i Excise-tax bill ignites debate
Excise-tax bill ignites debate
BY SUSAN M. COVER
Staff Writer Kennebec Journal & Morning Sentinel 03/27/2009

AUGUSTA -- The debate over one of the most hated taxes in Maine -- the motor vehicle excise tax -- sparked more than three hours of discussion Thursday at the Statehouse.

Supporters of a citizen-initiated bill to cut the tax in half immediately and continue cutting it in succeeding years said it's a bill that will deliver the kind of tax relief the Legislature has promised but not delivered.

"Maine people deserve real tax relief," said Tarren Bragdon, chief executive officer of the conservative Maine Heritage Policy Center. "They have been promised such relief for years."

The bill would reduce, by $80 million to $85 million a year, the motor vehicle excise taxes paid by Maine citizens.

The tax -- paid at local town and city offices based on the age and value of a motor vehicle -- stays in the local municipalities to pay for road work.

That has municipal officials concerned they would have to raise property taxes to make up for the lost revenue.

Bragdon said that the owner of a Ford Focus, Maine's most popular car in 2008, would save a total of $615 over five years. Critics, however, said there would be no reduction for the majority of vehicles in Maine, which are more than five years old.

In addition to cutting the excise tax, the proposal calls for eliminating the 5 percent sales tax and first three years of car excise taxes on certain fuel-efficient vehicles. The bill also seeks to give tax breaks to buyers of hybrid or other energy-efficient vehicles.

Bragdon's group wrote the language for the bill, which was circulated last year to get the more than 55,000 signatures needed to put it before lawmakers.

Legislators are obligated to consider the bill, but nearly all those at the public hearing acknowledged that it will not pass and thus be sent to voters for consideration in November.

That has many municipal officials worried.

Litchfield Town Manager Mike Byron called it "a bad bill" that will mean the town will not be able to afford to adequately maintain roads.

"Folks, there ain't no meat on those bones," he said. "Any more (loss of revenue) and we have to cut people and programs."

For Litchfield, Byron said the loss of excise tax would prompt an increase in the property tax from $12.60 to $13.40 per $1,000 of assessed property value.

Legislators are divided on the bill, with some testifying on each side of the issue. Members of the Taxation Committee asked pointed questions Thursday of those who testified.

Some Democrats on the committee challenged Bragdon and others to specify how cities and towns would make up for the lost revenue.

Bragdon and Roy Lenardson, who spoke on behalf of Maine Leads, a group interested in tax policy, said it's up to local officials to make tough decisions.

"I dare them to raise the property tax. We've got the Taxpayer Bill of Rights as well," Lenardson said, referring to another piece of tax legislation that will likely be considered by voters in November.

Pushed by the same groups that got the signatures necessary to move the excise tax cut proposal forward, a public hearing will take place in the coming weeks on current version of TABOR. Voters rejected an earlier incarnation in 2006.

The new version imposes spending limits on state and local government and requires voter approval for certain state tax increases.

Rep. Patsy Crockett, D-Augusta, said Augusta city and schools are already making significant cuts even before the excise tax is reduced. She said the city has laid off workers and closed a recreation facility, and that a school will be closed, which will result in teacher layoffs.

"I'm wondering how they should be able to come up with the money?" she said.

Gary Foster, a former Gray councilman, said he knows from experience that town and city budgets "include expenditures that are more want than necessity."

"The problem is that many cannot or will not differentiate between the two, or more commonly, many expect everyone else to pay for services that benefit only a small group of people," he said.

On the other side, George Finch, Eastport city manager, told the committee that the motor vehicle excise tax should not be altered in any way this year.

"We all realize the need for tax reform ... but to do so by singling out individual revenue sources that would adversely impact municipalities, causing costs to be passed on to the property taxpayer, is not acceptable under the current economic conditions," he said.

The Associated Press contributed to this report.

Susan Cover -- 620-7015

scover@centralmaine.com

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