Editorial:

Property tax plan looks like best option for now

Copyright © 2005 Blethen Maine Newspapers Inc.

E-mail this story to a friend

The state's new property tax reform bill now being debated in the Legislature is not ideal, but it is at least the start of honest-to-goodness property tax relief in Maine.

That said, Gov. John E. Baldacci and lawmakers have a lot of work ahead of them to make Maine's property taxes truly affordable.

The proposal, which won initial approval Tuesday in the state Senate and House of Representatives, is a complex package meant to provide more state aid to Maine's public schools and to lower property taxes.

Along with the revised school-funding formula, the bill includes new spending caps at all levels of government -- state, county and municipal -- and property tax-relief programs that would save Maine property owners an average of about $207 a year, according to an analysis by the Maine Revenue Service.

It also doubles the Circuit Breaker property tax deduction and nearly doubles the Homestead exemption to $13,000.

The bill, a reworked version of Baldacci's original proposal, includes $250 million to begin the process that will increase the state's share of local education funding to 55 percent from 43 percent over the next four years.

That is a long time, much longer than voters were seeking last June when they approved a referendum calling for the state to begin funding education at the 55 percent level immediately.

By getting to 55 percent over four years, instead of one, the governor and lawmakers are ignoring -- or at best, delaying -- a key element of what voters have requested.

That would normally be inexcusable.

A compromise would have been to reach 55 percent in two years. If it must be four, voters will have to accept that or go back and collect more signatures to force another referendum.

The additional $250 million for education would come from the governor's proposal to borrow that amount over the next two-year budget cycle, and then pay back as much as $400 million over 10 years using revenues from the Maine State Lottery.

We have already opposed Baldacci's proposal to capitalize the state's lottery revenues. The plan mortgages Maine's future for a quick infusion of cash that will be gone in two years.

That said, information from state finance officials show the lottery idea to have at least some merit.

Those officials are now exploring the possibility -- and the legality -- of having the Maine State Retirement System provide the $250 million to buy the lottery profits.

While such a scheme is certainly not the best way to help fund education and to balance the budget, it provides necessary money right away, avoids the need to raise taxes and provides consumers and businesses with more money that could be put back into the economy.

This, according to state data, could lead to as many as 1,300 new jobs in 2006 and 2,300 in 2007. It could also generate additional sales and income tax revenue of almost $10 million in the same period.

Still, we wonder how the state will cover its expenses and make up for the lost lottery revenue in coming years -- after the $250 million has been spent.

For now, no one can say.

That worries us.

Despite these problems, the property tax reform bill, which lawmakers were scheduled to debate Wednesday afternoon and again today, is progress.

The governor and lawmakers from both parties pledged to work together quickly to present a property tax relief plan after the 122nd Legislature convened earlier this month. They have done as promised.

While we are troubled by parts of the bill, it looks to be the best option for now.

Lawmakers should pass it.