By Ashley Berry
Governor Paul LePage has drafted a Tax Reform Plan that would eliminate revenue sharing for municipalities, increase sales tax, decrease income tax and cut corporate taxes. The elimination of revenue sharing means that towns and cities will receive approximately $160 million less than last year. His grand idea to make up for the money lost is to allow towns to tax the property of a non-profit organization if it is assessed at over $500,000.
Although larger counties may be able to make up the difference, the smaller and more rural Maine towns will not fare as well as their larger counterparts, as they have significantly fewer non-profits. For instance, the small town of Madawaska, which has few major revenue services, relies on revenue sharing to keep property taxes affordable.
Without the revenue provided by taxes, many towns like Madawaska will be forced to raise property taxes on residents, who in many circumstances can barely afford to pay their current property taxes. LePage’s tax plan is not in the best interest of the majority of Maine’s people, as it calls for spending cuts of public services and significant increases of property taxes for Maine homeowners. This tax plan would ultimately be more harmful than beneficial.
The revenue from property taxes from large non-profits could be helpful but not the way that LePage has planned. A blanket tax for all non-profits with property valued at or over $500,000 isn’t necessarily the best option. Smaller or more rural towns with fewer non-profits could see a hike in property tax because there are fewer large charities to tax and they are losing such a substantial sum from cutting revenue sharing.
Places like Shalom House in Portland, which provides needed mental health services, would manage to stay open, but would have to cut greatly needed public services. In the Portland Press Herald, Clare Whitney, who is a representative with the Good Shepard Food Bank in Auburn, said that “paying property taxes wouldn’t sink the organization, but would likely mean that 100,000 free meals wouldn’t be distributed to hungry clients.”
Private institutions of higher learning would also be subject to the property tax where they have traditionally been exempt. Although SMCC will be exempt as it is a public non-profit, it could come to affect students that wish to go on to a bachelor’s degree program at private universities. Laurie Lachance, the president of Thomas College in Waterville, said it will be a “direct hit on the affordability of college to the students we serve who are 75 percent from Maine and 70 percent first-generation. … A new tax would push college costs higher and would, ultimately, diminish our ability to raise the educational attainment of the region’s economy.” Lachance, who was formerly a state economist with the Baldacci administration, said it would cost the school about $600,000 a year.
We find ourselves in the midst of a job market that is desperate for workers with technical skills and where your chances of the “American Dream” almost always hinge upon your ability to get a bachelor’s degree. Surely, the taxation of non-profit schools would result in an increase of tuition, perhaps drastically hindering the number of students across the state who are able to attend.
The passing of the tax reform plan could have repercussions of increased tuition, cutting of public services and damage not yet realized. Should it pass, many people who are already struggling will see increased property taxes only making their lives more difficult. In regards to pursuit of education many people may be deterred from their dreams of building a better life and condemned to living paycheck to paycheck and struggling to just to make ends meet.