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April 5, 2011

Panel nixes city revenue sharing change

By The Mainebiz News Staff

A legislative committee has unanimously rejected Gov. Paul LePage's proposal to change the way in which municipalities receive money from the state.

The Legislature's Taxation Committee yesterday voted against changing the formula from a percentage of total state revenues to a fixed appropriation, according to MaineToday Media. The current revenue sharing formula gives cities and towns 5% of the state revenue, but changing it to an annual allocation would allow municipalities to better plan their budgets, LePage said. However, municipal officials opposed the change, saying it would decrease how much money cities and towns receive overall and force them to compete with other state priorities. Under the current system, municipalities would get a total of $280 million over the next two years, while LePage's proposal would allocate $188 million. The change was proposed as part of LePage's $6.1 billion biennial budget.

The committee's recommendation to reject the proposal will now go to the appropriations committee. The Taxation Committee still must take a position on several other budget proposals, including $203 million in tax cuts, according to the news service.

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