Representative Ellen Winchenbach, R-Waldoboro, expressed concerns about a proposed revenue sharing cut, but “nothing is set in stone with the state budget at this time” when Lincoln County residents met with legislators, March 18.
She asked attendees at the two-hour meeting for feedback and ideas for ways to make cuts or find money to improve the budget forecast.
Winchenbach and Sen. Chris Johnson, D-Somerville, hosted the public forum at the Waldoboro Municipal Building in order to discuss impacts to the local budget from state budget proposals offered by Gov. Paul LePage.
Finally, Johnson cited $25 million in planned reductions in funding to school districts, which LePage would accomplish, in part, by maintaining the curtailment he enacted at the first of the year.
“On the [Legislature’s] education committee, the general feeling is that we need to make the curtailment go away,” Johnson said. Stating a theme he would come back to throughout the evening, he said, “We need to find ways to make our higher education better prepare people for jobs.”
LePage has also called for excise tax revenues from the registration of certain types of trucks to be collected and administered by the state, rather than being returned to towns. Johnson said this would cost municipalities a further $8 million.
In addition to the above, Johnson mentioned changes LePage is calling for in the Homestead and Circuit Breaker property tax relief programs that would reduce benefits to those aged 65 and older, and take them completely away for younger property owners.
Johnson said the changes would force increases in property taxes and cuts in programs and school funding.
Other proposals Johnson said would “make life more difficult for the elderly and low wage earners” include elimination of state funding for Maine’s Low Cost Drugs for the Elderly and Disabled Program and a reduction in the reimbursement for general assistance from 90 percent to 50 percent for the state’s largest municipalities.
Johnson described the budget timetable. The governor’s proposal is first reviewed by the various legislative and policy committees that propose changes and by the appropriations committee.
“There’s still some time to get your thoughts on this whole budgeting process in,” he said.
A budget must be in place when the new fiscal year starts July 1. Because of the timing Johnson said, this year’s budget will have to be processed as emergency legislation, requiring a two-thirds majority vote of the Legislature to be enacted.
Johnson said property tax comprises approximately 40 percent of state and local taxes in Maine, with income taxes responsible for another 30 to 35 percent.
He said Maine’s tax structure puts the heaviest burden on the poorest fifth of Maine workers, who pay at a rate of 17 percent of income, versus the top 1 percent of earners who pay slightly less than 10 percent of their income in taxes.
He said ways to generate revenue without increasing property or income taxes, now under discussion in Augusta, include raising the sales tax by a penny and increasing the meals and lodging tax.
Johnson said Maine’s per capita spending is lower than any New England state except New Hampshire, and only slightly higher than in that state. He said the latter was the lowest in New England. He said much of the money spent on public assistance comes as matching funds from the federal government.
“The biggest problem we have is not that we’re spending too much,” he said. “Our problem is we don’t make as much in the state of Maine so its a bigger burden for people. You don’t get those kinds of jobs and opportunities for people without investing in [research and development] and education and roads.”
Dyer said businesses are subject to too many regulations and Winchenbach said energy costs are also a factor.
“There are so many factors on why businesses won’t come to Maine,” she said. Winchenbach said young people need to be taught skills and ethical values that will prepare them to enter the workforce.
The Regional School Unit/School Administrative District 40 budget has not been finalized, he said.
Waldoboro expects to spend more than $600,000 on its police department and more than $140,000 on its fire department in the coming year.
“I was told to tell the town manger, from [the] appropriations [committee], to not count on getting the revenue sharing and I hate saying that,” Winchenbach said. “I know it’s very unfair.”
Gregory Hodge of Jefferson said the government is like an alcoholic or drug addict, looking for quarters to feed a habit. He said the Legislature is “spending money you don’t have.”
Citizens expressed concern over proposals that have been presented by both parties that do not allow time for careful consideration and public input.
Deborah Bellows of Waldoboro said raising the meals and lodging tax would be an “unfriendly” act and would cause a loss of business that would spread beyond the hospitality industry.
Waldoboro Selectman James Bodman asked Winchenbach, who also serves on the town’s budget committee, what the local impact would be from revenue sharing cuts.
“I honestly don’t like the fact that we’re having our revenue-sharing cut,” Winchenbach said. “I never felt that Waldoboro got our fair share anyway. We have five gas stations in Waldoboro but what do we get for fuel tax? If Waldoboro has to cut $350,000 it’s going to hurt our police, fire, ambulance.”
“I don’t want any of us to have a property tax increase,” she said, as for one reason why she ran for office.
Audience members called out for service cuts.
“I do not support cutting the revenue sharing,” Winchenbach said, “and many of us in Augusta don’t either.”
In answer to further concerns about welfare spending, Johnson said the best way to move people from welfare to work is through education. He said Maine’s rates for Temporary Assistance for Needy Families are lower than other New England states and that 85 percent of TANF recipients leave the program within two years.
When a member of the audience said state employees are getting raises while taxpayers get pay and benefit cuts, Winchenbach said some state workers have not had raises since 2009. Johnson said benefits have been cut for some state employees.
Hillary Holm of Whitefield serves on the RSU 12 Board of Directors, and said she is concerned about the state’s failure to fund education at the rate promised in 2005.
Currently the state pays 46 of 97 percent of the amount defined through the formula, Essential Programs and Services or EPS.
“It’s based on what the state had an expert figure out what we should spend,” she said. Most districts spend significantly more for education.” She called for an increase in the sales tax, similar to one instituted by former Gov. John McKernan’s administration. “Nobody noticed and it brought in a significant amount of money.”
Johnson said a 1-cent increase in the sales tax would produce $130 million in revenue.
Spear said the “abruptness” of the proposal to cut revenue sharing created practical concerns for him and others involved in municipal budgeting.
“It’s so late in the process that it’s going to be very disruptive,” he said. “Waldoboro self-insures unemployment.” He said layoffs that might result from budget cuts could have severe and immediate consequences to the town.
In regard to a proposal to use upcoming negotiations for the state’s liquor sales contract to pay off the state’s debt to hospitals, Johnson said only $186 million of the debt has to be paid by the state, as long as that amount is paid before the end of September.
A federal match for that payment will decrease after that time. He said bonding the payment would cost more and could not be accomplished in time to get the maximum federal match.
Johnson said the remainder of the approximately $400 million for the first two years of the 10-year contract could be used to help balance the state budget.