HOULTON, Maine — If a proposal to reduce revenue sharing is approved at the state level, the net effect to local municipalities could be devastating, according to Houlton Town Manager Eugene Conlogue.
Conlogue was in Augusta Jan. 22 hoping to speak before the Committee of Appropriations and Financial Affairs. He was one of about 60 individuals looking to address the panel, including numerous representatives from Aroostook County, including several officials from Presque Isle.
“The primary focus of the speakers that were there, and there was a large crowd, was to protect revenue sharing,” Conlogue said. “It’s a universal concern across the state.”
Because of the long list of individuals wising to speak, Conlogue was unable to address his concerns with the committee in person. Instead, he submitted a letter of testimony to the committee and also included a letter on behalf of the town council.
Municipalities are at risk of seeing state revenue sharing shrink from the current level of $65 million to about $25 million if alternative revenue sources are not identified.
Revenue sharing has been in place for more than 40 years and was created to be a replacement for the old inventory tax, which was repealed by the Legislature. It was also designed to provide some measure of property tax relief.
Originally, the revenue sharing program was funded by reallocating 5 percent of all income and sales tax collected in the state to local municipalities. The distribution formula took into account such factors as population, tax effort and valuation.
Over the years, the state’s revenue sharing program has been diverted to help pay for other programs, which in turn created a greater burden for local municipalities, who relied on that money to help keep property tax rates in check.
In his letter to the committee, Conlogue urged the committee to keep funding in place for revenue sharing, and if at all possible, to increase the amount municipalities receive so that local taxpayers do not bear the burden of another hike.
“For those who say such local increases were at the discretion of the municipalities, I say ‘bunk,’” Conlogue wrote. “Municipalities have risen to meet the needs of their residents and services cost money. When the state claims it has held the line on taxes, that is simply not so. Rather, they have simply passed along their ‘savings’ to the local property taxpayer to pay.”
The council’s letter went even further, explaining that in 2012, the town of Houlton was budgeted to receive $650,000, but only received $623,000 in revenue. In 2013, the town lowered its expectations of revenue sharing to $600,000, but only received $481,175.
This year, the town further reduced the amount it expected to receive from the state to $368,000, which was a decrease of $123,000.
The one good thing, Conlogue added, was that the town should know sooner this year what its revenue sharing figure will be.
Last year, the town did not find out how much it would receive from the state until the end of June. This year, because of the short session in the Legislature, the town should know in April.
Conlogue said a worst-case scenario would see the town of Houlton lose another $228,000 in money coming in from the state, giving the town just $140,000 in revenue (or just 17 percent of what the town should receive).
“Until you know what you are going to have to work with, spending a lot of time on speculation doesn’t get you very far,” he said.
