York Town News
From the Manager's Desk
TABOR- The Taxpayer Bill of Rights
By Town Manager Rob Yandow
Rob Yandow
The TABOR legislation, which was originally rejected by the Maine Legislature in May, was written by the Maine Heritage Policy Center and is based on a citizen initiative process led by tax activist Mary Adams. Colorado is the only state in the country that has adopted a Taxpayer Bill of Rights and there have been attempts to compare the Maine version of TABOR with the version of TABOR adopted by Colorado in 1992.The Maine version is far more restrictive however; and, in fact, Colorado voted to suspend TABOR for five years in 2005.
In its simplest form, TABOR limits spending increases in each fiscal year based on the lower of two "one-size fits all" formulas for local governments, counties, utility districts and state government, although the legislature can choose to ignore the state government implications if they choose. The first formula limits increased spending to the increase in assessed valuation in municipalities. The second formula limits increased spending to the cost of inflation (Consumer Price Index for Urban Consumers, or CPI-U) plus the percent change in population. Again, whichever formula results in the lowest increase in spending is the formula that must be used. The formula for School Administrative Districts is based on the cost of inflation plus the change in student enrollment, up or down.
Because the town of York's assessed valuation has been increasing at an average rate of 10.1 percent annually since 2003, the town would be required to use the spending formula based on the CPI-U plus population change as that calculation results in a lower percentage increase. I have done some calculations to determine what impact TABOR would have had on local government spending had it been in place for the last three fiscal years. The starting point for these calculations is the figure that reflects the approved municipal appropriation for fiscal year 2004, as shown on line two of the Assessor's Certification of Assessment. The starting figure is $10,066,984. In fiscal 2005, the voters approved municipal spending in the amount of $11,180,443 which represents an increase of $1,113,459 or 11.06 percent. Had TABOR been in effect, the spending increase would have been limited to 3.59 percent, which is based on the inflation factor (CPI-U) of 2.66 percent plus a population increase of .93 percent. The 3.59 percent increase equals $361,405, which means that the town would have had to cut $752,054 from the town budget or follow an override procedure which I will discuss later.
Following the same formula and procedure for fiscal 2006, the town would have had to cut $534,396 from the voter-approved budget or follow the override procedure.
Using the same formula and procedure for fiscal 2007, the town would have had to cut $357,086 from the voter approved budget or follow the override procedure .The $357,086 figure does not take into consideration the $845,000 that was taken from fund balance money for the purpose of purchasing land on Long Sands Road.
The TABOR-mandated process for determining spending increases for the York Schools during calendar years 2004-05 reveals a similar outcome. The spending increase would have been capped at 1.68 percent based on the inflation factor of 3.39 percent, minus a student enrollment decrease of 1.71 percent. The result of the 1.68 percent increase cap means that $712,895, the equivalent of 14 teacher positions, would need to have been cut from the voter-approved budget or follow the override procedure.
The override procedure is cumbersome and costly. Unlike Legislative Document 1, which is the current legislatively-mandated override that appears on the ballot, the TABOR override requires additional steps and costs. In order for the town to exceed the TABOR-imposed spending limit, or, in order to increase the tax rate or any fee, or to impose a new fee, the measure must be approved by a two-thirds vote of the legislative body which, in our case, is the voters. If the measure is approved by voters at a budget referendum, a special budget referendum must then be held. At least 30 days prior to the special referendum, each active registered voter in the town must be mailed a notice that must include a 500-word essay for both sides of the measure; estimates of a four-year fiscal impact of the vote and a comparison of the budget/taxes if the measure passes and if it fails. The town of York has over 10,000 active registered voters, so at a projected cost of $1.90 for each mailing the cost would be over $19,000 plus the referendum, which is projected to cost approximately $5,000.
The town of York has been active in limiting spending in accordance with the recommendations of the Tax Task Force. The voters have also been very clear in the desire to limit population growth through a cap on growth permits, which would be used against the town in the TABOR formulas. The voters have had the opportunity to limit municipal spending through the provisions of L.D. 1, our current override procedure, which appears on the ballot, and all of us have been keenly aware of the need to limit tax-impacted budget growth to reasonable levels. L.D. 1 is working. TABOR is not the answer to achieving the reasonable spending limits that we have been working hard to develop.
