LD 1’S SLOW PROMISE

Nothing else local government does comes close to the cost of K-12 education, so state help, known as LD 1, with local property-tax burdens that pay for this essential service was especially welcome last year. A recent report, using only very early data, found the help did have a positive effect, though Maine certainly has more work to do.

The study, by Todd Gabe at UMaine’s Margaret Chase Smith Center for Public Policy, showed that by sending more state money and setting limits on state, county and local tax increases, growth appears to have been slowed. There are reasons for caution with this, largely because the study covers early information from a limited number of communities. Time and increased participation will produce more definitive results, but there is good reason to be hopeful.

Primary among those is that the state still has more increases planned for its share of education. In the study, only 31 percent of school-administrative units have ’05-’06 budgets that fall below the spending limits set in LD 1. Still, across all municipalities the growth rate of property tax dropped from more than 5 percent annually in the previous two years to 1.7 percent this past year.

The goal of LD 1, however, is not merely replacing property-tax dollars with state sales and income-tax dollars but to lower the overall tax burden in Maine. That burden can be measured as the total of income, sales and property taxes as a percent of personal income and as taxes per capita. The Legislature’s Office of Fiscal and Program Review warns that these represent “very simple measures of tax burden.” However, they are also commonly used by many states. In Maine, the combined tax burden stands at around 12.5 percent, where it has been, more or less, since 1992. That puts the state first or second highest on several rankings.

To reduce that to the middle of the pack, as LD 1 aims, requires Maine to drop to around 10 percent. It could do that quickly if residents suddenly earned a lot more money and income-tax rates were cut. Short of those unlikely events, a slow, consistent restriction on public-spending increases is the most obvious way to reduce the burden while maintaining essential programs.

LD 1 is a fair attempt at that, starting with a four-year increase in the education funding. One of the faults of earlier attempts to raise the state share of school funding, however, was a lack of commitment – an increase would be seen for a couple of years then die when the price got steep. If supporters are to have LD 1 mean anything, they will ensure it lasts, that state funding reaches 55 percent of the total spending, spending restrictions produce multi-year effects and all communities benefit from this slow turning of Maine spending practices.