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For Immediate Release
September 24, 2003

Contact:
Dana Connors
(207) 623-4568
E-mail: beryl@wolfepr.com

Beryl Wolfe
(207) 883-6083

Television Ad Supporting Question 1A Called Deceptive and Misleading

AUGUSTA, Maine (September 24, 2003) - Dana Connors, Chairman of Mainers for Real and Responsible Property Tax Relief, today warned voters that a television advertisement, sponsored by proponents of Question 1A, is deceptive and misleading.

The 60-second advertisement, sponsored by "Citizens to Reduce Local Property Taxes Statewide," claims that property taxes will be reduced by 15 percent statewide, an assertion that Connors said doesn't add up.

"Question 1A forces the state to immediately come up with an additional $246 million a year to fund 55 percent of local education, but there is absolutely no legal requirement that even one penny of those extra funds will be used by local governments for property tax relief," he said. "Maine homeowners will quickly realize that this claim of a 15 percent statewide cut in property taxes is false. There is simply no provision in Question 1A to assure that homeowners will get the relief they deserve."

Connors, a former President of the Maine Municipal Association (MMA), called upon the MMA to explain to Maine taxpayers how the state can come up with $246 million a year to fund Question 1A.

"Question 1A could result in a huge increase in state taxes or severe cuts in vital programs for Maine's children and elderly," Connors said. "For example, the sales tax would have to be raised from 5 cents to 7 cents or the individual income tax raised by 24 percent in order to fund Question 1A. The MMA has an obligation to tell the truth, the whole truth, about how they propose to pay for this initiative."

In contrast to Question 1A, Connors said a yes vote on Question1B would provide guaranteed property tax relief.

"Question 1B will expand the Circuit Breaker program, helping low to moderate income homeowners, and also extend the Homestead Exemption which will benefit every Maine homeowner," Connors said.

# # #



MAINERS FOR REAL AND RESPONSIBLE PROPERTY TAX RELIEF


BACKGROUND

-On August 22 the Legislature approved a measure submitted by Governor Baldacci to compete with the Maine Municipal Association (MMA) referendum question.

-The measure passed in the House of Representatives by a vote of 112 ö 22 (roll call 259) and the Senate by a vote of 31 ö 0 (roll call 197).

COMPARISON OF QUESTION 1A with QUESTION 1B

Question 1A, the MMA Initiative requires:

-The State to provide 55% of the total allocation for education or equivalent under any new funding formula

-The State to provide 100% of the cost of funding special education

-$245,465,847 in new state spending in the fiscal year that begins July 1, 2004, and over $480 million in the biennium that begins July 1, 2005

Question 1B, the Governor and Legislature's Competing Measure requires:

-Transition to Essential Programs and Services (EPS) funding model, with the state share of education increasing according to the following schedule:

FY 2005-06: 49%
FY 2006-7: 50.5%
FY 2007-8: 52%
FY 2008-9: 53.5%
FY 2009-10: 55%

-Special education would be a shared responsibility, with special education costs included in the cost sharing formula

-Doubling of the funding for the so-called Circuit Breaker Program that provides direct rebates to homeowners.

-Restores the Homestead Exemption to $7,000 effective April 1, 2004

-$14,783,184 in new state spending in the fiscal year that begins July 1, 2004, and $81 million in the biennium that begins July 1, 2005.


ARGUMENTS IN SUPPORT OF QUESTION 1B, THE COMPETING MEASURE

Question 1B is better state fiscal policy:

-By phasing in the state share of education to 55% over 5 years, the Governor and the Legislature can avoid a massive tax increase and avoid enormous reductions in essential state programs.

-The state budget was just reduced by $1.2 billion to balance a revenue shortfall. It would be fiscally disastrous to saddle that budget with an additional $245 million burden, as the MMA initiative will do.

-Education is one important program in the state budget. It is not the only program that could benefit from increased state spending. State prisons are overcrowded, state mental health programs remain in noncompliance with court mandates, health insurance costs are skyrocketing and more people are becoming dependent on Medicaid. MMA's initiative disregards these other important needs and views the state budget through a special interest tunnel.

Question 1B is better education policy:

-Essential Programs and Services (EPS) is a better funding model. It is based on what a quality education should cost and allocates costs based on that calculation. The MMA initiative would have the state reimburse 55% of whatever is spent at the local level, regardless of whether it is necessary to achieve a quality education.

-Local schools should have some responsibility toward special education, shifting 100% of the burden of that federal mandate to the state is irresponsible and suggests that local schools have no investment and interest in educating children with special needs.

-Question IB will establish a maximum local cost share, beyond which the state will pick up 100% of education costs, resulting in reduced local expenditures in 400 municipalities..

Question 1B is guaranteed property tax relief, not hoped for property tax relief:

-By more than doubling funding for the circuit breaker program, and restoring the homestead exemption to its former full value of $7,000, Question 1B guarantees property tax relief to those least able to shoulder the burden imposed by the property tax.

-There is absolutely no requirement in the 1A initiative that municipal governments use the $245 million windfall for property tax relief.

-It's a myth to believe that increasing state funding for local education will reduce local property taxes. From 1995 to 2003, state expenditures on local education grew 5% annually (Bureau of the Budget). Inflation during that period of time averaged just 3%. During this same time period, property taxes continued to go up by 4.9% per year (Maine Revenue Services).






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