January 12

LePage budget proposal: Blueprint or massive tax shift?

Gov. LePage’s $6.2 billion two-year budget proposal draws heavy fire from Democrats; the House GOP leader says it calls for ‘right-sized government.’

By Steve Mistler smistler@pressherald.com
State House Bureau

AUGUSTA — Gov. Paul LePage proposed a $6.2 billion, two-year state budget Friday that would make deep cuts to human services and suspend revenue sharing for cities and towns while protecting tax cuts passed by the last Legislature.

Opponents' response to the proposal was swift. Democrats said the governor is proposing a massive tax shift to municipalities, which would have to choose between raising property taxes and cutting services and local funding to schools.

But the Republicans' leader in the House, Ken Fredette of Newport, said, "This budget gives us a blueprint for a right-sized government."

In a prepared statement, Fredette, said, "It sets us in the right direction by keeping the tax burden on Maine families low while paying our bills and reforming our overly generous welfare system."

The proposed budget for the two years starting July 1 would save more than $52 million by eliminating or tightening eligibility for services for low-income residents.

It also would eliminate more than 200 positions in state government.

The suspension of municipal revenue sharing would save the state close to $200 million over two years. But the proposal may be a non-starter for lawmakers who would have to defend it in their home districts, where local officials could be forced to raise property taxes to cover the loss in state funding.

The Republican governor's previous attempt to decrease revenue sharing, in 2011, was rejected by a Republican-led Legislature.

LePage said in a prepared statement Friday that state government has to learn how to manage its finances, and so do municipal governments.

Portland Mayor Michael Brennan said he doubts that the revenue sharing proposal will survive because it would hit every city and town in Maine.

Brennan, who served in the Legislature for 13 years, said there has "never been anything as radical and far-reaching as this proposal."

Sawin Millett, LePage's budget officer, acknowledged that the revenue-sharing freeze is a bold proposal.

Millett, who presented the budget to legislators on LePage's behalf, said it was one of the most difficult spending plans he had ever drafted.

He said that as it looks to cut costs, the state is out of "low-hanging fruit." All that remains are structural reforms.

"We couldn't pull the strings together and balance this budget with easy fixes," he said.

Democrats countered that suspending revenue sharing, along with several other initiatives that cut state aid to towns, effectively would be a tax shift of about $400 million.

Included in that calculation is a $73.4 million cut to the circuit breaker property-tax relief program. LePage has proposed eliminating the program, as well as the homestead property-tax exemption, for everyone younger than 65.

The budget would also reduce state expenditures on teachers' retirement by $28 million by making school districts contribute to the cost, which is now covered wholly by the state. The state would contribute $14 million toward retirement costs.

Lois Kilby-Chesley, president of the Maine Education Association, called the budget proposal "a giant shell game" that would hurt public schools and teachers.

"Ultimately, when we impact the schools, we impact the children of Maine," she said. "This is a very sad day for our students. A shift in educator retirement cost to the local communities is a prime example of that shell game."

(Continued on page 2)

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