The FY16 and FY17 budget proposal developed by Governor Paul LePage is regressive and will hurt poor and middle class Mainers. The budget would cut revenue and cut expenditures, which will pass expenses onto towns and cities and result in a major tax shift to property taxes and sales taxes.
Every town and city and Maine will be harmed financially if the Governor’s budget passes. The City of Portland could see a deficit in FY16 of $5.1 million and in FY17 of $9.5. This includes flat funding for K-12 education, loss of revenue sharing, loss due to the homestead exemption change, cuts to the Fund for Healthy Maine, loss due to the change in exemption to the business equipment tax reimbursement, and changes to general assistance reimbursement formula.
Cuts in services and increases in property taxes will be how every town and city will need to respond to the Governor’s budget if it is passed by the legislature. The result will be more costs passed onto home owners, commercial owners, and non-profit institutions such as hospitals and colleges.
Meanwhile, the tax rates on corporate and the highest income earners will be decreased. To make up the difference, the proposed budget would include increases and expansion of sales taxes. The proposed budget could disrupt what is a progressive tax structure that the State of Maine has institutionalized over the period of decades.
The tax shift to property taxes and sales taxes is regressive as it has a disproportionately negative effect on those who can afford it the least. Let us hope that the legislature passes an alternative budget that is not regressive at the core. It is time to call your state representatives and state senators and ask them not to shift the tax burden onto the poor and the middle class.
In 2009, Maine voters passed a citizens veto by referendum the last time the legislature approved a budget with a nearly identical regressive tax structure and we should expect a repeat of history if the legislature votes in favor of the Governor’s proposed budget.
David Marshall can be reached for further comment at 207-409-6617