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AUGUSTA — A tax
reform package based on increasing state aid to
education over four years passed 12-3 out of
committee Monday night after changes were made
to the funding formula to assure no communities
lose aid next year.
The proposal
being pushed by Governor John E. Baldacci, which
was before the Joint Select Committee on
Property Tax Reform, had been in doubt just a
week ago, when the state released a list that
showed more than 80 schools would lose education
aid in the short term under the plan, even
though overall state aid to schools is being
increased.
The goal of the
tax reform plan is to get the state to cover 50
percent of overall education costs in two years
and 55 percent in four, although the percentage
split will differ by community.
State Sen. Peter
Mills (R-Somerset
County) pushed for a two-year ramp-up to 55 percent, paying for the increase by
extending the sales tax to recreational services
and increasing the overall sales tax half a
cent. His motion failed in a 3-12 vote. Mills
said his plan would assure all school districts
got a state aid boost in the biennium.
School Funding Shift
Losers on the
original list were small school districts that
couldn’t justify administrative and operating
costs under the new funding formula known as
Essential Programs and Services, and schools
whose communities were rapidly increasing in
land value. High-value towns get less state aid
for education under EPS because they can raise
substantial cash even with low mill rates.
Under the
reconfigured list, no schools will lose aid this
coming fiscal year under the formula, but rather
will be kept at the same level as last year,
meaning they also will see no increase in aid.
That list
includes Bucksport, Orland, Trenton, Milbridge,
Isle au Haut, Orland and Vinalhaven. All were
scheduled to lose in the next fiscal year, but
now will be flat-funded.
State Rep. Earle
McCormick (R-West Gardiner), one of three
members of the committee who voted against the
plan, said he appreciated attempts to make sure
no school districts lose under the formula, but
said it failed to provide tax relief.
“Are we doing
what the people sent us up here to do?” he
asked.
McCormick, like
the rest of the Republicans on the special tax
reform committee, called for a two-year ramp-up
to 55 percent funding by the state, which would
have assured that all school districts got some
increase in the upcoming biennium that begins
July 1. They were not, however, inclined to
raise the sales tax to pay for it.
State Sen.
Richard Rosen (R-Hancock
County) said, “I’m voting against it for one reason, and one reason only, and
that’s because of the four-year ramp.”
Not all
Republicans, however, voted against the
four-year plan, saying they didn’t want the tax
reform package to come out divided along party
lines. The tax reform committee has 15 members,
including seven Republicans, seven Democrats and
one independent. Three of the members, including
Rosen, are from Hancock
County. The other two are Sen. Dennis Damon (D-Hancock
County), who serves as the committee’s Senate Chair, and Rep. L. Earl Bierman
(R-Sorrento).
“I have great
concerns with the formula and great concerns
with the ramp, but I will support it,” said
Bierman, when casting his vote.
In order to make
sure no school districts lost money under the
first year of the plan, funds were taken away
from some property-rich towns. The wealthiest
towns, which received almost no aid under the
old formula, were scheduled to get 100 percent
funding for special education under the new one.
Now they will get 84 percent funding of special
education costs this year, and eventually be
covered 100 percent in four years.
Those towns
include Bar Harbor, Blue Hill, Castine, Mount Desert, Southwest
Harbor and Tremont. Collectively that cut in special education funding to
wealthy communities statewide raised about $3
million. Another $6.9 million was needed to make
all communities whole. That will come out of
funds earmarked in the bill to encourage
regionalization.
Amendments on Tap
Five
constitutional amendments also were approved by
the tax committee, including a plan to tax
second homes at a higher rate.
If approved by
the full Legislature, they will appear on the
November ballot.
The five
include:
* A two-part
amendment that gives communities the option of
limiting increases in value on the land
supporting a person’s primary residence or small
business. The intent of the amendment is to
protect longtime landowners from spikes in their
tax assessment that could force them to sell in
order to pay their tax bills. There is a tax
penalty when the landowner does sell.
* A protection
against valuation spikes for working waterfront
property used in connection with commercial
fishing. The amendment would allow the land to
be valued at it current use versus what it would
be worth if developed into housing. This
amendment essentially adds working waterfront to
exemptions already allowed for farmland, forest
and open space.
* A local-option
homestead, where cities and towns could opt to
give homeowners a greater exemption on the value
of their land for tax purposes than allowed by
the state.
* A local option
circuit-breaker where cities and towns could opt
to refund a greater portion of property taxes or
rent — based on a person’s income — than allowed
by the state.
* A higher tax
on second homes, not to exceed 25 percent of the
regular tax rate, with a proposed exemption of
the first $150,000 or $200,000 of value to
protect Maine residents who own second homes or
camps in-state. This, too, would be a local
option tax.
State Rep.
Edward Dugay (D-Cherryfield) pushed for the
differentiated tax rate, saying out-of-staters
have come in and paid “exorbitant amounts of
money” for second homes, pushing house prices up
for everybody.
Rosen voted
against it, however, even though he supported
the four other constitutional amendments. “I’m
concerned we’re throwing out a lot of proposals
for the citizens to consider … we may be
reaching a point of perhaps overloading folks.”
The higher tax
on second homes worried some members of the
committee Monday, who said they felt Mainers
could be hurt for owning camps or cottages. “I
can’t support somebody’s taxes going up on a
hunting camp,” said McCormick, adding that there
are no assurances the Legislature would adopt an
exemption for lower-valued property. |
