HOULTON, Maine — If the state Legislature goes along with Governor Paul LePage’s proposed 2014 and 2015 biennial budget, the impact to the town of Houlton could be “catastrophic.”
That was the message delivered to the Houlton Town Council Monday evening by Town Manager Eugene Conlogue. Gov. LePage unveiled his budget proposal on Friday, which calls for dramatic changes to the way municipalities receive funding from the state.
Based on the rough estimates that were compiled by Conlogue and town treasurer Nedra Hanson, the impact to the town would be an increase of $1,580,907 in local tax dollars, which is an increase of 5.4 mils to Houlton’s tax rate.
“This is a sweeping document that ruins state support for municipalities,” Conlogue said. “I can not imagine that any of these proposals will pass the Legislature.”
As presented, the biggest impact to local taxpayers is the elimination of the Homestead Exemption, which was adopted in 1997. Currently, eligible homeowners are entitled to a $10,000 exemption on their primary home, Conlogue said.
“The Homestead Exemption was a way to help offset a bit of the impact of increasing property taxes because of state mandates handed down to municipalities, without any money to go with them,” Conlogue said. “This was a real problem that continues to be a problem today.”
Of the $10,000 exempted from one’s property value, $5,000 is reimbursed by the state, while the other $5,000 is “eaten” by the municipality. Businesses are not eligible for the exemption.
If eliminated, taxes will increase for Houlton homeowners by a total of $296,462, Conlogue said.
The town would also lose all $600,000 of the state revenue sharing funds it has budgeted to receive.
In addition, changes to the commercial vehicle excise tax are proposed. Instead of the town receiving local excise tax dollars for commercial vehicles, the governor is proposing taking that money and giving it to the Maine Department of Transportation to help with road projects. In 2012, the town received $97,882 from commercial vehicle excise taxes.
Another proposal is the elimination of the BETR (Business Equipment Tax Reimbursement) program, which was adopted by the state legislature in 1995 as a way to repay companies who invested in machinery and equipment.
Instead, the governor is proposing folding the BETR program into the BETE (Business Equipment Tax Exemption) program, Conlogue said. That program allows companies to exempt equipment from taxation. Conlogue said if this were to happen, the town would lose roughly $136,203 in revenue.
Changes would also be made to the Maine State Retirement plan for teachers. Currently, teachers in the state are covered under this program, with the state covering the full cost of retirement. Each year, school districts are required to show how much the retirement package would be, if local municipalities paid it, Conlogue said.
“The governor wants to put 50 percent of this amount onto the backs of property tax payers,” Conlogue said.
For Houlton taxpayers, that amount comes to $321,946, Conlogue said.
Another tax relief program that would be eliminated is the Circuit Breaker program, which helps low- to moderate-income families with taxes.
General Assistance would also be impacted. The state currently funds $15 million for this program. Under the new plan, that amount would be lowered to $10 million. Conlogue said those funds would be on a first-come, first-served basis and when the $10 million was gone; no additional assistance would be given to individuals until the next fiscal year.
“If all of the above losses were to be replaced by property taxes, the overall impact on the town’s mil rate would be 5.4 mils,” Conlogue said. “While it is unlikely the town would approve such a huge increase, the choice would then be to drastically curtail expenses and eliminate services.”
To better illustrate his point, Conlogue said a property tax payer would see a 26 percent increase in their tax bill, if all of the measures are approved.
Council chairman Paul Cleary said the message Gov. LePage is sending is troubling.
“It almost looks like the governor is thumbing his nose at the Legislature,” he said. “It’s like a spoiled little brat taking his ball and going home. It’s too bad because he makes himself look idiotic.”
The council agreed to draft letters to Houlton’s state representatives urging them not to support the governor’s proposed budget.
SAD 29 letter
Councilors also unanimously agreed to draft a letter to the SAD 29 school board urging the group to do everything within its power to come up with a 2013-14 budget that does not increase the town’s tax rate. That letter was supposed to be presented to Superintendent Mike Hammer on Tuesday.
“The town has allocated $2,215,029 in local property taxes to support the school’s budget during our fiscal year of 2013,” the letter states. “This allows the school to maintain its current level of funding through to Dec. 31, 2013. Based on this projection along with the amounts budgeted for the county tax and municipal government, the town hopes to hold the mil rate for this year to last year’s level of 19.95. While the municipal budget increase was held to 1.1 percent, the school budget increase on a calendar year-to-calendar year basis will increase by 8.0 percent. Any school increase above what is anticipated in the budget will certainly drive the mil rate above 20 and the council is deeply concerned about and opposed to crossing that threshold. As well, we believe the taxpayers of the town will not stand for a third year of increases in taxes.”
SAD 29 is only in the beginning stages of formulating its budget as the district operates on a fiscal cycle of July 1 to June 30.
“While not unmindful of events in Augusta that impact budgets locally, we implore the board to at least hold the line on property taxes for the 2013-14 school year,” the letter states. “If reductions are required to accomplish this goal, the council will be supportive. We respectfully ask that you closely examine your budget proposals to identify real ‘needs’ compared to ‘wants.’ While the town has adopted its budget, it will continue throughout the year to find other areas of reductions and savings. We respectfully ask that you look closely at your budget as well with the same goal in mind. The council wants to be in cooperative relationship with the school board and wishes to be supportive of the budget you eventually adopt rather than to oppose it.”
Other business
The council also heard a request from Marie Carmichael, recreation program director, to forego a decision made during the budget approval process to explore privatizing maintenance of the parks. During the budget process, a request was made to have the town explore privatizing the upkeep of the parks and recreation facilities to see if it could save the town money by eliminating two positions.
“We have gone here four or five times to look into privatizing our maintenance,” Carmichael said. “Each time, the council has taken a hard look at it and they don’t (go forward with the idea). What these two positions mean to our department is unbelievable.”
She suggested the council should have a sit down meeting with the maintenance crew and review all the work they perform for the town. Much of the work done is preventative in nature, which has helped keep the facilities in tip-top shape, Carmichael said.
In other agenda items, the council:
Tabled action on waiving a Payment in Lieu of Taxes (PILOT) for the Houlton Band of Maliseet Indians. The matter will be revisited at the Jan. 28 council meeting.
Learned that the town has received $200 in pledges thus far to assist with funding the rest area/tourist information center. An additional $1,000 has been promised, but not yet received. The town is also working with Brian Longstaff of the Northern Maine Development Commission on ways to help fund the center.
The next regular council meeting is set for Monday, Jan. 28 at 6 p.m.
