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A Joint Project of the Maine
Association of Interdependent Neighborhoods |
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Volume 8 No. 3 |
September 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. 3 |
September 2004 |
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The Palesky Tax Cap Initiative:
Threatening all we care about!What is the Palesky Tax Cap Proposal?
Care about your local schools? Public safety? Health Care? Human Services? Higher Education? Good Jobs? Our ability to successfully advocate for improvements in all? Then MAIN urges you to Vote No on the Palesky tax cap proposal that will be Question One on the ballot on November 2nd. Here’s a summary of what it is and what is at stake.
The Palesky tax cap proposal, modeled after California’s Proposition 13, would:
Limit property tax rates to a maximum of 1% of assessed value (a tax rate of 10 mils, or $10 per every $1,000 of property valuation).
Roll back property assessments to their 1996 value (the Maine Supreme Court has stated that this aspect of the proposal is unconstitutional)
Permit increases in assessed property value to only 2% per year until the property is transferred.
Prevent changes to this system without a 2/3rds vote in a statewide referendum.
What’s wrong with the Palesky Proposal? It would:
Cause massive cuts in services provided by towns and cities, including schools, fire and police protection, road maintenance and snow removal, garbage collection, recreation, libraries, general assistance, and other services. Out of 491 Maine towns, 248 already commit more than 10 mils (the proposed tax cap limit) to education, leaving nothing left over for other municipal services if the Palesky proposal passes.
Cause big cuts to state services. If passed, the state will be under heavy pressure to fund municipal services, likely resulting in both increased state taxes and major cuts in state services, including MaineCare, higher education, corrections and other major state services.
Give huge tax breaks to wealthy property owners. A person with a $1 million dollar mansion and an average tax rate of 17 mils ($17 on every $1,000 of property value) would save $7,000; But the ordinary person with a $60,000 home would save only $420.
How could it affect state funded services, like MaineCare, the University and Community Colleges, and K-12 education?
The numbers make it clear that cities and towns could not possibly absorb this level of cuts and maintain even the most basic level of safety and education. They will seek help from the state. How will the state pay for it? The state already has an expected gap in its budget for the fiscal years 2006 and 2007 of $934 million. This is a huge problem even if the Palesky proposal does not pass. If Palesky passes the problem will be even more massive. Even if the state raises taxes (which the Governor and Legislature are loathe to do), it is highly unlikely to raise sufficient taxes to avoid serious cuts in services.
Where would they cut? The largest item in Maine’s budget is aid to cities and towns for education. But, because voters passed a referendum in June to increase state education aid to municipalities by about $250 million, the state will have to increase funding on this item. This will help the towns, but the help would pale in comparison to their losses. The next largest item in the state budget to cut would be Human Services, including MaineCare. Human Services and MaineCare – and every other state funded program – would surely see drastic cuts.
These numbers are so big, I can’t grasp them. Give me an idea of what they mean!
If Palesky passes, the loss of tax revenue to cities and towns would be so huge, it is hard to grasp! Here is a sense of proportion.
If the State were to raise the sales tax to make up for the losses to towns, it would have to raise the sales tax from 5 cents to about 9 cents on the dollar.
The loss for Bangor alone ($20 million) is about the same as the cost of the entire state Drugs for the Elderly program.
The state funding for all of Maine’s Higher Education, including the University and the Community Colleges (about $237 million) is less than half of the losses towns will suffer.
The entire state cost of the Maine Medicaid program in 2003 (about $301 million) is only 60% of the what the cost to municipalities would be if the Palesky proposal had been in effect in 2003 (about $495 million).
The Palesky tax cap proposal is, indeed, extreme. Please vote NO on Question One on November 2nd – and bring your friends to the polls!
“. . . the Palesky Proposal tax cap measure, appearing on the November 2004 ballot, would have numerous unintended consequences, including the devastation and even elimination of many publicly funded local Maine libraries. The Maine Library Association vigorously opposes its passage.”
Maine Library Association
"I would predict that the legislature would just eliminate the general assistance program if Palesky passes. Neither the state nor the towns would be able to pay for it. I worry that the people who need help the most would be hurt the most by Palesky."
Mary Frances Bartlett
Augusta General Assistance Administrator" As funds became more limited after Prop 13, school districts began to cut programs. First went teachers in subjects such as music and foreign language for the elementary schools. Then, to keep adequate teaching staff, maintenance on the buildings was deferred and purchasing newer equipment put off. I remember teaching for two years in a classroom with a leaky roof. During winter when it rained . . . I would have to have a bucket at the front of the room to catch the water coming down. So every time I went to the chalk board, I would have to remember not to trip over the bucket."
Ruth Hicks, retired teacher,
Marin County, California
But Property Taxes ARE too high for many people – is there an alternative to Palesky?
There are property tax relief programs in place. (See related article!) MAIN has advocated strongly for an expansion in the Rent and Property Tax Relief Program (the “circuit breaker” program). This program targets help to those who need it by setting the benefit based upon how much of a bite property taxes (or rent) are taking out of a person’s income. It also targets the property owned as a home – not second homes and vacation homes. This is a more rational alternative – even if you double the value of the Circuit Breaker program, it would cost less than one-tenth of the Palesky proposal to implement and still provide real relief.
Why would anyone vote for the Palesky proposal if it is so bad?
We don’t think most people will vote for it if they really understand the consequences. But the question on the ballot will be deceptive: “Do you want to limit property taxes to 1% of assessed value?” Everyone wants a tax break. If you don’t understand the full proposal, it will be tempting to vote for it. We need to educate voters about how extreme the proposal is. Anyone with a child or grandchild in school or who relies on state or municipal services would probably lose more than they would gain from the property tax break.
There are some who say, “I know the Palesky proposal is bad – but I want to send a message to Augusta that we need property tax relief.” The answer to that is simple: this is not about sending a message; it is about saddling the towns and the state with a disastrous law. Once passed by referendum, it is not a disaster that the legislature can easily fix. By its own terms, it can only be changed with a 2/3rds vote of the people at another referendum. We must encourage responsible voting.
Tax Breaks to Out-of-Staters?
20% of all property taxes in Maine are paid by people who do not reside in Maine. Why give people with summer homes or ski homes big tax breaks while cutting essential services to Maine people?
“Though I do need help with paying my property taxes we should target tax relief to those who really need it - like the Circuit Breaker program. It won’t do us any good to reduce our property taxes if Mainers lose critical services such as the health coverage we get through MaineCare. The tax cap is a bad idea for Maine.”
Monika, from Brunswick
“Portland would likely experience a loss of 46% of its revenue, destroying the city budget if the Palesky referendum passes. I can't imagine the catastrophe that would cause to public health programs, homeless shelter funding and other critical programs for homeless people in the city.”
Jon Bradley
Interim Executive Director
Preble Street Resource Center
Citizens United to Protect our Public Safety, Schools and Communities
MAIN and MEJP have joined the broad coalition to defeat the Palesky initiative: Citizens United to Protect our Public Safety, Schools and Communities. For more information, or if your organization wants to join the coalition, go to www.citizensunitedformaine.com or call them at (207) 879-1198.
What will happen to the services Towns and Cities provide if Palesky passes?
The Maine Municipal Association estimates that the towns will lose 31% of their revenue or $592 million in 2006. Major cities, which provide key services to large populations, including surrounding towns, would be among the hardest it. Here are some estimates of their lost revenue if it had been in effect in 2003:
South Portland - 38% loss ($17.1 million). For South Portland, economist Charles -Colgan estimates that if all of these cuts fell on municipal services, they would be cut 83%; if all the cuts fell on the schools, they’d be cut 52%.
Bangor - 54% loss ($20.7 million). The Bangor city manager estimates it would cause a 23% cut to the school budget and an overall cut to the city budget of 40.5%.
Presque Isle - 60% loss (or $5.9 million). Here the city would have to eliminate all municipal services and would still be over $800,000 short of what it would owe for its share of the school administrative district (SAD) funding.
Augusta - 54% loss (or $12 million). The Augusta city manager estimates that $6.5 million would have to be cut from education, closing three schools and laying off 137 school employees. 72 full time city employees would also be laid off, including police, firefighters, and public works
employees.
Similarly, Portland would experience a loss of 46%; Lewiston – 54%; Auburn – 56%; Waterville – 59%; and this writer’s own little Town of Wales – 42%. To find out your town’s loss, go to www.memun.org , click on Palesky Proposal News, then click on “Likely Impact Analysis.”
In short, the proposal is extreme. Think of your municipal services: schools, fire, police, libraries, roads, and general assistance. A very high risk exists that general assistance would simply be eliminated.
