(from Maine Townsman, July 1999)
By Geoffrey Herman, Director, State & Federal Relations, MMA
In the first few minutes of June 19, 1999, the first legislative session of the 119th Maine Legislature officially adjourned after disposing of 2,260 separate pieces of legislation in one way or another.
The adjournment came six months after an all-time record number of legislative initiatives were submitted for consideration.
Among other characteristics, the 119th Legislature will be remembered as having too much to do.
A constant refrain throughout the session was that there were just too many bills to deal with too many ideas and not enough time to give them proper consideration. As evidence, approximately 13% of all printed bills (300 pieces of legislation) were carried over into the second legislative session another all-time record. For comparison purposes, two years ago there were 1,905 bills submitted to the 118th Legislature and only 9% of those initiatives (far less than 200 bills) were carried over into the 1998 session. A complete listing of the bills of municipal interest that were carried over to the Year 2000 legislative session is found in a separate article in this issue of the TOWNSMAN.
Rather than a Legislature that enacted sweeping reforms, the 119th will likely be remembered for its accomplishments in the area of systems management. As opposed to changing the fundamental priorities or direction of state government, this Legislature will be noted for its mid-course corrections and enhancements of existing programs. In distinction from most of the legislatures of the past decade that were forced to react to the rapidly changing present, the accomplishments of this Legislature could be characterized as quiet preparation for the future. As examples:
The educational funding distribution formula was tweaked and adjusted put into a multi-year track toward greater formulaic honesty not radically transformed.
The Highway Fund was reinvigorated financially with a mix of additional tax and fee revenues, but more study will be necessary to develop a sustainable, long-term funding solution.
The Unemployment Trust Fund was put on a solvency track with an increase in the premium paid by employers.
The voters will be asked if they want to borrow serious money over the next five-year period in order to purchase more land for public use.
Through operational appropriations and a $26 million bond proposal, significant investments were made in the capacity of the states technical college system to enroll more students and train them for the developing job markets.
The sales tax rate will drop back down to 5% in July, 2000, a full nine years after the rate was increased to 6% in order to provide the necessary revenues to operate state government during the recession that began the decade
Education subsidy from the state treasury will increase 4.7% in the first year of the biennium and 2.9% in the second year increases that easily outpace inflation or cost-of-living indexes but fall short of even a 10-year plan to bring the state to the level of "majority funding" that has been the stated-but-unfulfilled "legislative intent" since 1985.
The politics of tax relief vs. tax burden breeds dispute almost of necessity. The 119th Legislature went in both directions, enacting tax cuts and tax increases. Some will argue that more tax cuts could have been obtained and implemented more quickly. Some will argue that the tax increases could have been avoided altogether. Others will argue that the tax cuts on the state side will only serve to lock in a high property tax burden and the so-called "tax relief" represents a codification of a shift in tax burden to the local level. Whatever the judgment, there are three facts to bear in mind:
The cut in the sales tax rate to 5% will save the sales tax payers $60 million a year.
The increase in the personal exemption in the income tax from $2,750 per exemption to $2,850 per exemption will save the states income tax payers $4.5 million per year.
The increase to the fuel tax of three cents per gallon and the $2 increase to the motor vehicle registration fee will cost the motorist tax payers $24.5 million a year.
The overall package, therefore, represents a bottom line of state tax relief to the tune of $40 million per year. To what degree deep-structure property tax relief could have been obtained if the Legislature retained the half-penny on the sales tax and infused the educational subsidy with that additional $60 million per year will remain an unknown.
The MMA Agenda
As fully described in the December, 1998 TOWNSMAN, MMAs Legislative Policy Committee developed a four-plank legislative agenda for submission to the 119th Legislature. The scorecard shows that on two fronts the municipal objectives were achieved. On the other two fronts the initiatives were carried over and there is more work to be done. With respect to those two issues, weve been given the equivalent of a rain delay.
Highway Fund. Culminating a solid 18 months of concentrated effort on the part of municipalities and the Maine Department of Transportation (DOT), the 119th Legislature finally enacted a biennial revenue plan for the transportation component of the Highway Fund that implements the programmatic changes recommended by DOT and the Municipal Transportation Advisory Committee. Discussed in more detail in a separate article in this edition of the Townsman, the program changes include a transformation of the Local Road Assistance Program into the Urban Compact and Rural Road Initiatives, and a new system of voluntary state-local financial partnership that is designed to more positively concentrate resources on the states minor collector roads that are in need of substantial repair. The initial plan called for the changes to be funded by increasing the fuel tax by five cents per gallon, the first fuel tax increase for the stagnant Highway Fund since 1991. Facing a public that was skeptical of a big fuel tax increase given the surplus revenues being generated by the states General Fund, the final revenue compromise was a three-cent fuel tax increase and a $2 increase to the $23 motor vehicle registration fee.
Utility Cuts in the Right of Way. A second plank of the MMA agenda concerned the archaic law that governs the financial and technical interaction between utility companies and municipalities when the utility companies cut into the municipal road system to install their pipes and wiring. Substantial progress was achieved this session with the enactment of amendments to that law that both modernize the statute and place municipalities in a stronger position to retrieve the taxpayers actual costs associated with these road cuts and obtain a better-designed repavement to extend the life span of local roadways.
Education. The major thrust of the municipal agenda regarding education policy was to create a more positive system of financial accountability between the local voters and the school units with respect to the development, adoption and implementation of the school budgets. MMA introduced two bills with that goal. One would have established a minimally detailed line item format for all school budgets, unless the local voters chose to adopt an alternative budget format. This bill would essentially invert current law which favors a gross budget allocation system and allows for a line item format only if the voters petition for that approach. The other MMA bill would have given affirmation to the voters right to adopt their school budget by referendum for those district school systems that are made up several municipalities. Under current law the voters have a right to petition for a referendum vote on a district school budget, but their right to choose the method of voting is taken away from them if the budget is not adopted at referendum.
Using the vehicle of this second bill, the issues surrounding municipal-school and school-voter relations were carried over into the second legislative session. At the same time, the Legislatures Education Committee referred the matter to the State Board of Education with a request that a subcommittee of the full Board convene a group of interested parties between now and next session to see if dialogue might yield constructive solutions with respect to the school budgeting issues on the local level.
Property Tax Exemptions. The remaining plank in MMAs legislative agenda was an effort to bring into some state of coherence the states policy on tax exempt property. As is the case with the school budgeting issues, this matter was carried over into the second legislative session.
MMA offered two solutions to this municipal problem. First, certain standards governing the eligibility of charitable organizations to achieve tax exempt status would be put into statute. Second, several classes of exempt property that now receive a 100% exemption would be scaled back to a 60% exemption over a 10-year period so that they would ultimately be providing a contribution to the municipal services they receive.
In addition to carrying over this particular bill, the Legislatures Taxation Committee carried over, either formally or informally, a raft of related proposals dealing with property tax issues, including: (1) local option taxation; (2) direct municipal participation in the meals and lodging tax; (3) adjustments to municipal revenue sharing; (4) repeal of personal property taxation and the BETR program with a revenue sharing off-set; and (5) creating a structure for financially supporting increases to the $7,000 homestead exemption.
In light of all this carried-over legislation, it appears that the Tax Committee chairs can be taken at their word when they indicate that the second session focus will be on the property tax, particularly as it pertains to the states high property tax burden communities.
Municipal Legislation of Others
In addition to the agenda of the Associations Legislative Policy Committee, MMAs State and Federal Relations staff were kept busy keeping track of the many other legislative initiatives submitted during the session. In a proportion consistent with previous sessions, MMA was tracking 26% of the total number of bills actually submitted. Of those 583 bills of municipal interest, over 90% were of significant priority, and about 50 bills (8%) were merely housekeeping measures, charter amendments, or similar matters of lower priority.
As will be noted when reviewing the 157 bills of municipal interest that were enacted, the Legislature was generally extremely respectful of municipal government and demonstrated a special skill at turning mandate-oriented, paternalistic bills into partnership systems operating between the central and local levels of government.
The most notorious deviation from that general philosophy and the clear front runner for dog-of-the-year legislation from the municipal perspective is LD 2192 (PL 1999, chap. 430). This enactment bars municipalities from access to the courts with respect to many kinds of negligence and product-liability lawsuits that could otherwise be filed against gun and ammunition manufacturers. Heavily lobbied by the National Rifle Association, the gun manufacturers and the Sportsmans Alliance of Maine, LD 2192 represents the first municipal bar to court access in the history of the state and is an enactment that very clearly had no foundation whatsoever in Maine. It is very difficult to read this new law in any other way than as a message that the Legislature distrusts the good judgment of the community leaders in this state.
As is always the case, and very much due to the design of the legislative system, most of the initiatives submitted to the Legislature do not live all the way through to enactment. This year was no exception. Of the 565 bills MMA was tracking, 330 were disposed of "ought not to pass" at one point in the process or another. Although from a lobbying perspective it is sometimes a clear accomplishment when a bill is finally rejected by the Legislature, it is not the purpose of this edition of the TOWNSMAN to detail the bills that "failed of enactment". For anyone interested in reviewing the entire list of legislative initiatives that MMA was tracking and the final disposition of each, that information is available on MMAs web page (www.memun.org) under "LD List" which is located in the Legislative Information section. Anyone interested in a hard copy should call SFRs Tina Means at 1-800-452-8786.
What follows is a series of five articles to inform our readers about the accomplishments of the 119th Legislature in its first session.
First, SFRs Kate Dufour provides a detailed report on the new Urban Compact and Rural Road initiatives and other elements of the state-local transportation partnership that were enacted with the Part II Highway Fund budget.
Second, there is an article describing the bond issue proposals, proposed constitutional amendments, and citizen initiatives that will be presented to the voters on the November, 1999 statewide ballot.
Third, there is an article describing the 157 bills of direct municipal interest that were enacted into law, organized under the appropriate committee of jurisdiction.
Fourth, there is an article similarly organized describing the 74 bills of municipal interest carried over into the second legislative session.
Finally, there is an article describing the various bills enacted or otherwise disposed of this session that created a task force, study commission, or working group project dealing with matters of municipal interest.
MMAs State and Federal Relations staff would like to express their sincere appreciation to all the legislators making up the 119th Legislature, legislative leadership, legislative staff, the Governor and the staff of the Governors Office, and the many state agency representatives that participate in the legislative process. Disagreements will exist, but the last six months has been characterized by comity and dialogue, and all of the participants deserve a big collective "thank you" from the people of Maine for the extraordinary effort they put into this session. We also would like to express our deep thanks to MMAs 70-member Legislative Policy Committee and the hundreds of municipal officials across the state who provided us with the information and support that make it so enjoyable to do our jobs.