Initiative Town of Cumberland Overview & Impacts. Town Councilor Michael Perfetti October 12, 2009 MAINE MUNICIPAL ASSOCIATION

Transcription

1 Motor Vehicle Excise Tax Initiative MAINE MUNICIPAL ASSOCIATION Town of Cumberland Overview & Impacts Town Councilor Michael Perfetti October 12, 2009

2 Who is Behind this Measure? Question to the Voters OUTLINE OF PRESENTATION What is the Motor Vehicle Excise Tax? How Are Excise Revenues Used? What Initiative Does to Cumberland What Happens If it Passes? Unintended Consequences Why Vote No? Questions From Audience 2

3 WHO IS BEHIND THIS MEASURE? Isn t municipal spending too high in Maine? The Maine Heritage Policy Center (MHPC), an outspoken proponent of the excise tax initiative, conducted a study last year that compared local spending in Maine to local spending in other states. The conclusion of that study was: Maine ranks #41 in local spending burden. In other words, Maine s towns and cities are very frugal relative to the rest of the country when the amount of income Mainers have is compared to the amount of money spent by municipalities. On a per capita basis, MHPC determined that municipal spending in Maine ranked 40 th. Therefore, the evidence shows that spending by municipalities in Maine is quite low. With respect to investments in roads, Maine local government ranked 15 th and 16 th nationwide as a percentage of state income and per capita, respectively. This reflects both the priority that Mainers put on our roads and the high costs associated with having a large state and rough winters. 3

4 QUESTION TO THE VOTERS 4 Do you want to cut the rate of the municipal excise tax by an average of 55% on motor vehicles less than six years old and exempt hybrid and other alternative-energy and highly fuel-efficient motor vehicles from sales tax and three years of excise tax? Question Number _ 2_

5 WHAT IS THE MOTOR VEHICLE EXCISE TAX? The motor vehicle excise was adopted in Prior to 1929, vehicles were part of the general property tax system. It has remained essentially unchanged for 80 years. Its provisions are established in state law. High initial rate (24 mills), steep decline (4 mills). Vast majority of Maine cars pay the lowest mill rate ( 2 out of 3 Statewide). Mil Rate is a cost per thousand In Cumberland Motor vehicle excise generates $1.3 million in revenues which stays in our community. 5

6 HOW ARE EXCISE REVENUES USED? Aren t excise revenues general revenues that are not dedicated to roads? 6 There is no state requirement that motor vehicle excise tax revenue be used for road or bridge repair and maintenance, but that is how it is used. Statewide the total excise raised in FY 2007 was $210 million; total local road expenditures were $235 million. The difference was covered by state aid to municipalities i i (a small portion of the state gas tax).

7 HOW ARE EXCISE REVENUES USED? $2,500,000 7 $2,000,000 $1,500,000 $1,000,000 $500, $2,051,000 $2,051,000 $868, Highway Dept. Plowing, Road Repairs, Maintenance $533, Captial Improvements Paving $650,000 Infrastructure Bonds Large Projects Range Road 751,000 Property Taxes $1.3M Excise Tax $0 1 1 Total Infrastructure Expenses Excise Tax Revenues

8 WHAT THE INITIATIVE DOES IN CUMBERLAND? It reduces the motor vehicle excise tax rates for some. 8 Current Mil Rate Present Proposed New Plan Difference % Loss Mil Year 1 $24.00 $187,677 $12.00 $85,997 (101,680.00) % Mil Year 2 $17.50 $203,181 $8.00 $92,175 (111,006.00) % Mil Year 3 $13.50 $174,304 $4.00 $50, (123,727.00) % Mil Year 4 $10.00 $138,405 $4.00 $53,709 (84,696.00) % Mil Year 5 $6.50 $80,684 $4.00 $49,430 (31,254.00) % Mil Year 6 $4.00 $342,502 $4.00 $343,532 1, % Rapid Renewal Online $200, $120, (80,000.00) ) % 00% $1,326,753 $795,420 (531,333.00) %

9 WHAT WILL HAPPEN IF IT PASSES? In Cumberland, we will lose $530,000 in revenue. 9 To Make up for the Loss in Revenues 1. Increase Taxes to Maintain the Same Services 2. Cut Services to Maintain Present Tax Rate 3. Some Combination of 1 & 2

10 Scenario One Shift to Property Tax Estimated Tax Increase to Homeowner of a $.46 Mil Rate $250,000 Home $115 per year $350,000 Home $161 per year $750,000 Home $345 per year

11 Scenario 1 Continued - Shift to Property Tax $2,500,000 $2,000,000 Maintenance $868,000 Paving $533,000 Projects $650, $1,500,000 $1,000,000 $500,000 Total Infrastructure Expenses $2,051,000 Property Tax $751,000 $ 1.28 M Excise Tax Excise Tax $1.3 M $ 770,000 $0 Total Infrastructure Expenses Present Proposed

12 Scenario 2- Service Cuts Net to Property Mil Rate Department t Expenses Revenues Tax Impact Library $372,533 $142,000 $230,533 $0.20 Recreation $459,334 $355,500 $103,834 $0.09 Trash & Recycle $752,990 $240,000 $512,990 $0.44 Police $950,651 $64,400 $886,251 $0.77 Fire - EMS $719,677 $152,000 $567, $0.49 Public Works $867,985 $85,000 $782,985 $0.68

13 UNINTENED CONSEQUENCES The initiative also provides two special tax exemptions, for alternative vehicles only. It provides a state sales tax exemption for hybrid or alternative fuel vehicles only. 13 It provides a three-year exemption from the motor vehicle excise tax for hybrid or alternative fuel vehicles only. Because the benefits are based upon whether a car is an alternative vehicle, absurd results occur: Tax Exemptions No Tax Exemptions Cadillac Escalade Hybrid Ford Focus Weight: 7,500 lbs 2,600 lbs Combined MPG: Annual Barrels of Oil: Carbon Footprint : MSRP: $80,000 (approx.) $17,000 (approx)

14 WHY VOTE NO? Objectives Are Not Clear 14 Maine Heritage Policy Center Reports The Maine Heritage Policy Center (MHPC), an outspoken proponent of the excise tax initiative, conducted a study last year that compared local spending in Maine to local spending in other states. The conclusion of that study was: Maine ranks #41 in local spending burden. In other words, Maine s towns and cities are very frugal Excise Taxes are paying for our roads and infrastructure This isn t an environmental or Green friendly proposal This will place additional pressure on property taxes This will put at risk all current municipal services

15 Why Vote No? 15 Savings over Next 5 years with New Excise Tax Plan for Homes ranging from $250, to $750, Any Vehicle over 5 years Old No Savings $648 to $2,028 in more taxes or fewer services New Vehicle $17,000 No Savings $19 to $1,399 in more taxes or fewer services Cadillac Hybrid - $80,000 Great Savings $3,000 to $4, in savings

16 QUESTIONS? How does this impact me? 16