Battle Over School Funding Measure Underway

Mar 20, 2017

The voter-approved surtax to provide additional money for Maine’s schools was both attacked and supported at a lengthy public hearing before the Legislature’s Taxation Committee.

School funding has long stirred political passions in Maine. In 2004 a group led by the Maine Education Association successfully passed a citizen-initiated referendum calling on the state to pay for 55 percent of the cost of local schools. Successive legislatures ignored that vote.

Last year the MEA again pushed a citizen initiative that imposed a 3 percent surtax on those with household incomes of more than $200,000 a year. The state has started collecting that surcharge, expected to raise $124 million this year for schools.

But during the public hearing, opponents lined up to say the income tax rate of 10.15 percent is the highest in the country and is already leading professionals such as doctors and engineers to leave Maine. They said that will make recruiting new professionals to Maine a lot more difficult.

Rep. Karl Ward, a Republican from Dedham, is president of the Brewer-based Nickerson & O’Day Construction Co, one of the largest construction companies in the state. He expressed the view of many in the business community.

“I am here to testify in favor of any and all bills that will repeal the economic disaster that is known as Question 2 that penalizes successful businesses,” he said.

Ward argued that most Maine companies are small and that the owners already pay taxes on the money they earn through their personal income taxes. He said they will be hard hit by the tax surcharge.

But Nick Paquette, an electrician from Benton, told lawmakers that voters spoke last fall and that their voices should be heard.

“I find it appalling that some legislators and other wealthy interests are so quick to try and overturn the will of the voters. The opponents made their case to the voters, but ultimately the voters voted yes,” he said.

Not all legislators support the repeal effort. Sen. Troy Jackson of Allagash, the Senate Democratic Leader, said he agrees that the will of the voters should not be overturned. He points out that while tax cuts that have been passed in the last few years, the state has failed to meet its responsibility to fund its 55 percent share of public education. That has meant increased property taxes for many communities.

“Asking the rich to pay their fair share will not only allow us to fully fund education, it will restore fairness to a tax system that is squeezing the middle class to benefit the wealthy,” he said.

Dana Connors, president of the Maine State Chamber of Commerce, said he interprets last fall’s vote as a vote for additional school funding. He said that’s a goal that’s supported by the business community. But he said the way the measure accomplished that goal, with a surtax, is having serious consequences for Maine’s economy.

“We believe there must be a better way to achieve this goal, one that will not hinder Maine’s ability to grow its economy by attracting additional investment, one that will not hurt our ability to attract the talent necessary to meet the needs of our economy,” he said.

Instead of the current surtax, lawmakers were given a wide array of other taxes to to consider as a replacement. One proposal would raise the tax on tobacco and recreational marijuana. Another idea is to raise the meals and lodging tax rate and to expand the sales tax for amusements like ski lift tickets and golf greens fees.

Based on the testimony and the questioning, lawmakers appear divided on repealing the surtax, which will be the subject of additional discussion in the weeks to come.