In November, Lincoln County voters will be asked to slash more than $2.3 million from their local town budgets.
The request will come in the form of a Nov. 3 ballot initiative which asks voters: “Do you want to cut the rate of the municipal excise tax by an average of 55 percent on motor vehicles less than six years old and exempt hybrid and other alternative-energy and highly fuel-efficient motor vehicles from sales tax and three years of excise tax?”
While everyone hates to pay any tax, and the motor vehicle excise tax is a pain, like Paul Harvey used to say: “Now, for the other side of the question.”
In order to maintain the present level of municipal services, and that means budgets funding roads, including snowplowing and public safety and other town functions, selectmen and town managers say the excise cut will force them to slash services or raise property taxes.
University of Southern Maine Professor Charles Colgan says the choice is simple.
“If you cut the excise tax and want to fix the roads, you raise the property tax. There are only two choices for the towns: excise tax and property taxes.
“There is no other revenue source, unless you get the state to share part of the gasoline tax and that is not likely,” said the Professor of commuity Planning and Development.
Averaging the complex formula for excise cuts at 40 percent, the association says the towns from Somerville ($28,562) to Waldoboro ($287,870) will be forced to slash their 2010 budgets by more than $2.3 million. (See the chart for exact figures for each town)
Heritage Policy Center arguments for the excise tax cut include:
• Creating of nearly $1,000 in personal tax savings.
• Putting newer, cleaner, safer cars on local roads.
• Picking up where the legislature left off to reduce local taxes.
• Empowering consumers to achieve cleaner air and fuel savings.
• Improving the standard of living for Mainers on fixed incomes.
The spokesman for group that pushed to get the measure on the November ballot, “More Green Now, ” Chris Cinquemani, also the Heritage center spokesman, says the cuts will provide benefits for Maine citizens. However, when asked for a major Lincoln County supporter, he was unable to provide one.
Waterville Mayor Paul LePage is a strong supporter of cutting the excise tax, arguing that it will increase government efficiency.
“For a variety of reasons, government at the state and county level is out of control. People are not working to increase efficiency. They are just raising taxes,” said the Republican mayor.
LePage’s argument is that the excise tax was initially earmarked to use solely for the local streets and roads. That is no longer that case. Now it goes to general fund for general use. So it is used for anything and everything.
“It makes a fraction of our road budget. We collect $l.4 million and use half a million on the roads. If the excise tax is reduced in half, it would be closer to the original target,” he said.
“That is it. That tax is a regressive tax in that it penalizes people for improving themselves. If you get a new car, you still pay the tax.”
In tiny South Bristol, Beverly Eugley, the administrative assistant to the town selectmen, said the cuts will shift the burden to the property tax payers.
“If we lose $80,000, that means we will have to raise property taxes by $80,000. We don’t have a choice. The town voters in the town meeting tell us what to do and we have to raise it,’ she said.
In affluent Boothbay, Town Manager John Anderson says it is simple: the excise tax cut will mean no road paving for Boothbay.
“If you want roads, you have to pay for it,” he said. “Look, the (tax) system needs to be tweaked but this is not the way to do it,” he said.
State Senator Carol Weston (R-Montville), a former GOP leader, disagreed with Anderson.
“The law does not require the excise tax to go for roads. It goes in the general pot and it is up to the leaders how they spend it,” she said. “This is part of the municipal leaders work. They have to find out what the public needs and how to raise the revenues to pay for it.”
“We are not a cash cow, we are pretty frugal with funds,” he said. “In fact, since I came here, we have cut three positions and the rest of the staff is doing double and sometimes triple duty.”
“First, in anticipation of the cuts, I have told the police chief to put on hold our plans to hire the additional police officer that was authorized by this year’s town meeting. That will mean about a $40,000 budget cut when you include benefits.”
“Second, we will have to cut our capital reserve account and that will mean we won’t be putting away the $25,000 a year for capital reserve projects like a new fire truck.
“We have some fixed costs – we have to pay for power, fuel, water and sewer, street lights, the transfer station. We have to plow roads and fix them,” he said.
“It is a miracle that that happened,” said Town Manager Tom Woodin.
“We recently cut out our local dispatch center and shifted the police/fire communications to Lincoln County and that left us with the $185,000 we had already budgeted for that communications center.”
To cover the excise cut, Woodin says they will either have to hike property taxes or look at painful budget cuts. That could mean cuts in the police-fire budgets.
“About 90 percent of our budget is for public safety. There are some things that you can’t cut out without cutting services. In our town, there is not a lot of fluff in our budget,” he said.
State Senator David Trahan, (R-Waldoboro), says he has serious concerns about the excise tax cut proposal.
“This proposal is just slashing the excise tax without replacing it,” he said. “I think it will trash local government needs. We need to reform the excise tax, but I have serious concerns about this proposal.”
Rep. Jon McKane (R-Newcastle) agrees with Trahan. “If there were some way to cut or eliminate the auto excise tax without increasing other taxes, I would be all for it,” he said.
“There is no question our auto excise tax is too high. However, to simply eliminate it at the local level while the state continues to shift more expenses to municipalities can only mean an even bigger increase in property taxes than we are already enduring,” he said
Nobleboro Board of Selectmen chair Richard Spear said the funds they get from excise tax revenue goes toward the cost of winter maintenance, road hot topping and road repair.
“It’s the people who have newer cars who will save on excise tax,” Spear said, adding, “but everybody will pay more on property tax.”
Jeff Austin, a lobbyist for the Maine Municipal Association, said the potential excise tax cut means all the Maine towns will have to slash $80 million out of their total excise budget of $210 million.
“We have a mandate to plow the roads. We have no choice,” he said. “This means the towns have to make up $80 million. It means they will have to cut the road budgets.”
Towns are already seeing tax cuts because people are not buying new cars, says Bremen selectman Wendy Pieh.
She says this reduction in excise tax dollars meant the town had to reduce the amount of road repair work. Additional excise tax cuts will exaggerate the situation.
“If (the excise tax) is going to go away, something has to replace it,” Pieh said. “The roads aren’t going to take care of themselves.”