meeting or an election, principal and interest payments must be made from within the amount raised by a $10 tax rate.

This year, Bangor’s nonvoter-approved debt payment is $4.2 million. To raise this amount requires a tax rate of about $2.35. Since the full faith and credit of the community backs the city’s debt, debt service payments have first call on our property taxes. These payments simply must be made. With $2.35 required to pay our debt, Palesky would leave us with a maximum tax rate of $7.65 to fund the services we provide. Rather than facing a reduction of $16.4 million from our operating budget, we may face $20.6 million in service cuts.

The impact of the Palesky proposal, if adopted, would vary dramatically from community to community. Bangor and many of the other service centers in Maine will see property tax revenue reductions of more than 50 percent – with a corresponding reduction in education, police, fire and public works services. Palesky’s requirement that debt be voter approved to be exempt from the cap is particularly unfair to Bangor and

to Maine’s other large communities.

To address this inequity, the Bangor City Council has placed Municipal Question 2 on the ballot. Approval of this question will partially “level the playing field” should Palesky be approved.

This “voter-approved debt” problem first gained public attention when Bangor considered placing this question on the ballot. In the discussions that followed, Carol Palesky, author of the tax cap, told Maine Public Radio that it was her intention that all existing debt – both voter approved and council authorized – would be exempt from the tax cap. Unfortunately and in spite of her intent, this is not how the proposal is written or how the legal community interprets it.

Passage of Municipal Question 2 will allow the city of Bangor to collect property tax to pay our debt over and above the amount we would receive under the Palesky cap’s

$10 limit. If Question 2 is passed, the city of Bangor’s property tax limit would be about $12.35.

The impact of the Palesky tax cap on Bangor would be catastrophic – and I’m convinced that our citizens understand that. Unfortunately, I’m less confident of the outcome in other areas of the state. It’s important, therefore, for our residents to vote on Question 2: “Should the Council of the City of Bangor adopt the following order ratifying all existing city of Bangor indebtedness?”

The relief afforded by Question 2 is not sufficient to overcome the draconian impacts of the tax cap. While it may allow us to reduce the loss of police, fire and public works personnel from 50 to 40 percent, the impact of Palesky, if passed, will remain significant and will undermine our efforts to maintain our quality of life and public services.

When you enter the voting booth on Nov. 2, I ask you to carefully consider Municipal Question 2 and to keep in mind the impacts of the Palesky tax cap, State Question 1, on our community.

John Cashwell is a Bangor city councilor.


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