Op-Ed
Local Democrats weigh in on taxes and spending as Nov. 7 election nears
By Glen MacWilliams
Seacoast Democrats
The issue of taxes is on the minds of many Maine voters. One response to the tax issue has been the introduction into this year's election of an initiated referendum called the "Taxpayer's Bill of Rights" (TABOR), which will impose spending limitations on both Maine state and municipal governments. Although TABOR will have no direct effect on tax rates, its proponents believe that by making any new form of community expenditures all but impossible (because it will take a super majority to change), people will pay fewer taxes. In Colorado, the only state to have tried this radical tax proposal, the citizens found that their taxes did not go down, and their personal expenses rose significantly. Colorado's TABOR-like tax law was recently suspended by popular vote.
Be that as it may, it seems clear that Maine voters wish to have something substantial done by the governor, the senate and the house of representatives in regard to "taxes," which includes property taxes as well as broad-based taxes administered at the state level.
While this is a complicated subject and there is no single "silver bullet" solution, Seacoast Democrats offers their recommendations for changes in the Maine state tax structure. These changes are proposed to respond to the tax shift, where the bulk of the taxes needed for public services are being shifted from the wealthiest segment of our society and put onto the middle and lower income citizens.
Since this is a particular problem in Maine, where most of our population is middle- and lower-income, the following changes should be made to meet the tax shift burden without resorting to extreme measures like TABOR:
1.) Property Tax Valuation. The principal problem here is the question of property tax valuation. When property is revalued tax bills often rise. Even if the tax rates remain constant or even decrease, many property owners receive increased tax bills, which taxpayers, especially seniors on fixed incomes, have great difficulty paying. It has been decades since our state and local methods of property tax valuation have been examined with the goal of eliminating unfair tax burdens for vulnerable segments of our population.
2.) Reliance on Property Taxes for Education. The problem posed by the reliance on property taxes for education has led to "bail-out" programs with state money going back to the cities and towns. At least half of the state's budget dollars are returned to the cities and towns. The problem of fair and equitable distribution of money has never been satisfactorily solved. This is particularly true for communities in the southern region of the state, which provide the largest portion of tax money for the state treasury. Let's restore a fair and equitable distribution of state funds for education, which coupled with the change in valuation, will further reduce local property taxes.
3.) Tax Exemptions. Millions of dollars never reach our State Treasury because of tax exemptions. These tax exemptions primarily benefit special interests, sometimes with good reason, but often they defy rationality. Attempts to change or eliminate tax exemptions are fiercely opposed by lobbyists and rarely succeed. This subject has been wrestled with by many legislatures in the past. It is now the time to change tax exemptions to a legislatively initiated referendum. Then all Mainers can vote to change a status quo that force the average citizen to pay more than he or she should.
4.) State and Municipal Spending. It is now time for the Legislature to prepare two separate sections of the state budget: one for state agencies and another for state/municipal expenditures. This would clearly show how much the state itself is spending for state services and enable greater economy using the state purchasing power to lower costs. It will also allow for greater control over the state/municipal expenditures. Now, for example, though the state has to pick up a percentage of school costs, it has no say in what those school costs will be, except in limited ways. Greater legislative oversight for better and continued dialogue with municipalities and school districts will help reduce spending needs while maintaining quality.
5.) Federal tax cuts and tax shifting. Maine people need to know what impacts federal tax cuts have had upon our state. We've seen, with the federal drug benefit, that the state of Maine had to step in and pick up the cost when the promised federal money was not forthcoming. There are additional costs to the state for other non-funded mandates such as the "No Child Left Behind" education bill, which costs our school and local taxpayers. These federal tax cuts and tax shifting are real costs for the people of Maine. While federal policies are problems that cannot be solved by the Maine Legislature, our congressional delegation needs to know what these federal policies cost the people of Maine and how these policies affect the Maine taxpayer.
We propose a community commission be formed with our congressional delegation on these issues, with the goal of working to effect change, as we did on a bipartisan basis to overturn the Defense Department's decision to close the Portsmouth Naval Shipyard in Kittery.
6.) Tax refunds. Recent studies have shown that at least 100,000 Mainers have not applied for the tax refunds already available through recent legislative action in an upgrade of the Maine Residents Property Tax and Rent Refund Program. Eligibility requirements were changed to allow Maine households with income up to $102,000 to apply for property tax refunds up to $2,000 for property assessed in 2005. Since more outreach is needed for the many households that have not applied for a refund, we propose that all eligible citizens be asked to take advantage of this offer to help pay for their property taxes. We want our elected representatives to work together to build support among their legislative and congressional colleagues to reduce the effect of the nationwide tax shift and to do so without jeopardizing our "civilization," as exemplified in our communities, our civic institutions and our infrastructure.
