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Bill seeks to restore Maine revenue sharing

Glenn Adams, Associated Press

AUGUSTA, Maine (AP) -- With a proposal to slash revenue sharing looming, Maine city officials took turns Friday speaking in support of a bill that would set into motion a plan to return the state-municipal program to full funding over three years.

Assistant Senate Minority Leader Roger Katz's bill went before the Appropriations Committee as municipal officials across the state worry about the potential impact of Gov. Paul LePage's plan to suspend municipal revenue sharing for two years to balance the state budget. Katz's bill would return to the full 5 percent the share of state sales and income taxes that's supposed to go to cities and towns.

Co-sponsored by Republicans and Democrats, the bill seeks to restore an important funding source for municipalities that's been eroded amid difficult fiscal times for state budget-makers.

"A couple of legislatures ago, we decided to ignore this formula and essentially raid the trust to pay for other general fund needs. We did it last session too and I was a participant in that," said Katz, who served on the Appropriations Committee last session.

"Let's face it, to solve our own difficult budget problems we passed some of those problems downstream to the communities we represent. The result was that we are now down from 5 percent to about 3.6 percent in terms of the revenues we return," said Katz, who is also a former Augusta mayor.

Katz told the committee that his bill is not a reaction to the governor's proposal to put revenue sharing on hold for two years. Katz said he first proposed it well before LePage put forward the revenue sharing cut to help balance the state's $6.3 billion, two-year budget.

The senator's bill drew support from officials representing Portland, Augusta, Bangor, Waterville, Bethel as well as the Maine Municipal Association, who see it as a bulwark against tax shifts to local property taxpayers.

"I have seen elderly property owners almost reduced to tears — or anger — when they talk to me about how hard it is now to pay their property taxes, pay more for food, heating fuels (and) medications, not to mention the fact that they are on fixed incomes with no substantial cost of living adjustments over the years," Augusta City Councilor Cecil Munson told the committee.

Waterville Mayor Karen Heck, representing a coalition of 12 city mayors, called revenue sharing "a longstanding partnership between the cities and state" that dates to 1972.

"Suspending revenue sharing would inevitably lead to significant property tax increases, statewide," said Heck, adding that it's been difficult for municipalities to manage "arbitrary" reductions in revenue sharing in recent years.

Portland Mayor Michael Brennan said that with full funding, revenue sharing in 12 of the state's largest cities would total more than $41 million. But with reductions that have already taken place, the total is $28 million for fiscal 2013.

Meanwhile, the Taxation Committee by a 6-3 vote rejected the idea of suspending revenue sharing, saying it would lead to property tax increases for residents.

Another bill that came before the Appropriations Committee on Friday would move revenue sharing funds into an irrevocable trust, which would make future legislative raids on those funds more difficult. But the bill, sponsored by Senate President Justin Alfond, D-Portland, would have no impact on the revenue sharing formula.