Bridgton faces $372,778 cut in state revenues

By Gail Geraghty

Staff Writer

The town of Bridgton faces a game-changing $372,778 loss in state revenues to be applied to its municipal budget under Governor Paul LePage’s state budget plan, Town Manager Mitch Berkowitz told the Bridgton Board of Selectmen Jan. 22. Another $39,000 shortfall is projected from Bridgton’s 34% share of the SAD 61 education budget, which faces a total district loss of $114,000. In total, the potential loss of state revenues for FY 2014 is $411,778.

“This is a game-changer. We need to understand what this will mean for Bridgton,” Berkowitz told the board. He called the governor’s plan to balance the state budget using revenue sources that towns have traditionally relied upon to lessen the impact on local property taxpayers “a replay of the fiscal cliff” that could fundamentally change the relationship between towns and the state. He supplied the board with a memo from the Maine Municipal Association that called the cuts in local services or increases in property taxes that will result from LePage’s “extremely serious,” representing an unprecedented violation of “nearly every significant financial agreement that has been struck over the last 80-plus years between state and local government as currently codified in statute.”

LePage has proposed $420 million in cuts over the next two years to municipal revenue sharing, general assistance, Homestead Exemption, business equipment tax exemption, circuit breaker property tax relief and motor vehicle excise taxes.

“The governor’s proposal delivers a double whammy to all property taxpayers in this state by first jacking up the property tax rate in a variety of ways and then eviscerating the programs that are designed to help people who are having trouble paying their property taxes,” the MMA’s letter to the towns states.

Berkowitz said in a later telephone interview that he’s beginning to hear from legislators that LePage’s budget-balancing plan “will be DOA” after its full impact is reviewed by the Appropriations Committee in Augusta. And he suspects that at least some of what LePage has proposed may turn out to be little more than “posturing” that isn’t expected to become the law. However, he said towns must estimate their budgets based on anticipated revenues, and that’s why he has drawn up a list of cuts totaling $242,181 that could be made without impacting core services.

“This (governor’s plan) may be posturing, but I don’t have that luxury,” Berkowitz said. “This isn’t the only governor who has raided the municipal revenue sharing pot,” he added, but he said the cuts come at a time when town governments and their local residents can least afford them.

Back when municipal revenue sharing was first enacted in the early 1970s Bridgton received around $418,000 in annual reimbursements, Berkowitz said. But by FY 2013, the amount had dropped to around $265,000 to $272,000. “It just keeps getting eroded every year.” Instead of eroding the fund, however, LePage is proposing to completely eliminate municipal revenue sharing for the next two years, Berkowitz said.

“We’ve had that partnership for years. This is huge. This qualifies for a very important issue for every municipality in the state,” Berkowitz said. He is also concerned about the proposal to cap general assistance at $10.1 million through June 30, because towns would then be in the position of having to turn people away once the town’s general assistance funds have been exhausted.

Berkowitz details impacts of LePage’s revenue cuts

Bridgton is taking an early lead role among Maine towns in crying foul over a proposal by Gov. Paul LePage that would strip $420 million over the next two years either from municipal government directly or from the property taxpayers that support municipal government.

After sending a strongly-worded letter to legislative leaders Jan. 15, Town Manager Mitch Berkowitz followed up by creating a memo showing how the cuts would affect Bridgton and the FY 2014 budget review, now underway. Berkowitz is projecting revenue losses of $372,778 in the municipal budget, and $411,778 overall, once the $39,000 loss in state support for education is figured in.

The impact on the tax rate from the revenue losses would be between 37–55 cents per $1,000 of valuation for the municipal budget and between 41–59 cents per $1,000 of valuation for the total budget, Berkowitz has estimated, based on the budget he presented to selectmen Jan. 8. His FY 2014 budget is $6,444,085, reflecting an increase over 2013 of about $566,000.

The biggest loss — $250,000 — would be in municipal revenue sharing funds, by which the state redistributes 5% of all sales and income taxes it collects. But Bridgton also faces a potential loss of reimbursement of $90,430 under LePage’s plan to eliminate the Homestead Exemption for homeowners under age 65. Bridgton has 1,316 taxpayers currently receiving a $10,000 deduction from their property valuation under the program. LePage’s plan would increase the exemption amount for those age 65 and older to $20,000.

The town faces a net potential loss of $11,148 in general assistance, said Berkowitz, under LePage’s plan to cap total state spending on general assistance through June 30 at $10.1 million, which is about $1.5 million less than last year. LePage’s cuts to general assistance are an effort to close a $112 million Medicaid shortfall.

Other revenue reductions projected by Berkowitz for Bridgton are $1,200 in exemption reimbursement under the Business Equipment Tax Exemption Program, and between $10,000 and $20,000 less in tractor excise reimbursements.

Early knife-sharpening

Berkowitz has also prepared a second memo outlining budget reductions that the Budget Advisory Committee and selectmen could consider in light of the current crisis. The BAC has not yet met to review the recommendations, which propose $242,001 in cuts, and would leave a tax rate impact of $130,597, or $.135 on the tax rate, he said.

A “Round 1” of cuts could include shaving $41,601 from town recreation programs, cutting $17,400 from funding given to outside agencies (a 10% cut across the board) and reducing the contingency amount by $5,000. The town could also ask United Ambulance to accept $3,000 less under its contract, and court expenses could be shaved by $1,115, Berkowitz suggested. He also proposed saving $35,386 by verifying overcharges in general assistance and not funding an additional full-time employee at the transfer station.

Another $158,000 could be cut from capital expenditures in Round 1, he suggests, by reducing paving by $25,000, fire department stations by $3,000, restrooms at Highland Lake Beach and the transfer station for $45,000, and support for the Ham Recreation Complex by $85,000.

In “Round 2,” another $20,000 could be cut by such actions as holding $6,252 back from firefighters’ call pay, saving $12,500 by reducing the cost of living adjustment (COLA) to .01, and reducing firefighters’ FICA by $478.

Berkowitz points out that even with his proposed cuts, taxpayers will still see an increase under LePage’s revenue reduction plan.

 

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