Legislative Bulletin
April 28, 2000

The 119th Maine Legislature is bumping and grinding towards its adjournment this week after finally adopting the supplemental budget on Wednesday. The supplemental budget re-defines the state’s financial priorities through June 30, 2001, given the availability of $400 million of new-source and unexpected revenues.

As was reported in last week’s edition of the Legislative Bulletin, the supplemental budget, while not lavishing state resources on municipal priorities, nonetheless deals Maine’s towns and cities a fair hand.

And as is always the case after finally adopting the budget, the Legislature also had to decide which of the 130 bills with fiscal impact that had been placed on the "Appropriation’s Table" were going to be funded with the relatively small amount ($8 million) of residual General Fund revenue that was not consumed in the $400 million supplemental budget.

The Legislature is now scheduled to convene just once more, in early May to consider any bills that Governor King might choose to veto in the next 10-day period that is available to him for that purpose.

A complete review of the Second Legislative Session, including detailed descriptions of all the enacted legislation pertinent to municipalities, will be provided in the May issue of the Maine Townsman. In the meantime, anyone interested in learning more about the final outcome of any municipal legislation should feel entirely free to call Geoff Herman, Kate Dufour, Linda Lockhart or Tina Means at 1-800-452-8786 or click onto the constantly updated "LD List – 2000" under the "Legislative" section of our website (www.memun.org).

Last week’s issue of the Bulletin accurately summarized the major elements of the supplemental budget from the municipal perspective, which include:

Revenue Sharing II. The supplemental budget includes a one-time appropriation of $3.6 million to start-up the so-called Revenue Sharing II proposal, which is designed to move extra and unanticipated revenues in the Local Government Fund in a more targeted way toward municipalities with higher-than-average property tax burdens. There are many legislators to thank for the inclusion of this initial expansion of municipal revenue sharing in the supplemental budget, but the proposal’s chief architect and champion was the House Chair of the Taxation Committee, Representative Ken Gagnon (Waterville).

MMA’s Kate Dufour has developed a spread sheet that projects each municipality’s Revenue Sharing allotment over the next three years taking into account: (1) the Revenue Sharing II appropriation in the supplemental budget; (2) the most current projections of state sales and income tax revenue as made by the Revenue Forecasting Committee; and (3) the reductions to those projections which will occur because of a number of income and sales tax cuts also enacted by the Legislature this session. Those sales and income tax cuts include, but are not limited to, a $6,000 pension exemption, the repeal of the so-called "snack tax" as of January 1, 2001, an earned-income tax credit for low income workers, a sales tax exemption for agriculture and aquaculture, the indexing of the state income tax brackets for inflation, and several other tax breaks that will affect the Local Government Fund. The bottom-line is that the income and sales tax cuts enacted by the Legislature will have the effect of reducing the amount of revenue that would otherwise be distributed to the municipalities next year by $1.5 million, so the $3.6 million one-time appropriation for municipal revenue sharing will accomplish two functions – partially off-set of that reduction of Local Government Fund revenues, and provide $2 million in FY 01 to actually implement the Revenue Sharing II system.

GPA. A 6% increase in base GPA is part of the budget, pushing the base from $622 million this fiscal year to just short of $660 million for FY 01, not counting the "hold harmless" cushion. A spreadsheet developed by the Department of Education (marked "Not Final") showing the distribution of GPA for FY 01 is available by calling MMA’s Tina Means at 1-800-452-8786 or by clicking on http://janus.state.me.us/education/data/ProposedMaj.htm. (It should be noted that this spreadsheet does not include revenues that will be distributed to school units for the state share of school bus purchases, debt service and "adjustments".) In addition to the base GPA appropriation, the supplemental budget includes a $4.3 million "hold harmless" cushion to make sure all school units, at a minimum, will receive at least the same GPA subsidy in FY 01 that they received in FY 00.

School Renovation and Construction. $27 million was appropriated to the school renovation and revolving loan program, which provides a combination of grant and loan funding to schools that need to be renovated, with a priority for environmental, health and safety, ADA and other pressing needs. In addition, the budget increases the debt service cap within the GPA appropriation for new school construction purposes from $74 million in FY 01 to $84 million in FY 05, which will allow the authorization of an additional $100 million worth of school construction projects in the near-term. Although not finalized at this writing, a separate but related bill on the Appropriations Table (LD 870) could also be enacted with appropriates an additional $2.5 million into the School Renovation and Revolving Loan Fund.

Highway Funding. The Department of Transportation’s $44 million supplemental budget is funded through a $33.25 million General Fund allocation, $6.6 million in Highway Fund surplus and $4.15 million from the Transportation Funding Reserve. The Transportation Funding Reserve is a General Fund account set up by the Legislature in 1999 to reduce the need for future highway bonding.

The $33.25 million General Fund revenues will fund $20.65 million in highway and bridge projects; $550,000 in ferry and dredging initiatives; $2 million for three airport projects (see below); and $11.05 million for rail maintenance on the Calais Branch and reconnection of rail links between Lewiston-Auburn and Portland.

The $20.65 million General Fund allocation for highways and bridges, combined with the $4.15 million of Transportation Funding Reserve, will fund $6 million for the state share of the Minor Collector Road program; $2.6 million for unscheduled priority highway projects; $5.6 million to accelerate rural arterial reconstruction projects; $3.6 million toward the extension of I-395; $3 million toward East-West collector roads such as Route 6 and 16; and $4 million toward the rehabilitation of the Waldo-Hancock Bridge.

Airport Funds. $2 million is appropriated in the supplemental budget for three local airports: The Bangor and Presque Isle airports will get $800,000 and $120,000, respectively, for marketing purposes, and the Oxford Airport will receive $80,000 for engineering purposes.

Comprehensive Planning. $1.7 million is in the budget, primarily to assist municipalities in their comprehensive planning/growth management efforts.

Wastewater Treatment Facilities. $2.9 million was appropriated in the budget for grant programs for specific wastewater treatment plant upgrades and DEP’s "Small Community Program" which provides direct subsidy to landowners to repair their failed septic systems.

Landfill Closure. $1.25 million was appropriated for the landfill closure program, which is estimated to close-out the 15-year old state-local effort to cap the hundreds of unlicensed landfills that were in common use in Maine throughout most of the 20th Century.

Firefighter Training. A piece of fire fighter training legislation was included in the supplemental budget, as finally enacted. The fire fighter training proposal has been something of a moving target this legislative session.. As originally proposed in LD 2685, $2 million would be appropriated to create a firefighting training commission, provide reimbursement to local fire departments (at $100 per fire fighter) to partially cover the costs of firefighter training, and create a $50,000 death benefit for firefighters killed in the line of duty. After being amended into the supplemental budget, the firefighter training appropriation will now provide $376,000 to go primarily to the Maine Technical College System to create 3 full-time and 32 part-time positions to develop and deliver standardized firefighter training in local communities throughout the state. $52,000 of that appropriation will be used to support the newly-created 21-member Maine Fire Protection Services Commission, which is charged with comprehensively evaluating both existing and needed resources for the state’s overall fire protection system and with developing a comprehensive slate of recommendations, including how to recruit and retain volunteers, create a length-of-service program for volunteers, create a health insurance "bridge" for retired career firefighters, create a fund for death benefits for firefighters killed in the line of duty, etc.

Removing the last gimmick, Cops In Court. One of the bills on the Appropriations Table that was moved into the supplemental budget was LD 1251, which is the fulfillment of the concerted effort of Representative Ken Lemont (Kittery) to correct a shift-and-shaft gimmick enacted in 1991 that reduced the reimbursement provided to municipalities for providing their law enforcement officers to the District Court to prosecute traffic violations. Prior to 1991, the reimbursement was provided an honest hourly rate. In 1991, when state revenues dried up as a result of the economic recession, the Legislature reduced the reimbursement rate to a mere $10 per day "witness fee". When first elected as a State Representative in 1993, Rep. Lemont introduced legislation to correct this gimmick, and he reintroduced the corrective legislation in 1995, 1997 and 1999. Thanks to his persistence, the reimbursement rate was elevated to $25 per day in 1998, which was the first step closer to equitable reimbursement. On average, municipalities spend $75 every time a local police officers goes to court to act as a witness to a traffic violation. With the enactment in the budget of Rep. Lemont’s most recent bill, LD 1251, the reimbursement rate will increase to $50 per day, which brings municipalities into a rough equity with the reimbursement system that existed before 1991.

Tobacco Use Reduction. As mentioned above, the final supplemental budget appropriates both state General Fund revenue as well as the tobacco settlement revenue that will be accruing to the state at the rate of about $60 million per year as a result of an enormous settlement executed in 1999 between 41 states including Maine and the cigarette manufacturers. The tobacco tax revenue that the state receives is deposited into a special account, the Fund for a Healthy Maine. In the supplemental budget, dozens of appropriations are made from the fund to implement a variety of programs designed to reduce tobacco use, provide greater access to Medicaid, prevent substance abuse, expand child care programs and the Head Start program, expand home-visit programs to parents of newborn children, etc. Of the $74 million appropriated from the Fund for a Healthy Maine for these various programs, $8.35 million is appropriated to the Department of Human Services to provide grants to communities and schools to achieve the goal of reducing tobacco addiction and use, with a focus on those at highest risk such as youth and disadvantaged populations.

Microenterprise Initiative. A one-time appropriation of $850,000 is in the supplemental budget to allow the Department of Economic and Community Development to provide grants to community-based organizations so that they, in turn, can provide training and technical assistance to "microenterprises," which is defined as a business in Maine that produces goods and services and has fewer than 10 full-time employees.

Grants to Retain Certain Employers. $345,000 is transferred under this budget from the state’s Job Retention Program to the Department of Economic and Community Development (DECD) for the purpose of providing grants to municipalities for the purpose of retaining "mature" or dominate employers that are presently located in the state, with a focus on manufacturing firms. Certain criteria to govern the awards of those grants are provided, which must be further fleshed out in DECD rulemaking.

CDBG. A supplemental $1 million is allocated in this budget from the Federal Block Grant Fund for Community Development Block Grant projects that will be ready to start in the present fiscal year (FY 00).

LD 2594, An Act Regarding Forest Practices, was a citizen-initiated bill that sought to require that woodlot owners whose land is enrolled in the Tree Growth tax program adhere to specific sustainability standards. On February 17th, MMA’s Legislative Policy Committee (LPC) voted with a strong majority to provide general support for LD 2594, although the LPC favored an amendment to place representatives of the paper industry and woodlot owners on the rulemaking body created in the bill. The intent of the LPC’s conditional support for the initiative was to establish a measurable standard within the Tree Growth "current use" tax program that links eligibility to the statutorily established purpose of the Tree Growth program, which is to "encourage (timber harvesting) on a sustainable-yield basis." The LPC believed that the rulemaking body created in LD 2594, composed largely of forestry scientists, would create appropriate standards to implement the sustainable harvesting requirement. In depth analysis of the mechanisms ensuring sustainability was left to the wisdom and negotiation of that rulemaking body.

MMA’s generally supportive position for LD 2594 triggered a significant level of concern among the industries dependent on forest products and several municipalities that are hosts to paper mills, saw mills, or forest-related jobs.

The LPC’s response to those concerns was to solicit additional information from both sides of the issues and reconsider their original position. Following their review and discussion of new information, the LPC reversed its earlier position and voted on Thursday this week to recommend that MMA’s Executive Committee, the body that will determine and communicate the Association’s position on the ballot issue to be submitted to the voters in November, oppose the forestry initiative.

The issues considered by the LPC included the following four major areas of concern:

1. A sentence embedded in the middle of the proposed sustainable harvesting standard creates significant problems of interpretation, at best, and could cripple normal and healthy timber harvesting activity according to several possible interpretations. That sentence reads:

"This (the sustainable cutting levels) means that the yearly allowable cut levels may not be greater than the average annual growth during the past 10 years."

Presumably, this sentence clarifies the first sentence of the proposed Tree Growth standard. According to Jeff Pidot, Assistant Attorney General, this second sentence of the initiative is the controlling sentence of the section. Mr. Pidot believes that this sentence should be read to mean that "the yearly allowable cut levels [for cutting that must be performed each year or forever lost] may not be greater than the average annual growth during the past 10 years." Under this interpretation, owners of land in the Tree Growth program would be required to harvest relatively small amounts of wood on an annual basis; according to typical growth patterns just one-third to one-half a cord per acre, each and every year. In the alternative, opponents believe that this sentence could possibly allow "banking" of that .3 to .5 cords per acre for up to 10 years, yielding a harvesting limit of three to five cords per acre maximum harvest over any rolling 10-year period.

In other words, the forestry initiative, if enacted by the voters, would establish a bottom-line standard that would prohibit all harvesting events on land enrolled in the Tree Growth program that are more intense than the equivalent of annual growth rates multiplied by years in the program (after adoption by the voters) multiplied by acres in the parcel, during any rolling 10-year period.

2. "The proposed legislation is not based in science. It does not recognize how the forest grows. It does not recognize the natural cycles of the forest."

This sentence is drawn from the testimony of Thomas Doak, Director, Maine Forest Service, Maine Department of Conservation. According to Doak, the proposal does not allow manipulation of cutting levels intended to treat insect infestation or species development. Presumably, the rulemaking effort would not have the latitude required to make such adjustments.

To frame this concern another way, opponents of the initiative make the point that even if the initiative would allow for a 10-year "banking" of harvesting limits, the forest doesn’t grow in 10-year cycles and harvesting limits should not be established on such an arbitrary cycle. Sound forest practices would allow a more intensive harvest of a mature stand of timber in order to open up the emerging forest to the light and growth environment it needs to grow efficiently.

3. "The reference in the bill to the Governor’s Maine Council on Sustainable Forest Management is taken out of context and ignores important recommendations of that report."

This statement is also from testimony of the Maine Forest Service and refers to the first sentence of LD 2594, "In accordance with the Governor’s Maine Council on Sustainable Forest Management report of July 1996, total cutting activities and cutting activities for each species group may not exceed sustainable cutting levels for any rolling 10-year average."

The reference to the 1996 report lifts, word for word, Benchmark 1 of Criterion 3. The goal of Criterion 3 is to: "Improve the productive capacity of the forest and the quality of the timber resource to sustain a stable, or if possible, increasing harvest of quality forest products and support a diversified forest products industry."

The benchmark in the 1996 report to achieve that goal is "Total and species group harvest activity will not exceed sustainable levels for any rolling ten-year average." A major difference, however, between the 1996 report and the citizen’s initiative is that the method to implement the sustainable harvesting benchmark in the 1996 report is not a parcel-by-parcel limitation on harvesting. Rather, the 1996 report calls for a system of computer modeling: "Sustainable harvest levels will be determined by computer modeling that incorporates growth, yield and management scenarios. Analyses will attempt to verify that current and planned harvest levels are consistent with projected future growth and yield."

In addition, the goal, the criterion, and the benchmark are part of a much larger body of work that includes a vision for Maine’s forests, seven criteria, and 29 benchmarks. A single benchmark cannot reasonably be used in isolation to create and substantiate an entire regulatory scheme.

4. The standards developed in the citizen’s initiative to obtain a permit for clearcutting activities (rather than the mere notice requirement under current law) are too subjective to be efficiently implemented, and the process to appeal any permitting decision made by the Maine Forest Service appears to allow for too broad an appellant class. Under the traditional doctrine of appellant "standing", only those individuals who can articulate a particularized injury related to a permitting decision (abutters, for example) have standing to appeal. On this point the forestry initiative is murky, but it could be interpreted to grant appellant standing to the general public.

After considering and discussing the forestry initiative issues in their April 27 meeting, the LPC voted overwhelmingly to reverse their original position and recommend that MMA, through its Executive Committee, oppose the referendum issue. (LL)