🔒Tightening belts

LePage orders $100M in cuts

• Federal budget woes to impact Maine
• New taxes, fees on the table

With looming federal budget cuts, Gov. Paul LePage has ordered state agencies to come up with $100 million in savings. A 12-member task force established as part of the current budget and already tasked with finding $25 million in cuts will be asked to look at additional proposals.

"I have asked each commissioner to look at their department and agencies and to start from zero," LePage said. "Look as if you have nothing [at] your disposal and you are to build an agency to provide services and you are to look at every program."

While the state will not know for months exactly where the federal cuts will occur, LePage is confident the additional $75 million will be needed to at least partially offset the federal cutbacks. "We have to prioritize, we have to live within our means and we have to use our resources wisely," LePage said. "Do I have all the answers now? No, but by the end of the year we will have a much better feel for where we need to be going."

LePage has been personally reviewing all of the Office of Program Evaluation and Governmental Accountability reports to see if the recommendations have been implemented. "We know there are federal cuts that we have to address," he said, "like in [the Low Income Home Energy Assistance Program], where we are looking at $30 million in cuts already. We are not going to let people freeze this winter, not on my watch."

Sen. Richard Rosen, R-Bucksport, co-chairman of the appropriations committee and a member of the budget task force, said some agencies are more dependent on federal funds than others. "I think that it is entirely appropriate to have a target that is above the $25 million that is required to maintain balance in the budget," he said.

Sen. Dawn Hill, D-York, who also serves on both the task force and the appropriations committee, agrees the task force is equipped to look at proposals in excess of the $25 million target. "A hundred million sounds like a huge figure to reach, given what we just went through with two supplemental and the biennial budget," she said. "We are going to have to roll up our sleeves and be creative." Hill said everything will be on the table, including the difficult sell of additional revenues or fees to keep essential programs operating.

Delegation split on taxing online sales

• Bill targets Internet retailers
• Maine stands to gain $65M

Maine could get a boost of over $65 million next year if Congress passes legislation introduced in July to require online retailers to collect sales taxes. But the state's congressional delegation is divided on the issue.

A University of Tennessee study estimates that in 2012, states will lose $23.3 billion in uncollected taxes on Internet sales, according to the National Conference of State Legislatures, which endorsed the legislation. Maine is estimated to lose $65.4 million.

"The fact is that our purchasing habits today have changed dramatically and people can go online and buy an item and have it shipped to them the next day," said U.S. Rep. Chellie Pingree. "I support the legislation to help our states and make a fairer tax system." Pingree said small business owners who collect sales taxes operate at a disadvantage when competing with online retailers that don't. Many consumers fail to pay the taxes owed when they make online purchases, she said.

U.S. Sen. Olympia Snowe disagrees. She said she doesn't want to impose what would amount to a new tax during a tough economy. "I just don't think this is the time to be imposing a new tax," she said.

The legislation, introduced by U.S. Sen. Richard Durbin, D-Ill., in the Senate and by U.S. Rep. John Conyers, D-Mich., in the House, is in response to a 1992 U.S. Supreme Court decision that ruled retailers are not required to charge and collect state sales taxes if their business lacks a physical presence in that state. The ruling noted that Congress could authorize the tax.

Technically, residents of states that charge sales and use taxes owe the taxes when they buy an item online and use it in their home state. In Maine, a line on the income tax form allows the filer to enter the amount of out-of-state purchases made or use a calculator that estimates purchases based on income.

"I have not reviewed the House bill yet, but I will carefully look at it," said U.S. Rep. Mike Michaud. "I do understand the problems small retailers have faced."

U.S. Sen. Susan Collins said she is not sure Congress should get involved, as states can form compacts without the need for legislation and implement the collection of taxes on Internet sales."I have no doubt that the states are losing revenue," she said. "I think taxpayers forget that when they order items over the Internet they should be paying use tax."

Police research new patrol cars

• Crown Vic nearing end of production
• Alternatives costlier, lack track record

For two decades, the Ford Crown Victoria police interceptor has served as law enforcement's basic patrol vehicle across the state. But the last one will roll off the assembly line next month, and agencies are scrambling to find a new vehicle amid more expensive alternatives.

"They served us really well," Penobscot County Sheriff Glenn Ross said. "We are watching to see what is coming out, but we will not be the first to buy. We are good for the short term."

Ross, president of the Maine Sheriffs Association, said all of law enforcement is struggling to replace a vehicle that was big enough to handle the additional police equipment as well as last with reasonable maintenance costs. He said the typical cruiser has both a radio and a data terminal and lots of other gear. "We also, in a rural area like this county, carry a lot of equipment we might need and that pretty much fills the trunk," Ross said. "We all really look at what it costs to keep a vehicle on the road, fuel efficiency, what it needs for routine maintenance."

That, he said, is what's causing hesitation, because the replacement vehicles being pushed by manufacturers have no track record. Ford is offering its Ford Police Interceptor based on its Taurus model. Chevrolet is offering an Australian-made version of the Caprice that's different from the U.S.-made model. Chrysler is offering a version of the Dodge Charger.

A basic Crown Vic has sold for around $25,000. Police agencies on tight budgets are looking at vehicles in the $28,000 to $30,000 range for replacement patrol cars. South Portland Police Chief Ed Googins, president of the Maine Chiefs of Police Association, said many agencies are using vehicles longer than they used to, often up to 125,000 miles or longer.

Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz.