The Governor’s Proposal

Governor's Budget: Cost Shifts to Municipalities

As we await Gov. LePage’s promised veto of the state budget, it’s useful to revisit what it was that the governor himself proposed. For although the governor claims that he opposes new taxes, there is no way that the impact of what his original budget meant for municipalities would mean anything but heightened local taxes. This is a map that reveals the relative cost-shifting to municipalities which occurs under the governor’s preferred budget scenario.

The map (which is interactive if you click on it and look at it in its Google Map version) shows the per capita cost of Governor LePage’s original proposal to suspend municipal revenue sharing, end the Circuit Breaker program for people under 65, and shift the costs of funding teacher retirement to municipalities.

With great thanks to the Maine Municipal Association and their annual fiscal survey, we have a good measure of how much revenue those programs contribute to municipal coffers. If we divide those amounts by the population of each town, we arrive at the per-person cost of Governor LePage’s budget proposal for each municipality.

The lightest markers indicate a cost-shift that adds an additional cost of less than $120 per resident to biennial municipal budgets. The darkest markers indicate a cost-shift adding an additional $600-$800 per resident to biennial municipal budgets. The municipality which was most strongly affected under the governor’s proposal, as far as I could determine, was East Millinocket. On average, every person in East Millinocket would have to come up with an additional $789 over two years to cover what the governor wants to cut. (Let’s hope that their very lucky former resident feels like setting up a scholarship or two, eh?)

These costs are the biennial costs, so we can consider that the annual per-capita cost is half of the amount listed for each town. However, they’re  also costs per capita, which means that the average family of four would be paying four times the listed amount over the two-year budget cycle.

Across all municipalities, the governor’s budget shifted a median average cost of $205 to every resident.  However, as I mentioned above, it varied pretty substantially by town, and we can see that it varied with the kind of services available in each town. The towns that got off most lightly tended to be the plantations — towns which already outsource a fair amount of their local government decision-making to the state — and other small towns which weren’t going to get much in the way of revenue sharing anyway. The hardest hit areas were southern Maine, the mid-coast, and then the more densely-populated areas in central, eastern and northern Maine.

The Appropriations budget is going to shift some of the costs currently covered by the state to municipalities as well. However, it’s going to do so much less dramatically: instead of ending municipal revenue sharing, the Appropriations budget is preserving almost two-thirds of it. It does shift some teacher retirement costs to municipalities, but far less aggressively. And most importantly for homeowners and renters, the Appropriations budget restores property tax relief that the governor’s budget stripped out.

Localities are going to bear higher costs under the next biennial budget under any scenario. The fact that even having majorities in both legislative chambers does not allow Democrats their preferred budgetary outcome — which would be greater redistribution of resources from wealthier to poorer residents — demonstrates the very real impact of divided state government.

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This entry was posted in Governor LePage, Maine Economy, Maine Legislature, Municipal Finance. Bookmark the permalink.

One Response to The Governor’s Proposal

  1. Pingback: About those Accommodations and Meals Taxes | Emily Shaw

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