Maine Property Taxpayers Should Have Paid $188 Million Less (10%) in Property Taxes in 2008

Read the full Report | As a result of huge spending increases at the local level and a failure to pass along increased state aid, property taxpayers paid$188 million more in property taxes than they should have in 2008.

In June 2004, Maine voters passed a ballot initiative requiring the State to increase it share of K-12 education spending to 55 percent. The Maine Municipal Association drafted and championed this initiative with the promise that such increased aid to local governments would result in a 15% reduction in property taxes.

After voters approved the measure, Governor Baldacci and the Maine Legislature dramatically increased state aid to local education and collectively increased all state aid to local governments by $278 million to almost $1.4 billion in 2008 from $1.1 billion in 2004, according to the legislature’s Office of Fiscal and Program Review.

Fueled by this ramped-up state subsidy, local spending skyrocketed. From 2004 to 2008, total local spending from all revenue sources climbed 22 percent, to $3.7 billion from $3 billion. This spending hike was much faster than inflation plus population growth (16%) and personal income growth (19%) for this same period. This means that Mainers’ property tax burden actually got worse, not better, during this time of dramatically increased state subsidies to local government.

By contrast, spending increases in the first part of the decade were slower at just 20 percent, still much faster than inflation plus population growth (13%) but slower than personal income growth (22%), as shown in Table 1 below.