The Brave New World of taxation



 By Jill Goldthwait

Say what you want about Governor Paul LePage’s agenda for his second term, but you have to admit it’s ambitious. His budget will produce no shortage of debate. Does it have a path to success? Let us just say it has some powerful detractors. His best hope is that no one can come up with anything better.

Take the part of his plan that would eliminate municipal revenue sharing. Only about one third of the funds to which that program is entitled remain, and the rest would disappear in the second year of the coming biennium.

To take up the slack, nonprofits with more than $500,000 in property value would lose 50 percent of their current property tax exemption. Only “houses of worship” and government properties would be excused. For towns that don’t have nonprofits? “Consolidate,” said the guvernator. Municipalities say they already have done so and are publishing lists of inter-town agreements to prove it.

You can be sure that all the hospital administrators in Maine will be nose to nose with their legislators. And that’s just for starters. The newly taxable would include private colleges – College of the Atlantic among them – theaters and concert halls, museums, art galleries, the Y, private libraries, land trusts and veterans’ organizations.

In Hancock County, Bar Harbor, Blue Hill, Franklin and Trenton all show veterans’ organizations with property valuations greater than $500,000. If that is in single ownership, they would now owe property taxes. Prediction: If any veterans’ organizations are touched by this budget, it’s going down.

The LePage proposal is not seen as all downside. Hospitals have come under increasing criticism for administrative salaries that far exceed that of the average Mainer. Mind you, running a hospital is not what that the average Mainer does for a living. Complex funding streams and endless regulations demand highly specialized administrative talent, and that’s before we get to the life or death nature of the work they do.

Still, if a hospital can afford administrative salaries approaching seven figures, why can’t they kick in a little toward the municipal services that they use, too? That mentality will hold for any nonprofits perceived as “rich.” The fatness of the cat is directly proportional to the nature of the service. Museums should pay. The Y, no.

If you intend to go to the nonprofit taxation portion of the budget hearing, take your lunch. It will be big, and it will be long. You are likely to be relegated to an overflow room, and where’s the fun in that? Well-heeled lobbyists might pay big bucks for tickets to Room 228. It could be a new revenue center for Appropriations.

The governor’s case is all about the big picture. Overall, says he, the fiscal gain in a community will far outweigh the loss. On MPBN radio last week –

Yes! The governor on MPBN! – he pegged the return at about $18 saved to $1 lost. He may be 100 percent correct, but the large nonprofits are not going down without a fight.

If you ask the Maine Municipal Association, or for that matter, any town manager or selectman in the state, they’re worried. The math does not yet add up for them. Expect this to be one of the biggest debates of the session.

There is so much more. The governor is requesting $2 million to hire outside counsel in cases where the state’s attorney general declines to represent him, a kind of pre-nuptial agreement for the new session. That proposal is being challenged, mostly by Democrats, on the presumption that if the AG is refusing to proceed at the governor’s request, she has good reason, and hiring outside counsel is going to be a waste of money.

The governor would cut $20 million from the Fund for a Healthy Maine, which uses tobacco settlement funds for community health programs, including smoking cessation. The money would be shifted to increased reimbursement rates for primary care health providers.

Every one of these bits and pieces will be debated at length. Keeping the overall budget in balance while manipulating its many parts is a Herculean task. Revenues must match spending, if not in the way the governor has proposed, then in some other way of the legislature’s devising. It is an exhausting process.

LePage is mounting what, in comparison to past media relationships, can only be called a charm offensive. Not only did the governor thaw out his chilly relationship with Maine Public Broadcasting in order to promote his budget, he is speaking around the state and planning two “town meetings,” in Portland and Bangor, where he will personally answer public questions about his plan.

When questions arose about a particular tax provision that would provide conformity with federal regulations, instead of “my way or the highway,” the governor acknowledged that it might have an unintended consequence and promised to “take a look at it.” By all accounts, he has lengthened his fuse. That will be a big help as negotiations begin in earnest.

Hi ho, hi ho. Whenever legislators can make a dash for the State House between snowstorms, there is now plenty of work to be done.

jillgold@gwi.net

Jill Goldthwait

Jill Goldthwait

Retired nurse and former independent Maine State Senator.
Jill Goldthwait

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