- Associated Press - Thursday, February 6, 2014

AUGUSTA, Maine (AP) - After nearly three hours of highly partisan debate, Maine’s Democrat-controlled House gave initial approval Thursday to a bill that would restore $40 million in revenue sharing to cities and towns, where municipal officials are begging lawmakers to keep state aid flowing.

The 114-21 vote to approve the bill gives Democrats the two-thirds majority they would need in the event of a veto by Republican Gov. Paul LePage, but the measure continues to face significant pushback from some Republican lawmakers who contend that the other side is being hasty and financially irresponsible.

“This argument that we need to get this done today - we need to do this now - is a political decision, but it is not the right decision,” House Republican Leader Ken Fredette of Newport said during debate.

The bill, which faces further votes in the House and Senate, seeks to forestall an automatic $40 million reduction in revenue sharing put in the budget to encourage lawmakers to eliminate no-longer necessary tax breaks and incentives. After lawmakers failed to agree on how to do that, Democrats moved forward with this bill, arguing that further reductions to revenue sharing will mean slashed services and increased property taxes in communities that are already struggling to stay afloat financially.

“The state’s funding promise to towns helps young families, elderly neighbors who want to stay in their homes and working Mainers struggling with tight household budgets and stagnating wages,” said Democratic Rep. Peggy Rotundo of Lewiston, co-chair of the budget-writing Appropriations Committee.

Republican lawmakers and LePage’s administration have taken issue with the bill because it would partially finance the proposal by taking $21 million from the state’s rainy day fund, dipping the account to about $38 million. They argue that will hurt the state’s credit rating and that the state should be using that money to deal with the current shortfall in the state budget, instead of funding revenue sharing for next year.

But Democratic Senate President Justin Alfond of Portland said earlier this week lawmakers have talked to bond-rating agencies and been assured that Maine won’t be downgraded by taking out funds to pay the towns. He said the important thing is to have a plan to replenish the account. The bill seeks to prioritize re-stocking the rainy day fund with future budget surpluses.

The measure would also take $4 million from a fund to save up for future income tax decreases and new revenue the state is projected to receive.

Lawmakers are being heavily lobbied to approve the measure by city officials and town managers, who’ve faced significant cuts to revenue sharing over the last several years. Maine’s municipalities typically received 5 percent of all state sales and income tax revenue, which would have been $138 million this year, according to the Maine Municipal Association. But without this extra money, the municipalities will receive only $20 million next year, the association said, resulting in skyrocketing property taxes.

The public pressure from cities and towns is putting Republicans - who repeatedly argued Thursday that they’re in favor of revenue sharing, just not the way it’s being funded - in a tough spot.

“I know this vote will be used against me to beat me in the next election, but I don’t care,” said Rep. James Gillway, a Republican and town manager of Searsport. “If we don’t get this right, I don’t deserve to be here.”


Follow Alanna Durkin on Twitter at https://www.twitter.com/aedurkin

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