TABOR: A problem, or the solution?

AUGUSTA -- The state's capital city would face strict budget limits, and by one measure a budget cut, if the Taxpayer Bill of Rights is approved by voters on Nov. 7, City Manager William Bridgeo says.

If the proposed spending cap had been in effect in 2005, the city would have had to reduce its $20 million budget by one-half of 1 percent, according to an estimate prepared by the Maine Municipal Association, a nonprofit, nonpartisan organization.

Bridgeo said trimming $100,000 from the budget would mean getting rid of employees.

"I don't think there's any way you make significant cuts in our budget without cutting positions," he said.

The ballot measure, also known as TABOR, seeks to limit increases in state and local government spending to the rate of inflation, plus population growth, and requires voter approval for all tax and fee increases.

If a town wants to spend above its cap, it also must ask voters. For schools, the limit is set by school enrollment, plus inflation.

With a month to go before Election Day, both sides are working hard to get their messages across. Supporters and opponents are running television advertisements, representatives for both campaigns are lobbying town councils and interest groups, and full-page ads warning of "Hurricane TABOR" are popping up in newspapers.

Whether the measure results in budget cuts for any Maine cities and towns is a matter for debate.

Supporters of the measure say towns may be restricted to spending only what they spent the previous year. The citizen initiative does not call for cuts, said Bill Becker, president of the Maine Heritage Policy Center, a conservative think tank in Portland that is pushing the initiative.

"There are no cuts required by the TABOR," he said. "It is not part of the law."

Opponents, namely the Maine Municipal Association, disagree, saying their interpretation of the language would force some communities to cut their budgets.

"There's nothing in that law that says when the formula goes negative, it stops," said Michael Starn, spokesman for the Maine Municipal Association.

In Manchester, Town Manager Mark Doyon said he's worked with city leaders to purchase a fire truck in recent years and that they are saving up for an estimated $250,000 in needed dam repairs. He's not sure those projects would be realistic under the Taxpayer Bill of Rights.

"The town of Manchester is pretty responsible with what it's asking from taxpayers," he said. "There's not a lot of fat in the budget."

Doyon said the strict budget limits in the measure would likely force the town to defer routine maintenance. For example, if the town can't afford to keep up with new fire equipment, it could increase the rates residents have to pay for fire insurance, he said.

"I believe citizens of every community have the right to determine what's right for them," he said. "I don't think TABOR is a one-size fix. TABOR doesn't allow a community to determine where their future is going to go."

The Taxpayer Bill of Rights is one form of a Tax and Expenditure Limit, or TEL. About 30 states have some kind of limit on government spending, including Maine.

When the Legislature passed Legislative Document 1 (LD 1) in early 2005, it contained a formula for limiting spending at the municipal, county and state government levels. But it's described as a weak limit, whereas the Taxpayer Bill of Rights is considered a strict limit, according to an analysis prepared by the Maine State Chamber of Commerce.

This is the fourth time in three years voters have been asked to decide a measure that promises to reduce taxes.

A 2003 referendum put forward by the Maine Municipal Association, in which voters had three options, proved inconclusive, forcing a second vote in spring 2004.

Voters that year approved the MMA plan, which required the state to fund 55 percent of the cost of education. Later that same year, in November 2004, voters were asked to approve a 1 percent tax cap, which failed.

In January 2005, the Legislature passed, and Gov. John Baldacci signed, a bill that increased school funding to 55 percent over four years, put more money in two tax-relief programs, and instituted spending caps on municipal, county and state government.

This time around, those who are supporting the Taxpayer Bill of Rights say the Legislature's action -- known as LD 1 -- just hasn't brought the kind of relief it promised.

"The question becomes to Maine people who have to pay the tax bills, did they find historic, unprecedented tax relief?" Becker said. "No."

"There's frustration, there's impatience, but there was first-year data collection on LD 1 and it seemed to be working," he said. "We lowered property-tax burden last year by a significant amount."

Bridgeo, who acknowledges that administrators are often accused of scare tactics when asked about possible cuts, said he would have to do some "intense work" with the City Council if voters approved the referendum.

But he offers statistics to try to back up his belief that the spending cap is unnecessary.

In the last five years, the average annual increase in the city's budget has been 2.6 percent, he said. Over the same period, property taxes have gone up less than 1 percent a year.

The tax bill on a home valued at $75,000 has gone up only $10 in nine years -- from $1,700 to $1,710, he said.

"Another thing that's frustrating about the TABOR discussion is it seems the most efficient level of government, cities and towns, is the one that gets punished under this legislation," Bridgeo said.

If cities, towns or schools want to spend more than the cap allows, they must ask voters for permission. Becker said that strengthens local control by giving all citizens a voice.

"The TABOR sets ground rules, and to elected officials we say, you're still going to decide, but it has to be within parameters," he said.

"Then you need to come to us and ask us to approve additional spending and taxes."

But the very process of asking voters would be expensive and time-consuming, local officials say.

For example, if the city of Augusta wanted to raise fees at the city landfill, which it did recently, the measure would require the City Council to approve it with a two-thirds vote and then citizens would also have to approve it by a majority vote.

Bridgeo estimates that each election would cost the city $25,000, in part because the measure requires the city to send out a mailing prior to the election outlining the pros and cons of the fee increase.

In towns with a board-of-selectman form of government, the annual town meeting is considered the governing body. That means that at least two-thirds of those present at a town meeting would need to approve a fee increase or agree to allow the town to spend above its cap.

After that, the proposal would go to a full town vote where a majority would have to approve the request as well.

In Waterville, City Administrator Mike Roy said an analysis performed by MMA shows that if the measure had been in effect for the last 10 years, the city of Waterville's budget would be $2.5 million less than it is today.

The city's 2005 budget was $13.2 million, and under TABOR, it would have been $10.7 million, he said.

"There's no way I can see reducing the budget by $2.5 million without cutting essential services and endangering public safety by doing that," he said.

"When you have a tight budget crunch, they always say you'll lose fire, police or the football team," he said. "In fact, Waterville reduced taxes two years in a row, lowered the number of people who work at the city, and we have not cut services at all."

In Oakland, Town Manager Steven Dyer said his $3.8 million budget would have been $259,000 less if TABOR had been in effect in 2005.

"It's not as significant as Palesky (the 1 percent tax cap) right off, but it would deplete resources over time," he said.

However, many of his council members believe that if the town has a legitimate need to raise taxes or fees, or spend above the limit, townspeople will vote to support it. He estimates a town election would cost $8,000-$10,000, not including the cost of printing the ballots.

"We're not going to lay police off or close the library," he said. "We don't want to go into scare mode."

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