Your June 8 statewide ballot

The June 8 referendum will feature five state-wide questions on the ballot; a People’s Veto and four bond issues. Additionally, voters in Jay, as well as Phillips, Strong, Avon, Eustis and Kingfield will be asked if they approve of the action taken at school budget meetings on June 1.

Question 1 (People’s Veto):

“Do you want to reject the new law that lowers Maine’s income tax and replaces that revenue by making changes to the sales tax?”

The state Legislature passed “An Act To Implement Tax Relief and Tax Reform” last year, and it was signed into law by Governor John Baldacci on June 12, 2009. The law is designed to reduce the impact of the income tax on most Maine residents, by applying the sales tax on several new categories of services.

The law consists of several parts. The first part institutes a flat income tax rate of 6 percent, which would be a 2.5 percent decrease for taxpayers making $16,700 or more annually. Currently, Maine uses a bracketed income tax system, of 2 percent, 4.5 percent, 7 percent and 8.5 percent.

It also institutes an additional income tax surcharge of .35 percent on taxpayers making more than $250,000, and replaces the current system of itemized deductions with tax credits. Individuals filing their taxes would claim a $700 credit and married couples filing jointly would claim a $1,200 credit. Unlike a deduction, which reduces the individuals’ listed income, a credit would be applied directly to the bottom line of taxes owed.

The law intends for the state to make up for the decrease in income tax revenue through increases to the sales tax program. The state sales tax of 5 percent would be applied to several categories of service for the first time, including those relating to amusement, entertainment and recreation, those relating to maintenance and repair, personal property services, which relate to the care of clothing, vehicles, pets, houses and so forth, and for transportation and long distant telephone service.

The law also increases the sales tax on several items, including food and drink at restaurants and bars (which would increase from 7 percent to 8.5 percent), on candy (which would increase from the standard 5 percent to 8.5 percent) and on vehicle rentals (which would increase from 10 percent to 12.5 percent).

Finally, the law broadens access to the Maine Residents Property Tax and Rent Refund Program, better known as the “Circuit Breaker Program,” by removing a 10-acre limit on the participating homeowner’s property lot size and making other small adjustments.

Supporters of the law claim that a flat income tax is fairer, and that the law will reduce the state’s high income tax for most Mainers. The increases in sales tax, they maintain, will primarily impact non-resident taxpayers, visitors and tourists, will saving residents millions (different estimates have been put forward by supporters, with the Maine Revenue Service estimating that new law reduces the impact on residents by $53 million).

The People’s Veto effort was initiated by Charlie Webster, of Farmington, chairman of the Maine Republican Party. Generally, those in favor of the veto (and therefore opposed to the law) believe that it does not represent tax relief, and instead merely shifts the tax impact into new categories. Supporters of the veto have pointed to a list of “100 new taxes,” which effectively represents the businesses that will be impacted by increases to the sales tax. Veto supporters also point to the impact of increased sales taxes on several businesses directly related to tourism, which represents the state’s largest industry.

The veto effort has also been supported by several organizations which represent industries impacted by the sales tax increases, including the Maine Association of Realtors, the Maine Automobile Dealers Association, the Maine Restaurant Association, the Maine Tourism Association and other organizations.

The website for the veto effort can be seen here: http://voteyestoreject.com/

The website for those opposed to vetoing the new law can be seen here: http://www.nohighertaxes.com/

A “YES” vote on Question 1 will support the veto and will prevent the alterations to the tax system from occurring.

A “NO” vote on Question 1 will oppose the veto and will allow the alterations to the tax system to occur. The new law would go into effect in 2011.

Question 2 (Bond Issue):

“Do you favor a $26,500,000 bond issue that will create jobs through investment in an off-shore wind energy demonstration site and related manufacturing to advance Maine’s energy independence from imported foreign oil, that will leverage $24,500,000 in federal and other funds and for energy improvements at campuses of the University of Maine System, Maine Community College System and Maine Maritime Academy in order to make facilities more efficient and less costly to operate?”

This question asks voters to approve the borrowing of money for several projects, in two major categories. A little more than half of the total bond, $13.5 million, would be spent on “energy and infrastructure upgrades” in the University of Maine System, Maine Maritime Academy and the Maine College System.

The second category, which encompasses the other $11 million of the $26.5 million bond, would provide money for a new fund, the “Maine Marine Wind Energy Demonstration Site Fund.” This fund would be administered by the University of Maine board of trustees, and would be used to obtain matching money and grants in order to fund one or more ocean wind energy demonstration sites.

While the bond question lumps school facility funding along with the Marine Wind Energy fund, all of the aforementioned leveraging of “$24,500,000 in federal and other funds” would be for the purpose of supporting marine wind power projects.

Breakdown of $26.5 million bond:

• $9,500,000 to the University of Maine System – Provides funds for energy and infrastructure upgrades at all campuses of the University of Maine System.
• $5,000,000 to the Maine Community College System – Provides funds for energy and infrastructure upgrades at all campuses of the Maine Community College System.
• $1,000,000 to the Maine Maritime Academy – Provides funds for energy and infrastructure upgrades at the Maine Maritime Academy.
• $11,000,000 to the Maine Marine Wind Energy Demonstration Site Fund (administered by the University of Maine) – Provides funds for research, development and product innovation associated with developing one or more ocean wind energy demonstration sites. It also provides funding for robotics equipment to accelerate wind energy components manufacturing in the State. The funds will leverage $24,500,000 in other funds.

Calculated interest (Office of the Treasurer):
Given a $26.5 million bond, paid off over 10 years at an estimated interest rate of 4.5 percent, Maine taxpayers will pay $6,558,750 in interest.

A “YES” vote on Question 2 will support the issuing of the bond.

A “NO” vote on Question 2 will oppose the issuing of the bond.

Question 3 (Bond Issue):

“Do you favor a $47,800,000 bond issue to create jobs in Maine through improvements to highways, railroads and marine facilities, including port and harbor structures, and specifying the allocation of $4,000,000 of the transportation bond approved by voters in November 2009 to be used for capital rail purposes?”

This asks voters to allow the state to borrow money for transportation-related projects. Specifically, roughly half of the bond would be used to pay for state highway paving and reconstruction, while the remainder would be used to purchase 240 miles of railroad in Aroostook County and other railway improvements and provide funds for the Ocean Gateway deep water pier project in Portland.

The railway in question runs north-south through Aroostook County, and is currently owned and operated by Montreal, Maine and Atlantic Railway. That company had expressed an intent to abandon the line, as it was not providing economically viable. Proponents of this portion of the bond say that the railway, which hauls primarily wood products, is necessary for the economic health of the region. Funds would also be used to purchase and improve rail line in the Lewiston and Auburn area, and to repair and improve the rail line between Windham and Fryeburg.

The deep water pier would be constructed at the Ocean Gateway facility in Portland, and would be designed to accommodate large vessels, like cruise ships. A small portion of the $7 million in this category would be used to fund a Small Harbor Improvement Program, administered by the Department of Transportation, to provide matching funds for coastal communities looking to improve marine facilities.

Breakdown of $47.8 million bond:

• $24,800,000 for the funding of state highway reconstruction and paving.
• $16,000,000 for the funding of railroads. $7,000,000 of this would be used to purchase and preserve approximately 240 miles of railroad track in Aroostook County currently owned and operated by the Montreal, Maine and Atlantic Railway, which track upon acquisition by the State must be operated by a rail operator chosen through a competitive process, in consultation with shippers and other stakeholders of the track. $5,000,000 would be used to purchase a portion of rail line and to make other improvements related to improved freight rail service and preparation for future passenger rail service to Lewiston and Auburn. $4,000,000 would be used for repairs and improvements of the portions of the Mountain Division Railroad owned by the State.
• $7,000,000 for the funding of marine-related improvements. This includes $6,500,000 for the Ocean Gateway deep water pier and $500,000 for challenge grants from the Small Harbor Improvement Program.

Calculated interest (Office of the Treasurer):
Given a $47.8 million bond, paid off over 10 years at an estimated interest rate of 4.5 percent, Maine taxpayers will pay $11,830,500 in interest.

A “YES” vote on Question 3 will support the issuing of the bond.

A “NO” vote on Question 3 will oppose the issuing of the bond.

Question 4 (Bond Issue):

“Do you favor a $23,750,000 bond issue to provide capital investment to stimulate economic development and job creation by making investments under the Communities for Maine’s Future Program and in historic properties; providing funding for research and development investments awarded through a competitive process; providing funds for disbursements to qualifying small businesses; and providing grants for food processing for fishing, agricultural, dairy and lumbering businesses within the State and redevelopment projects at the Brunswick Naval Air Station that will make the State eligible for over $39,000,000 in federal and other matching funds?”

This question asks voters to provide money for a number of diverse funds and projects. The largest portion, roughly a third, would be used to renovate and improve the Brunswick Naval Air Station, bringing it into code with federal and state regulations with an eye toward future economic development. The $8 million spent here would leverage $32.5 million in federal funding.

Breakdown of $23.75 million bond:

• Maine Historic Preservation Commission – $1,250,000 for the establishment of a revolving fund for the purpose of acquiring significant historic properties.
• Department of Economic and Community Development – $3,500,000 to provide the funding of investments under the Communities for Maine’s Future Program in competitive community and economic revitalization projects, which must be matched with at least $3,500,000.
• Maine Technology Institute – $3,000,000 in funds for research and development and commercialization as prioritized by the Office of Innovation’s current Science and Technology Action Plan for Maine. The funds must be allocated to environmental and renewable energy technology, biomedical and biotechnology, aquaculture and marine technology, composite materials technology, advanced technologies for forestry and agriculture, information technology and precision manufacturing technology through a competitive process and must be awarded to Maine-based public and private institutions and must be awarded to leverage matching funds of at least $3,000,000.
• Brunswick Naval Air Station Redevelopment – $8,000,000 for redevelopment projects at the BNAS, including the rehabilitation of buildings, federal Americans with Disabilities Act and fire code compliance and other site improvements, including up to $4,750,000 for the development of a higher education engineering and economic development center. These funds will leverage $32,500,000 in federal funds.
• Finance Authority of Maine – $1,000,000 to provide grants for food processing for fishing, agricultural, dairy and lumbering industries within the State.
• Economic Recovery Loan Program – $3,000,000 in funding for this program.
• Small Enterprise Growth Fund – $4,000,000 to provide funds for disbursements to qualifying small businesses in the State seeking to pursue eligible projects.

Calculated interest (Office of the Treasurer):
Given a $23.75 million bond, paid off over 10 years at an estimated interest rate of 4.5 percent, Maine taxpayers will pay $5,878,125 in interest.

A “YES” vote on Question 4 will support the issuing of the bond.

A “NO” vote on Question 4 will oppose the issuing of the bond.

Question 5 (Bond Issue):

“Do you favor a $10,250,000 bond issue to improve water quality, support drinking water programs and the construction of wastewater treatment facilities and to assist farmers in the development of environmentally sound water sources that will leverage $33,250,000 in federal and other funds?”

This question asks voters if they want to approve a $10.25 million bond to go toward a number of programs relating to drinking water supplies and wastewater treatment. None of the funds go toward specific projects, but instead will enable the creation or sustaining of revolving loan funds and grant programs.

Breakdown of the $10.25 million bond:

• Safe Drinking Water Revolving Loan Fund (administered by the Department of Health and Human Services) – $3,400,000 to provide funds for a drinking water revolving loan fund to acquire, design, plan, construct, enlarge, repair, protect or improve drinking water supplies or treatment systems to be matched by $17,000,000 in other funds.
• Small Community Grant Program (administered by the Department of Environmental Protection) – $1,000,000 to provide funding for grants to towns to help replace malfunctioning septic systems that are polluting a water body or causing a public nuisance.
• Wastewater Treatment Facility State Revolving Loan Fund (administered by the Department of Environmental Protection) – $3,000,000 to provide for a wastewater treatment facility state revolving loan fund to be matched by $15,000,000 in other funds.
• Uncontrolled Sites (administered by the Department of Environmental Protection) – $750,000 to provide for funds to investigate and clean up uncontrolled hazardous substance contamination at sites posing unacceptable threats to public health and water quality.
• Wastewater Treatment Facility Construction Grants (administered by the Department of Environmental Protection) – $600,000 to provide funds for wastewater treatment facility construction grants to be matched by $900,000 in other funds.
• Overboard Discharge (administered by the Department of Environmental Protection) – $500,000 to provides funds to assist homeowners whose homes are serviced by substandard or malfunctioning waste water treatment systems, including straight pipe discharges, individual overboard discharge systems, subsurface waste water disposal systems, septic tanks, leach fields and cesspools, which systems result in direct discharges of domestic pollutants to the surface waters of the State.
• Agriculture Water Source Development Program (administered by the Department of Agriculture, Food and Rural Resources) – $1,000,000 to provide funds to assist farmers in the development of environmentally sound water sources to manage weather-related risk and to comply with in-stream flow rules that will leverage $350,000 in other funds.

Calculated interest (Office of the Treasurer): 
Given a $10.25 million bond, paid off over 10 years at an estimated interest rate of 4.5 percent, Maine taxpayers will pay $2,536,875 in interest.

A “YES” vote on Question 5 will support the issuing of the bond.

A “NO” vote on Question 5 will oppose the issuing of the bond.