January 16, 2013

Skowhegan stands to lose $1.7 million in revenue sharing under LePage budget plan, town manager says

Would mean $80 property tax increase on a $100,000 home

By Doug Harlow dharlow@centralmaine.com
Staff Writer

SKOWHEGAN -- Offering an example of the woes communities would face if the Legislature backs Gov. Paul LePage's two-year, $6.2 billion state budget proposal, Skowhegan's town manager said his town could lose almost $1.7 million in state funding.

John Doucette Jr.

Staff file photo

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According to a Maine Municipal Association estimate, Skowhegan would lose $941,879 in Fiscal Year 2014 and $976,874 in Fiscal Year 2015, if Gov. Paul LePage's proposed two-year suspension of state revenue sharing is enacted. That's a total of $1.92 million over the two-year period.

You can see a town-by-town database of the MMA's estimated impact of suspended revenue sharing here

Key to the loss, John Doucette Jr. said, is the proposed suspension of municipal revenue sharing. The proposal would save the state $200 million, but municipalities would face cutting services or increasing property taxes. In Skowhegan, taxes on a $100,000 home would rise $80 a year, Doucette said.

"It doesn't make you a business-friendly state," Doucette said. "We've got big signs saying, 'We're open for business.' Well, this is closing you."

The current tax rate of $16.20 for every $1,000 in property value would jump to about $17 per $1,000 if the proposal is enacted, he said. The owner of a home valued at $100,000 would see the property tax increase to $1,700 per year.

"This is going to be a very difficult year if this happens," Doucette said. "It's going to be drastic. Property taxes are going up whatever you're going to do."

Doucette said the town received $644,344 in municipal revenue sharing from the state last year to help reduce taxation.

Another source of town revenue is from excise taxes charged for motor vehicle registration. Doucette said the governor's plan includes taking that money away, too, which would result in the loss of $56,500, because the town has two major trucking firms that register their vehicles with the town.

Loss of the homestead property tax exemption, as proposed by the governor, would eliminate $112,000 from the town's annual budget, according to Doucette. The governor's plan also calls for a lump sum to be put into general assistance, after which the funding would be frozen, leaving Skowhegan to pick up the entire $64,650 bill, Doucette said.

"Right now the state reimburses us half. We would have to take care of everything," he said.

The total potential loss in each of the next two years under the governor's proposed budget would be $845,169 per year, or about $1.69 million for the full two-year fiscal term.

"This isn't even counting our new budget coming in June, the county or the schools," Doucette said. "He's cutting the schools' retirement fund in half. Where do you think that's going to be paid from?"

Doug Harlow -- 612-2367

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