MMA Ad for Question 1 is 'Fear Mongering'

Says Statewide Vote No on Question 1 Coalition

Augusta – Dana Connors, Chairman of the Vote No on Question 1 Coalition (Mainers for Real and Responsible Property Tax Relief), today said that a current TV advertisement in support of Question 1 is “bogus and based on transparent fear mongering.”

“The Maine Municipal Association should be ashamed of the phony claim that homes are being taken to fund local education because the State does not provide enough money for schools,” Connors said. “This is a disgraceful claim, which ought to be rejected by Maine voters.”

[Note to Media: The full text of the ad is at the end of this news release; if would like to interview Mr. Connors today on this matter, call him at 623-4568,ext 13 or Beryl Wolfe to arrange at 883-6083.]

Connors said, “The ad is especially misleading, because Question 1 could increase state taxes by $245 million a year. Furthermore, MMA spokesmen have admitted that there is no guarantee that Question 1 would provide property tax relief. There is simply no requirement that municipalities use the extra funds to provide property tax relief to homeowners – not even one penny.”

Connors stressed that the State recently committed to fund 55% of local education with passage of LD 1924, signed into law by Governor Baldacci on May 12, 2004.

“This new law will gradually reach the same funding goals set forth in Question 1, while avoiding major tax increases or cuts in critical services and programs. And, it will provide genuine tax relief for Maine homeowners,” he said. “In contrast, Question 1 would force an immediate $245 million increase in state spending, triggering deep cuts in vital services or a massive tax increase or both.”

Connors continued, “The State of Maine already covers nearly 50% of the cost of public education when all costs are considered. Over the past 20 years the state raised its contributions substantially and tried to keep up with local spending. While state dollars increased each year, the state’s percentage fell back for two reasons: (1) Because the formula is “expenditure driven,” meaning the more money spent by towns, the greater the state must contribute to keep up. (2) The state is saddled with sole responsibility for teacher pensions (now $180 million per year) on top of $740 million in regular school aid. The state also pays 40% of retired teacher health insurance; towns pay nothing. Neither of these substantial state contributions counts toward the 55% goal.”

The following is the full text of the MMA television ad:

"In 1984, the legislature promised to fund 55% of the cost of education in the State of Maine. They've never fulfilled that promise. They've shifted hundreds of millions of dollars onto the property tax payers in the State of Maine unfairly. And there's not much we can do about it. We don't have a voice in Augusta and so we're ignored. Property tax owners are ignored. It drives me wild when I have to foreclose on somebody and take their home. I just firmly believe that you do not fund education by taking people's homes. That's ridiculous."


Below that is a list of organizations against Question 1

Vote NO on Question 1 Coalition
www.VoteNOonQuestion1.com

Mainers for Real and Responsible Property Tax Relief

Supporters:
Bancroft & Company
Casella Waste Systems
Dead River Company
Domtar Industries, Inc.
Georgia-Pacific
Independent Energy Producers of Maine
L.L. Bean, Inc.
Madison Paper Industries
Maine Association of Interdependent Neighborhoods
Maine Association of REALTORS
Maine Bankers Association
Maine Center for Economic Policy
Maine Children’s Alliance
Maine Equal Justice Project
Maine Health Care Association
Maine Innkeepers Association
Maine Merchants Association
Maine Pulp and Paper Association
Maine Restaurant Association
Maine State Chamber of Commerce
Maine State Employee Association
Maine Women’s Lobby
McCain Foods
Merrill Marine Terminal Services, Inc.
National Federation of Independent Business - Maine
National Semiconductor
Nexfor Fraser Paper
Parker Hannifin Corporation
Plum Creek Timber Company
Portland Regional Chamber
Sappi
Specialty Minerals
Tambrands
UnumProvident Corporation
Verizon
Wright Express Corporation

(To further see Vote No on question 1’s position, pasted in below is an editorial column authored by Dana Connors submitted to Maine weekly newspapers)

VOTE NO ON QUESTION 1
By Dana Connors, President, Maine State Chamber of Commerce

Question 1 on the June referendum ballot would require the State to immediately fund 55% of all local education expenses in the fiscal year that begins July 1, 2004, up from approximately 43% currently. This change will immediately increase state spending by $245 million in the first year alone.

Question 1 is neither a real or responsible tax relief initiative, rather it is a massive new spending mandate placed squarely on the backs of state taxpayers.

Question 1, sponsored by the Maine Municipal Association, offers hard-pressed homeowners a seductive, but false promise for tax relief. As the Maine Sunday Telegram (10-12-2003) has warned, don’t be fooled: Question 1 will actually raise your taxes, not lower them.

Despite MMA’s claims, there is absolutely no guarantee that municipal governments will return the $245 million windfall to homeowners through reduced property taxes. The referendum question does not require that even one penny go to property tax relief. Indeed, most municipalities would likely spend much, if not all, of the new money for local education and indirectly fuel the expansion of other municipal services.

If Question 1 passes, it will cause another financial crisis in Augusta. The Legislature will be forced to increase taxes massively or cut vital programs and services or do both. Important tax relief programs, such as the BETR (Business Equipment Tax Rebate) program, will be in jeopardy.

Also, the MMA initiative threatens many programs that provide fundamental support to Maine’s economy and civil society, such as public safety, health care for the elderly, child welfare, the University of Maine, job training and many others.

If the MMA initiative were funded solely by increasing state taxes, Maine’s working families, already among the most heavily taxed in the nation, would shoulder much of the additional burden. The Tax Foundation (www.taxfoundation.org), reports that Maine people on average pay out 12.2% of their income for state and local taxes, the second highest among the 50 states. For example, Question 1 could be funded with an increase in the sales tax from 5% to 7% (a 40 percent increase), which would raise approximately $260 million a year in new revenue. This would amount to approximately $500 a year per household (518,000 households, source: 2000 US Census) or $1000 over a biennium. A median family of four (average income about $55,000) would pay approximately $300 per year in additional sales taxes or $600 over a biennium.

In addition to raising taxes, the Legislature would likely make deep cuts in important programs and services. Last year, Governor Baldacci proposed and the Legislature approved an austere budget to cover a $1.2 billion projected deficit without raising taxes. This year, the Governor proposed and Legislature approved an additional $240 million in cuts for the current biennial budget. Add the $245 million that Question 1 will cost and the Legislature would be forced to slash vital programs and services.

Governor Baldacci has rightly and steadfastly opposed any increase in broad-based state taxes. He recognizes that higher taxes will damage Maine’s business climate, discourage investment and slow job growth. Higher taxes will also hurt the competitiveness of Maine businesses as they compete with companies in States with lower taxes, such as New Hampshire.

Ironically, while MMA presses its irresponsible initiative, the Governor and a bi-partisan majority in the Legislature have committed to invest more in local education. That’s why much of Maine’s business community supported the Governor’s proposal for a gradual increase in state aid over five years to fund 55% of local education, which was enacted into law (LD 1924) in early May. This new law will gradually reach the same funding goals set forth in Question 1, while avoiding major tax increases or cuts in critical services and programs. And, it will require reductions in local property taxes, providing genuine tax relief for Maine homeowners.

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