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Herbig, Jackson present alternative state budget at packed town hall

Democrats' plan would increase revenue sharing, school funding
By Jordan Bailey | Apr 28, 2017
Photo by: Jordan Bailey House Majority Leader Erin Herbig of Belfast looks on as Senate Minority Leader Troy Jackson of Allagash makes a point during state Democrats' town hall meeting in Belfast April 26.

Belfast — It was standing room only in the Hutchinson Center auditorium Wednesday night while Democrats presented a budget proposal they are calling “the largest property tax cut in Maine history.”

This was one of a series of town halls being held across the state to spread the word about Democrats' proposed alternative to the governor’s budget. Locally, another town hall is scheduled for Wednesday, May 3, at Watts Hall in Thomaston.

House Majority Leader Rep. Erin Herbig of Belfast and Senate Minority Leader Sen. Troy Jackson of Allagash outlined to a crowd of 130 attendees April 26 their party’s plan to get more money back to town governments and public schools, in order to lessen the amount municipalities would have to raise through property taxes.

Herbig summed up four key priorities of the “Opportunity Agenda,” of which property tax relief is “first and foremost.”

“This is something we hear in Waldo, we hear in Aroostook, and we hear in York: that people are being crushed by property taxes," she said, "and that is something we take very seriously."

Herbig said the proposal also focuses on economic growth and job growth, pre-K through college education, and Maine families (by supporting the elderly, people with disabilities, and veterans, and by expanding prevention and treatment to address the opiate crisis).

The Democrats' proposed expenditures would be paid for with projected surplus revenue, listed in the plan as $181 million based on figures from the Revenue Forecasting Committee, a tax on online revenue from such sites as Amazon and Airbnb, and two new revenue streams approved by referendum last year: a tax on recreational marijuana and a 3-percent surcharge on on income over $200,000. Though approved by voters, that surcharge is still generating controversy and the governor’s budget delays its implementation by a year.

To help lower property taxes, the Democrats’ budget would increase revenue sharing, the portion of income-tax and sales-tax revenue the state shares with municipalities, to 3 percent from its current level of 2 percent in order to bring the level closer to the 5 percent required by statute.

During the question and answer period, Belfast Mayor Walter Ash expressed appreciation for this proposed increase. Belfast is working on its budget now, he said, and calculated that if revenue sharing had remained at 5 percent, the city would receive $940,000 this year; instead, at 2 percent, it will receive only about $300,000.

“That was money that was raised in this community and sent to Augusta, and under the plan it is supposed to be sent back to us at 5 percent, and they knocked it down to 2 percent," he said. "I see that in your plan it is back up to 3, but boy, I’d like to see the 5.”

Public schools would be funded at the full 55 percent of essential program and services costs called for by a 2004 referendum, an increase that would cost the state $370 million, but would be paid for by the 3-percent surcharge on income over $200,000, according to the proposal.

The Democrats’ budget also expands the property tax fairness credit on state income taxes and directly reduces property tax bills by increasing the homestead exemption by $10,000. Jackson said Republican legislators not in leadership positions support these two measures, but the governor’s budget would eliminate the homestead exemption for property owners under the age of 65.

For a primary residence property in Belfast valued at $100,000, the current property tax is $1,832. According to our calculations, the Democrats’ proposed expansion of the homestead exemption would lower the tax to $1,603. Were the homestead exemption eliminated, the tax on that property would increase to $2,290.

Other expenses in the Democrats’ proposed budget include a “last-dollar” scholarship program for community college enrollees, expanded pre-kindergarten and Head Start programs, support of community college workforce development programs, support to business incubator programs, increases in direct-care worker reimbursement rates, expansion of mental health services for veterans, and expansion of prevention and treatment programs for opiate addiction.

The budget also proposes, through bond funding, to expand broadband access, improve infrastructure, support research and development and provide student debt relief and loan refinancing for graduates who stay in Maine. Further, it directs the Department of Health and Human Services on how it can use available federal funds to address childhood poverty and help people re-enter the workforce.

“As soon as we rolled this out, people started calling it a ‘spending plan,’” Jackson said. “But we don’t see it that way. It is not new programs; it is property tax relief.”

Jackson said the expenses are paid for with “money that has come in over projections that we don’t need for any existing services. The best thing we felt we could do is turn around and put this back into property tax relief for people across the state.”

By contrast, he said, the governor would use that money to reduce the tax rate for the state's highest earners.

"We have been giving income tax cuts on the backs of property taxpayers for the past six years and I'm just tired of it," he said.

The governor proposes to reduce the tax rate for Maine's highest earners from 7.15 percent to 5.75 percent. He has said on occasion that the highest tax rate would be 10.15 with the 3-percent surcharge on income over $200,000. However, this is misleading because the surcharge applies only to the income above the threshold, not to the full income of earners who make more than $200,000.

During the question period, when they were not expressing frustration with the Legislature’s lag in implementing policies passed by referendum and its rejection of federal funding for Medicare expansion, attendees appeared optimistic and supportive of the Democrats' plan.

City Councilor Mike Hurley summed up the mood of the audience: “After the November election, a lot of people were very despondent, really looking for leadership, really looking for the way forward,” he said. “I think people need a flag to rally around, and you really raised some good issues here, so thank you for fighting on our behalf.”

The legislators anticipate conflict over revenue sharing and say Republicans claim they will not pass a budget that includes the income surcharge for education funding. Other than that, Republicans are “silent,” which is worrisome, Jackson said, because the July 1 deadline for passing a budget is fast approaching.

“I’ve never seen it quite like this before,” he said. “We’re really close and there’s really no talking at this point.”

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Comments (1)
Posted by: Harold Richardson | Apr 29, 2017 11:30

People need to pay attention to this issue-there is a difference to Belfast taxpayers of over 1k between the Governor's plan and this one.  Secondly, the Governor either doesn't understand how tax rates work or he is lying.  Andy O'Brien in the Free Press has a good article in this weeks paper.  The Dems plan is not a "free money" situation that conservatives often complain about..  The revenue sharing is money that is raised here in Belfast and the Dems proposal is still far less than what we are supposed to be getting.

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