Increasing the state sales tax, addressing corporate tax breaks, and the effects of raising property taxes were all discussed at a public forum on Governor Paul LePage’s proposed biennial budget in Wiscasset on March 7.
About 12 people attended the meeting, which was hosted by Lincoln County legislators Sen. Chris Johnson, D-Somerville, Rep. Bruce MacDonald, D-Boothbay, and Rep. Tim Marks, D-Pittston. Two others forums were already held in Windsor and Damariscotta.
According to a hand-out provided by Johnson, LePage’s budget will have an impact of more than $425 million on Maine’s property tax payers and municipal budgets, including the elimination of $280 million in sales and income tax revenue sharing with towns.
“This budget is a huge tax increase on property taxes, and what we have to do is look at more equitable ways of raising those revenues through other taxes that are not going to be as harmful to people who can’t afford any more,” Johnson said.
“The increase in property taxes at this point is going to put a lot of people out of being able to afford to stay in their homes,” Johnson said. “With what municipalities have already made for cuts, that’s going to be the effect.”
Sandra Crehore, of Westport Island, agreed that something has to be done to let people stay in their homes.
“I resent the fact that I raised my family; I never asked for anything; I put them through college…Now I’m on retirement and I have to look to the fact that I have to leave a home that I worked toward,” Crehore said. “Retirees have been bit all the way along. He doesn’t seem to have any other way to do it except to hit the elderly and retirees, and I resent it.”
One method of raising revenues discussed at the meeting was increasing the state sales tax to 6 percent.
An increase of one percent in sales tax would generate about $125 million to $130 million, said Dan Shagoury, a legislative aide for the Senate Majority Office.
“Our sales tax is not what other states’ are,” Marks said.
Meals and lodging taxes are also well below the New England average, Johnson said.
Sales and lodging taxes are relatively immune to diversion because people don’t make vacation choices based on small increases in taxes, MacDonald said. “As long as you keep sales tax away from things like essential clothing and food, you keep some of the regress-ivity [sic] out of it,” he said.
“When we had the temporary increase in the sales tax a few years ago it, it didn’t hurt tourism and nobody even really noticed it. So, I think sales tax is an excellent way to do it,” said Ralph Hilton, of Alna.
“You use, you pay. I like that,” Marks said.
A report from the Maine Development Foundation on state and local taxes in New England from 2012 showed that Maine is near the top of the list for those taxes as a percentage of income, Johnson said. The same taxes per capita put Maine lower than many other New England states, he said.
“Our problem is not so much that we’re spending too much to run state government and local government. Our problem is that our wages in Maine are significantly lower than the U.S. average and the New England average, so it’s a bigger burden,” Johnson said.
Maine residents hold about 1.4 jobs per person in order to make ends meet, he said.
Hilton raised concerns about tax breaks given to corporations.
“If we’re going to give these huge corporations tax breaks, they need to give us something too and go back to training people, taking care of the skills gap,” Hilton said.
Maine has a skills gap in its workforce because employers are not investing in training anymore, Hilton said. Bath Iron Works closed its training department six years ago because hiring was flat, he said.
“Do you know that our tax breaks that we give to industry equal the $6 billion budget that we have right here in front of us, every biennium?” MacDonald asked.
“We’ve given so much welfare to corporations,” he said. “Is it worth it? Did it really produce anything?”
Everyone is afraid that if the state does not provide tax breaks for large corporations, then those corporations will leave, said Crehore. “It’s been moral blackmail, that ‘if you don’t give us the tax breaks, we’ll leave,'” she said.
Johnson said all tax breaks need to be reviewed to see if the original purpose is still valid and to see if there is any return on the investment.
Jarryl Larson, of Edgecomb, said the recent drop in population across the state also brings economic consequences.
It is rare to see young couples who are not from Maine move here and stay, Larson said. “Those that were born and raised in Maine, they reach this point where they can’t stay anymore,” she said.
State and county governments need to take this trend into consideration, she said.
“A lot of good this [budget is] going to do, because pushing the money down to people who can’t pay it is going to mean you’ll lose more, because they’ll walk and they have before,” Larson said.
Johnson said the Joint Standing Committee on Appropriations and Financial Affairs will start work on the biennial budget this week and will be holding public hearings with the policy committees.
“This is your legislature and the best way to assert your feelings is to come to these hearings,” Johnson said.
“We have our ideas but we want to hear from the public,” MacDonald said.
For the schedule of the hearings, visit http://maine.gov/legis and click Legislative Activities Calendar.
Johnson is hosting a fourth forum on LePage’s proposed biennial budget at the Waldoboro Town Office on Monday, March 18 from 6 to 8 p.m.
