LD 1 LR 0328(01)
An Act to Increase the State Share of Education Costs, Reduce Property Taxes and Reduce Government Spending at All Levels
Fiscal Note for Original Bill
Sponsor: Speaker Richardson of Brunswick
Committee: Joint Select Committee on Property Tax Reform
Fiscal Note Required: Yes
Fiscal Note
Projections Projections
2005-06 2006-07 2007-08 2008-09
Net Cost (Savings)
General Fund  $  24,424,975  $   53,966,878  $   75,707,497  $   81,582,849
General Fund  $(57,914,885)  $ (33,096,156)  $ (15,915,209)  $ (14,433,582)
Other Special Revenue Funds  $    4,140,845  $    9,013,310  $   14,552,541  $   20,730,626
General Fund  $(82,339,860)  $ (87,063,034)  $ (91,622,706)  $ (96,016,431)
Other Special Revenue Funds ($4,062,882) ($4,310,618) ($4,549,101) ($4,778,192)
Fiscal Detail and Notes
General Fund Summary - Costs (Savings) 2005-06 2006-07 2007-08 2008-09
Additional approp needed to fund EPS in bill 1  $  15,460,915  $   40,787,029  $   57,014,971  $   56,724,102
Additional approp needed to fund Efficient Delivery of Educational Services Fund 2  $    4,140,845  $    9,013,310  $   14,552,541  $   20,730,626
BETR 3 - Deappropriation  $(78,132,345)  $ (82,896,495)  $ (87,482,721)  $ (91,888,310)
             - Revenue loss  $  74,069,463  $   78,585,877  $   82,933,620  $   87,110,118
Homestead to $36,000,000 4  $      615,700  $               -    $               -    $               -  
Circuit Breaker Expansion 5  $    8,270,397  $    8,477,157  $    8,689,086  $    8,906,313
Net General Fund Cost (Savings)  $  24,424,975  $   53,966,878  $   75,707,497  $   81,582,849
1 Amount of additional General Fund appropriation required is a function of funding EPS model as in LD 1 vs. P.L. 2003, c. 712 ( current law) and also of updating certain data and assumptions (not including funds for Efficient Delivery of Educational Services Fund).  It does not reflect the impact of IB 2003, Chapter 2, approved by the voters on June 8, 2004, which becomes operative in January of 2005, barring legislative action.
2 Establishes the Fund for the Efficient Delivery of Educational Services as a dedicated fund within the Department of Education that was approved by the voter's in IB 2003, c. 2.  However, this bill differs from IB 2003, c. 2 in that it proposes to phase-in the requirement that 2% of the annual state appropriation for education be dedicated to providing incentive-based resources to those local school units or municipalities that develop sustainable cost savings in the delivery of educational services.
3 Converts the funding for Business Equipment Property Tax Reimbursement payments from General Fund appropriations to an undedicated revenue offset within the individual income tax line.  That change is estimated to generate net General Fund savings of $4,062,882 in fiscal year 2005-06, $4,310,618 in fiscal year 2006-07, $4,549,101 in fiscal year 2007-08 and $4,778,192 in fiscal year 2008-09, which represents the loss of funds to the Local Government Fund for municipal revenue sharing.
4 Part F of this bill requires that the appropriation for the homestead property tax exemption be at least $36,000,000 annually, which results in the need for an additional $615,700 in fiscal year 2005-06.
5 Revenue loss from increasing the income threshold for the Maine Residents Property Tax  program (Circuit Breaker).
Other Impacts
This bill changes the authorized uses of the Maine Budget Stabilization Fund, the statutory cap on the balance of the fund and the methodology for determining transfers into the fund.
The bill increases the percentage of a loan for learning space upgrades from the School Revolving Renovation Fund that may be forgiven.  Increasing the percentage of a loan that may be forgiven may result in less money being available from the Fund for future projects.  The impact to the Fund cannot be determined at this time.
Additional funding will be transferred into the circuit breaker reserve account from the year-end balance in the appropriation for the Homestead Property Tax Exemption program.  The State Tax Assessor is authorized to utilize funds in the circuit breaker reserve account to increase the maximum circuit breaker payment.  The amount available in the circuit breaker reserve account will depend on the amount of surplus funds and will vary year to year depending on homestead and circuit breaker claims.  It is estimated that a $3,000,000 balance in the circuit breaker reserve account in fiscal year 2006-07 would permit a $150 increase in the maximum payment in fiscal year 2007-08.
Additional administrative costs associated with this bill can be absorbed by the Maine State Housing Authority, the Department of Administrative and Financial Services and the Executive Department utilizing existing budgeted resources.