A STRATEGIC PLAN

FOR REVITALIZING

MAINE’S SERVICE CENTERS

   

Prepared for  

The Maine Service Centers Coalition  

by  

Maine Tomorrow  

September 22, 2003

Introduction  

In 1998, the State Planning Office reported that 71% of all jobs, 74% of all services and 77% of all consumer retail sales occurred in just 69 of Maine’s nearly 500 municipalities.  The significance of this economic concentration was underscored further when it was noted that 74% of all state income and sales tax revenues came from these same communities.  Add in local property tax revenues, and these relatively few communities originate roughly 63% of all tax revenue from these three major sources. 

These communities, now numbering 77, are Maine’s Service Centers.  They are not only home to most of Maine’s jobs and commerce; they host the overwhelming share of our state’s medical facilities and institutions of higher learning, and our state’s history and cultural activity is largely centered in these communities.  Service Centers represent the very type of land use development favored by those advocating smart growth.  Yet, for all this relevance to tax policy, economic development, environmental protection and even education and health care, Maine’s public policy turns worse than a blind eye toward these communities.  Consider these examples of current public policy.

 

·        While generating three quarters of the revenue for State Municipal Revenue Sharing, state policy exports this asset to less needy communities with lower property tax rates.  Service Centers receive just over half of this program’s benefits for a net loss of over $20 million.

 

·        Service Centers host over 86% of the state enacted property tax exemptions for benevolent and charitable, literary and scientific and leased hospital property representing a revenue loss in excess of $40,000,000 per year.

 

·        While having their own law enforcement capacity, they are taxed to provide this same service to their lower taxed neighbors through the County budget for an additional cost approximating $10 million.

 

·        While “urban compact” communities are responsible for summer and winter maintenance of the State Highway system, their outlying neighbors are relieved of this obligation and the true cost of this function is shifted in part to the property tax in these urban communities.

 

·        While closing under-populated schools, their outlying neighbors receive state aid to build new schools an easy commute away from the closed facility.

 

These are but a few examples of state policies that diminish the very places that must be relied upon to sustain our economy. 

A more detailed look at the tax burden issue illustrates the value of forging a new perspective.  Current data shows that Maine’s much heralded first in the nation ranking in tax burden is heavily attributed to the property tax, not the income or sales tax.  Left largely unstated is that Maine’s poor ranking is heavily skewed by the extraordinary property tax burden of its service center communities. 

In 1998, the State Planning Office cited property tax rates among Service Centers as 44% higher than those of other communities.  Based on the 2000 property tax commitments of Maine municipalities, service center tax rates averaged 18.84 mils, 39% higher than the 13.56 rate for the balance of the state.  If the Service Centers had the same average mil rates as the balance of the state, without corresponding tax increases elsewhere, Maine would move significantly toward the national average on tax burden.  As a percent of total personal income, Maine’s tax burden must drop by 1.2 percentage points or $368,000,000 to place Maine squarely in the middle of the states.  An average five and a third mil rate reduction for Service Centers, without increases elsewhere, would realize nearly .7 of the 1.2 percentage points needed, or just over a $200,000,000 reduction in tax burden. [The State Planning Office calculated Maine’s tax burden at 12.3% of personal income for 2001. This differs from the Census Bureau which made a major error in the Maine calculation and did not offset tax relief provisions. Mississippi has the average tax burden in the nation at 11.1% of personal income. The middle ten states range from 11.2% to 10.9%.] 

In the entire debate over tax burden, there has been little sustained conversation over the merits of focusing the fix where the problem is truly concentrated.  Relieve the tax plight of Service Centers and Maine’s overall standing on tax burden would improve significantly.  Relieve Service Centers and it is possible to realize a targeted stimulus for three quarters of the Maine economy.  Relieve Service Centers and relief can be provided to the very places that disproportionately assist our elderly, low income and special needs populations. 

The smart growth debate gives much attention to where we do not want development.  Initiatives like Land for Maine’s Future or the new highway access management law reflect this attentiveness.  Equal attention must be given to the incentives for development to occur in already built-up areas, where roads, schools and utilities already exist, where historic properties available for reuse are presently at risk of abandonment, and where habitats have already been compromised.  This environmentally driven objective converges nicely with the deep-seated desire of policymakers to build the Maine economy.  The place where three quarters of the Maine economy exists is the place where we logically should further grow that economy and promote a more benign land use and development practice.   Service Centers are that place. 

The Maine Service Centers Coalition realizes that the welfare of its member communities is inextricably linked to the resolution of the dominant themes running through today’s political discourse.  The Coalition’s challenge is to convince Maine’s policymakers that it is also true that the State’s resolution of these vexing concerns cannot be realized without focusing on the welfare of Service Centers.  Furthermore, Service Centers must not succeed at the expense of their fellow municipalities.  Rather the success of Service Centers must demonstrably be a success for all communities.  The overriding imperative of the Coalition is to bring about adjustments in public policy that will enhance the long-term viability of Maine’s Service Centers and thereby enhance the well being of the entire State of Maine.

 

 

Coalition Strategy Statement

  

The well being of the State of Maine requires vibrant Service Centers that are experiencing economic and population growth, are diverse in employment, housing and cultural offerings, are sustaining of the creative and entrepreneurial class, are affordable, and are self-contained as places to work, recreate and, most importantly, live. They must reflect a strong sense of community.  On the scorecard for those choosing a place to live, work, locate a business or just hold an event, our Service Centers need to score at the top of the list for compelling economic, environmental and social considerations.  

Realizing the type of Service Center described above is the mission of the Maine Service Centers Coalition.  To fulfill this mission, the Coalition has as its goal the conservation of Maine’s economic, natural and human resources.  This goal is about being effective stewards of the environment in its broadest sense.  It is about reversing public policy that presently results in a waste of Maine’s treasures by essentially redeploying the same workers, school children, households and shoppers onto previously undeveloped land while the public and private investment in Service Centers is being underutilized, neglected and discarded.  To conserve our economic, natural and human resources, efforts to revitalize Service Centers through reinvestment are required.  Such efforts will reduce the overall consumption of resources, reuse existing investments and recycle property already developed. 

The revitalization of Service Centers will occur if the climate they offer for investment and reinvestment is improved.  Whether the decision maker is a resident or a non-resident, a small business owner or a corporate executive, a college president or a hospital administrator, the climate within Service Centers must strongly encourage these individuals and many others to invest financial, human and social capital to a much greater degree.  Changing the investment climate requires changes in the competitive position of Service Centers relative to the cost of living and doing business in these communities. 

In addressing cost, the Coalition is principally concerned with matters of public expenditures, tax policy, governmental organization, service quality and regulation.  Some of the recommendations which follow are intended to level the financial playing field among municipalities.  Other recommendations are designed to lower the property tax burden in Service Centers without corresponding tax increases elsewhere, thereby moving Maine toward the middle of the country on overall tax burden and lessening Maine’s over reliance on the property tax..  The Coalition’s strategy is also intended to leverage private sector investment that builds the local tax base. 

In regards to lowering the cost of local government, the matter of how government is organized in Maine is a particular concern.  In a speech to the Community Preservation Advisory Committee earlier this year, Evan Richert of the University of Southern Maine and former head of the Maine State Planning Office, revealed some of his research on the relationship of tax burden to governmental organization.  He noted that nationally there appear to be fewer government full-time equivalent employees per 10,000 population then in Maine.   He concluded that, if Maine were organized more like states similar to Maine, savings could be realized.  Idaho, for example, while having nearly three times as many counties, has less than half as many towns and 114 school units compared to Maine’s 285.  He concluded that the number of units of local government was the single most significant determinant in the difference in cost between the two states. While additional quantitative research on the effect of governmental structure on costs is required, it is clear that this topic must be part of the larger agenda for lowering Maine’s tax burden.  Richert also suggested that any pursuit of reorganization should attempt to match the personal geography or travel patterns of its citizens with regard to shopping, work and accessing critical services to the boundaries of regional governmental bodies.  

While the Coalition believes the number of units of government may significantly influence cost, full consideration should be given to what appears to be a bigger problem in Maine’s pattern of governmental organization.  In Maine, it is commonplace to split responsibility for raising revenues, delivering service and prescribing service standards.  An example would be a state directive to counties on how they will deliver a service which municipalities pay for by raising taxes through the local property tax.  This pattern of governmental organization diffuses accountability and responsiveness to both taxpayers and service recipients. 

In addition to the recommendations that follow, the Coalition supports the efforts of Citizens to Reduce Local Property Taxes Statewide.  This Initiated Bill, if passed, would require the State to meet its long-stated commitment to funding General Purpose Aid at 55%.  Further, this referendum measure calls on the State to pay 100% of the cost of Special Education.  The Coalition believes this measure addresses several of the four fundamental aspects needed for tax reform.  This measure seeks to reduce the over reliance on the property tax by balancing the relative revenues raised from sales, income and property taxes.  It also requires the State to develop a tax burden management plan to address Maine’s overall high tax burden. The Coalition refutes the position taken by opponents to the Initiative that a net increase in Maine’s tax burden will result.  This measure, if approved by the voters, should be implemented in a manner that results in no net increase in Maine’s tax burden.   

In addition to this measure or other legislation that would achieve similar results, the Coalition believes that tax reform must also minimize the disparity that presently exists in property tax rates among Maine communities, must actually move Maine toward the middle of the nation in relative tax burden and must minimize volatility in Maine’s tax revenue performance.  It needs to be underscored that the recommendations which follow do not include any proposals for creating new taxes or increasing tax rates on existing taxes.  

1.   LEVEL THE FINANCIAL PLAYING FIELD  

State tax and expenditure policies which cause extreme disparity in local property tax rates and retard investment where Maine’s economy is centered should be reformed.  Creativity and dialogue within the municipal community will be essential to shape a consensus on these issues.  This will not occur unless there is an understanding that Maine’s economic, natural and human resources are at risk when our Service Centers are at risk. 

a.      Apportion State Municipal Revenue Sharing to reflect the tax effort on only the municipal side of the local budget thereby removing from the current calculation the local tax effort for schools which will now be fully considered under the new Essential Programs and Services initiative. 

b.      Relieve municipalities with at least four full-time law enforcement personnel from any obligation to pay for County patrol services.  Consider reducing payments by 25% if there is one full-time law enforcement officer, by 50% for two and by 75% for three.

c.      Reimburse urban compact communities more fully from the highway fund for their unique summer and winter maintenance responsibilities.

d.      Share state income tax revenues generated from property tax exempt institutions with communities for up to 50% of the tax loss. Where there are no income taxes generated from the property there would be no state share.

e.      Grant municipalities the option to finance fire protection services on the basis of property square footage (buildings and land) exclusively or in combination with traditional support through the property tax.

f.        Share a larger proportion of traffic fine income with the ticketing jurisdiction.

g.      Amend the current highway reconstruction local match requirement so it applies more equally to all municipalities.

h.      Limit the municipal contribution to basic education.

i.        Repeal outdated and unfunded municipal and education mandates imposed by the State.

j.        Clarify special education eligibility to reduce process and litigation costs.  Examine the reasons behind the growth in the special ed population of 27% in ten years even as student enrollment has declined 3% during this period.  Examine the merits of covering second language students under special education funding.

k.      The Coalition does not favor the complete exemption of business equipment from property taxation.  Maine does not stand out because it taxes business equipment. Rather we stand out because we tax such property at 100% of value. Any exemption granted should not exceed 70% of value and should only be for new property put in service prospectively.  Property covered under the BETR program should remain taxable once the BETR payments end.  That was the understanding for those who entered this program.

l.        Any caps placed on the financing of local governments should be on tax revenues and not on total expenditures.  Otherwise, the consequences of implementing funded state or federal mandates will be disruptive to the delivery of other services financed through the property tax.  In addition, the factoring of population into any capping methodology is opposed since it fails to recognize the regional population demanding services from the Service Centers.  

 

  2.   IMPROVE LOCAL GOVERNMENT ADMINISTRATION TO LOWER COSTS  

Service Centers have at their doorstep the best public and private sector management experience in the state. This is a tremendous asset to bring to bear on the challenges of lowering the cost and improving the quality of public services.  Significant successful initiatives already exist for communities to draw upon but, where new thinking is needed, these public and private sector administrators should join forces to generate new ideas. 

a.      Refinance and restructure debt and unfunded liabilities to lower servicing costs.

b.      Adopt rigorous preventive maintenance efforts to extend the serviceable life of equipment, facilities and infrastructure.

c.      Strengthen accident prevention and return to work initiatives for work-related injuries.

d.      Manage the highway network to preserve mobility, enhance accessibility, reduce congestion and delay the need for major capital improvements.

e.      Adopt winter maintenance practices now used by MDOT that reduce sand purchases, stockpiling and spring cleanup costs while also lowering overtime during storm events and reducing overall environmental impacts.

f.        Lower the costs of personnel and materials through the use of technology for such activities as:

-   instruction/train the trainer

-   payroll

-   invoicing

-   public works

-  public participation

-  GIS

-  accessing information clearinghouses  

g.      Clarify regulations to remove costs caused by uncertainty in interpretations and eliminate unnecessary or duplicative regulation and service.

h.      Eliminate excess municipal, county and state property holdings, and place this land back on the tax rolls.

 

3.      REORGANIZE THE DELIVERY OF PUBLIC SERVICES  

Existing service delivery patterns for state, county and municipal government need to be reconsidered.  The current pattern of intergovernmental service delivery must be revised to assure that service responsibilities are assigned to that level of government best positioned to provide service in the most efficient, effective and accountable manner.  To a much greater extent, the responsibilities of funding and delivering governmental services should reside within the same unit or level of government.  The initiative for reallocating responsibilities ideally should be driven and organized from the bottom up, not the top down.  Service Centers must be among the initiators of restructuring efforts. 

While the Coalition does not favor expanding county government in its current form, it is open to a total restructuring of boundaries and functions that would also include granting home rule and taxing authority.  The Coalition has had preliminary conversations with the Maine County Commissioners Association that indicated there may be common ground in addressing this issue one governmental function at a time, in allowing flexibility in organizational design for each region as reflected in charters, in granting the power to tax and that any reorganization not result in the creation of regional entities in addition to existing counties. 

a.      Reconsider the boundaries, financing, functions and accountability of county government.  Consider realigning county boundaries to reflect regional travel patterns much like Maine’s 35 Labor Market Areas.    Have school administrative units operate as a department within county government.  Consider having the school funding formula provide aid at this unit level.  However, for the sake of community cohesion, leave current school identities intact to the greatest extent possible.

b.      Authorize counties to assume full municipal powers with respect to the unorganized townships within their borders and ease municipal deorganization by having county governance available as a more attractive alternative to the current state governance option.

c.      Reconsider the design of those services that have the authority, financing and management functions fragmented across different levels of government.

d.      Undertake further research to identify which level of government is most effective, efficient and accountable for delivering each major governmental service and quantify the financial benefits that would accrue to taxpayers for reorganization proposals under consideration.

e.      Reconsider the boundaries of regional planning districts and county government, and consider the idea of bringing them both into alignment with the boundary concept suggested above in 3-a.

f.        Pursue further consolidation of the Public Safety Answering Point (PSAP) network.

g.      Reexamine regional solid waste delivery systems to assure that there is effective backup support when a facility goes off line.

h.      Study the evidence supporting the claim that Maine’s independent academies cost as much as 18% less to operate than public schools (National Center for Education Statistics).

i.        Expand cooperative purchasing of services, equipment and materials.

j.        Promote school vouchers in overcrowded schools to enable transfer to nearby underutilized facilities.

k.      Eliminate general assistance as a function of local government. 

 

4.   INVEST FINANCIAL, HUMAN AND SOCIAL CAPITAL  

While investment must come in many forms, the objective should be to enhance functional diversity and thereby realize the goal of having vibrant Service Centers.  In each functional area, be it housing, employment, retail, recreation or culture and the arts, the diversity of offerings must be strong.  This type of diversity is well documented as a key to supporting the creative and entrepreneurial class that keeps a community growing and adapting.  While investment must recognize the imperatives of joining the global economy, it must not come at the expense of local culture being overrun by cultural globalization.  Much of Maine’s historic property assets reside in Service Centers.  These assets richly reflect local culture and serve not only to differentiate communities but also greatly add to community diversity. 

a.      Coordinate public investment through MSHA, DECD and MDOT to target projects that promote compact, mixed use development and which leverage private sector investment.

b.      Make a stronger financial commitment to the redevelopment of brownfield and urban renewal sites that have been left vacant or underutilized for decades and are often in the very core of Service Centers.

c.      Convene meetings with federal, state and county officials to reenergize the effort and commitment to locating government facilities in downtowns.

d.      Place trails and parks where there are concentrations of housing and employment.

e.      Expand tax incentives as well as grant and loan programs for historic preservation and investment in cultural facilities.  The preservation of historic and cultural assets is a key element of the revitalization of downtowns and is essential to any smart growth strategy.

f.        Issue a biennial service center capital investment plan to guide state capital investment decision making that:

- leverages or attracts private investment that builds the property tax base

- lessens the dependence on the property tax for capital financing

- creates jobs

- reduces public service operating costs

- matches federal funds

g.      Complete the backlog of reconstruction needs on the rural arterial network and continue the development of access management policy to protect the mobility of rural arterials leading to Service Centers.

h.      Support the efforts of State government to amend and further fund the Municipal Investment Trust Fund making possible a more robust grant and loan opportunity for Service Centers.

i.        Develop new financing strategies and initiatives for addressing parking constraints that take into consideration companion investments that support intermodal development as well as in-fill development.

j.        Support the use of multi-family residential tax increment financing districts.

k.      Identify and protect working waterfront assets and access to marine, river and lake shorelines located in Service Centers.

l.        Monitor state law and rulemaking that has the potential to inappropriately retard development opportunities for Service Centers including storm water policies, traffic mitigation site review requirements, school construction, sludge disposal, tax and spending policies, etc.

m.    Support state investment in expanding the pursuit of higher education by Maine citizens.

n.      Study alternative energy supply and distribution systems for compact urban areas to see if new structures can be offered to lower energy costs.

o.      Support implementation of the MDOT’s Explore Maine Plan which is intended to strengthen intermodal linkages in downtowns, enhance access and relieve congestion.  

5.      REMOVE BARRIERS TO COMPACT MIXED USE DEVELOPMENT  

Much work remains in reexamining local regulations and procedures that undermine the goal of creating vibrant Service Centers.  It is critical that the link between transportation and land use planning be strengthened.  Designs are needed that foster mixed use development and higher population densities, while maximizing multi-modal mobility and access.  Regulatory frameworks are also needed to spur both historic preservation and complementary infill development while enhancing the diversity of housing and employment opportunity. 

a.    Research of the State Planning Office reveals that 43% of Maine home buyers moving out of urban communities (representing 37% of the total market) are looking for compact, walkable neighborhoods often not allowed under municipal zoning ordinances. Service Centers must become more responsive to market demands by removing unnecessary regulatory obstacles to the creation of compact, mixed-use neighborhood designs.

b.      Revise approval and permitting processes to assure prompt review of proposals and timely issuance of permits.  Requirements for developments should be initiated from a single location.

c.      Cross-train planning staff to reduce specialization and enhance staff understanding of how different development standards and requirements relate to each other.

d.       Ordinances should specify when decisions will be made, such as within 30 or 45 days of the acceptance of the application or the holding of the public hearing.

e.       If several commissions or boards want to review a development proposal, a single hearing can be jointly held, eliminating multiple public hearings or meetings.  In general, public input should take place at the beginning of the approval process, not at the end. 

f.        Consider switching from “zoning by statistics” to “zoning by showing.”  Displaying zoning regulations and design goals in pictorial fashion gives developers, architects, and builders a clearer idea of the precise type of development a community wants.

g.      Ensure that zoning ordinances are updated in a timely fashion to reflect revisions to a community’s comprehensive plan. 

h.      Promote new traditional development by changing planning and zoning regulations so that compact, walkable, mixed-use, transit-oriented projects can be built by right.  If zoning and development standards are met, there should be a presumption of approval. 

i.        Tailor design and building standards for streets, parking areas, sidewalks, and similar infrastructure to be consistent with the characteristics of traditional compact development. 

j.        Develop model ordinances that accommodate smart growth design standards and provide for flexibility in zoning regulations to allow compact, mixed-use development in designated growth areas and to preserve and revitalize existing neighborhoods.

k.      Adopt building rehabilitation codes to facilitate renovation and redevelopment of existing buildings particularly in downtowns and urban growth areas.

l.        Identify the proper design balance in downtowns regarding the desire for free flowing primary arterials and pedestrian friendly communities.  

The Coalition acknowledges the efforts of many in providing policy research, analysis and guidance that was instrumental in preparing this revised edition of our Strategic Plan.  In particular the Coalition recognizes the contributions of the Maine Municipal Association, the Maine State Planning Office, the Department of Economic and Community Development, the Department of Transportation, the Maine Legislature, GrowSmart Maine and the Community Preservation Advisory Committee.  This effort has also opened up beneficial dialogue with the Maine Association of County Commissioners and the Maine State Chamber of Commerce on matters of mutual interest.

 

Conclusion

The goals, objectives and recommendations outlined in this Strategic Plan set forth an ambitious agenda.  The implementation of this Plan will require the active participation of constituencies that extend well beyond the municipal leadership of Maine’s Service Centers.  To be successful, the Coalition must broaden its network to reach out to all who share interest in restoring the vibrancy of our Service Centers.  

There must be an intergovernmental partnership forged with federal, state and county government as well as with special service districts.   The link to the private sector through the state and local chambers of commerce as well as Maine’s business associations must be strong.  After all, it has been clearly established that Service Centers are where three quarters of Maine’s jobs and commerce are.  Earlier it was noted that much of Maine’s medical establishment and institutions of higher learning are found in Service Centers.  Their involvement in fulfilling this plan is essential.  Also, it has been noted that this strategy is about environmental protection, historic preservation and cultural awareness.  These constituencies deserve a seat at the table.  The Coalition must reach out and engage all these parties to enlist support and make the implementation of this Plan a broader team effort. 

This effort must be constantly sensitive to the potential for divisiveness that pits Service Centers against non-Service Center communities.  Service Centers must not succeed at the expense of their fellow municipalities.  Rather the success of Service Centers must demonstrably be a success for all communities.  With 74% of all GPA and revenue sharing sent to non-Service Centers being derived from Service Centers, it is easy to appreciate how building the economy of Service Centers lifts all communities.  Of the five sets of strategies outlined previously, the first one entitled “Level the Financial Playing Field” may be most problematic for inter-municipal relations.  Nevertheless, if careful consideration is given to how the proposed remedies will stimulate economic returns that benefit all communities, progress can be realized. 

The well being of the entire State of Maine requires vibrant Service Centers that are experiencing economic and population growth, are diverse in employment, housing and cultural offerings, are sustaining of the creative and entrepreneurial class, are affordable and are self-contained as places to work, recreate and, most importantly, to live.  Vibrant Service Centers will come through the pursuit of five strategies that: 

1.      Level the financial playing field among municipal governments

2.      Improve local government administration

3.      Reorganize the delivery of public services

4.      Invest financial, human and social capital

5.      Reduce barriers to compact mixed use development 

These strategies support the overall goal of conserving Maine’s economic, natural and human resources.  This is about being effective stewards of our environment in the broadest meaning of that term.