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A Joint Project of the Maine
Association of Interdependent Neighborhoods |
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Volume 8 No. 2 |
June 2004 |
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MAIN
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A Joint Project of the Maine
Association of Interdependent Neighborhoods |
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Volume 8 No. 2 |
June 2004 |
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Think Twice on Two Important Votes!
Education & Tax Referendums Raise Big Questions
beyond Tax Reform
By Christopher St. John, Maine Center for Economic Policy
Voters will face two ballot questions this year, one in June and the other in November. If passed, they will cause problems for state and municipal services - including services that low-income people rely on. In June, voters will again vote on Question 1A--increasing the amount of education funding the state must pay by $250 million; in November voters will be asked whether they want to drastically limit property taxes.
Most Maine people agree that they would like to see lower property taxes. Even if you are a renter, it's clear that rising property taxes affect the cost of your rent. While on the surface, these proposals sound like they will help, they are dangerous because they do not include a plan for funding them. Without funding, they threaten all other state services, including health care, general assistance, public safety, higher education and the many other services that people depend on.
This past legislative session, lawmakers generally agreed that property tax relief was needed. But they could not agree on a way to pay for it. As a result, efforts to put together a rational alternative to the unfunded ballot measures did not succeed. Ideally, lawmakers could come back into session this summer or in the early fall to pass a real tax reform package that provides property tax relief to Maine people without sacrificing other critical state services.
The First Referendum:
Question 1 on the June 8th BallotOn June 8, Maine voters will again face the question:
"Do you want the State to pay 55% of the cost of public education, which includes all special education costs, for the purpose of shifting costs from the property tax to state resources?"
From the language, it's tempting to vote yes. But unfortunately, if you are struggling to pay rent or property taxes, nothing in the referendum requires municipalities to lower property taxes after receiving the additional State funds called for in this measure.
Most agree our public schools should be well funded. And they will be. A bill has already passed that would phase in the increase for education over five years. But Question One calls for the $250 million increase to be made in one year. Even the supporters of this measure (the Maine Municipal Association and Maine Education Association) have acknowledged that raising $250 million dollars in a one-year period is unrealistic. Given the tough economic times, no money is available to take care of this cost. To put this in perspective, the devastating cuts in MaineCare just proposed were because of a $141 million deficit. Imagine if, in addition to the budget deficit that is already expected next year, we had to add another $250 million!
The Second ballot measure:
the so-called "Palesky" tax cap on the November 2nd BallotIn November, voters will face another referendum question:
"Do you want to limit property taxes to 1% cap of assessed value?"
Again, this sounds attractive at first. But, in fact, it would cause devastating cuts in many school, county, and municipal services. Property taxes now average about 1.7% of value in Maine towns - almost half of municipal and county budgets would be cut. We should not be fooled by promises that we can have the same quality of schools or roads or other services with such a drastic cut in the amount of dollars available to pay for them.
This referendum also poses a grave threat to the State budget and all of the critical services it provides. If Maine towns suffer a drastic loss of income from passage of this referendum, the State would have little choice but to help bail them out. Vital State services like Medicaid would likely be cut in the process. General Assistance, which is jointly funded by the state and the towns, would surely be devastated.In states where such ballot measures have passed the results have been devastating for public services. For example, in Colorado, where people have been living with such a cap for several years, we find that: 50% more of their children are uninsured than in the rest of the nation; the State ranks 47th in the nation in support for public colleges and institutions; school classes are larger and teachers are less well paid than in other states; fewer children have immunizations; libraries have fewer books; and state highways are less well maintained. In other words, the people of Colorado, particularly low-income people have paid a very high price in human cost for lower taxes.
More money for schools sounds good to many, as does lower taxes. But both must be balanced with other public needs like money for health care, courts, parks, subsidized child care and all the other things which state and local governments do.
There is a better way...
Property taxes remain a significant burden particularly for low-income households. Fortunately there is a better approach to rent and property tax relief that targets help to the households that need it the most. The Maine Resident Homeowners and Renters Property Tax Relief Program (also known as the "circuit breaker program") currently provides some help to renters and to homeowners whose property taxes are more than 4% of their income. Proposals in the current legislature to expand funding, eligibility, and assistance under this program gained a lot of support from all sides in the legislature. While these proposals did not pass this spring, they remain a far better way of providing meaningful property tax relief for the majority of Maine's people than the ballot measures that we will be voting on soon. We would be better served to urge legislators to support this far more effective approach when they return later this year or in January.
The Maine Association of Interdependent Neighborhoods, Maine Equal Justice and the Maine Center for Economic Policy urge people to learn about the impact of these proposals and vote against them to sustain current state and local services. We will be back in the next legislature to advocate with our Coalition partners in Taxpayers for a Fair Budget for increased funding for the Maine Resident Homeowners and Renters Property Tax Relief program, as the most effective and targeted form of property tax relief.
Thanks to Christopher St. John of the Maine Center for Economic Policy for his work on this article.
