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Measure Details

An Act to Provide Tax Relief

Maine Ballot Measure - Question 4: Citizen Initiative

Election: Nov. 3, 2009 (General)
Outcome: Failed

Government Budget and Spending


This initiated bill imposes expenditure limitations on state and local government and requires voter approval of certain state tax increases.

Under this bill, growth in annual expenditures of the General Fund, the Highway Fund and Other Special Revenue Funds are limited according to increases in population and inflation. For the General Fund and Highway Fund budgets, revenues exceeding the expenditure limitation must be distributed by directing 20% of that excess to a budget stabilization fund and 80% of that excess to a tax relief fund. The budget stabilization funds may be used only in years when revenues are not sufficient to fund the level of expenditure permitted by the growth limits. The Tax Relief Reserve Fund must be used to provide tax relief through broad-based tax rate reductions or refunds proportional to individual income tax personal exemptions claimed in the previous tax year. The Highway Fund Reserve Fund must be used to provide a decrease in motor fuel taxes. For state agencies that manage Other Special Revenue Funds, the managers of those funds must report excess surpluses to the Legislature with a plan for refund of those revenues.

Under this bill, a state tax increase would require a majority vote of each House of the Legislature and majority approval of the voters.

This bill provides that state expenditure limits contained in the bill may be exceeded by a majority vote of each House of the Legislature and majority approval by the voters.

The bill adds the requirement of majority approval by the voters before municipal and county expenditure limits may be exceeded.

The bill requires majority approval by the voters for the annual indexing for inflation of motor fuel taxes.

The bill requires counties and municipalities to use a cost center budget summary format developed by the Department of Audit and requires information in that format to be made available to local voters, filed annually with Maine Revenue Services and posted on any publicly accessible website maintained by the county or municipality as well as on the Maine Revenue Services website.

Intent and Content
Prepared by the Office of the Attorney General

This initiated legislation changes existing law with regard to limits on spending by state, county and municipal governments, and state tax increases.

State government spending limits, tax increases and voter approval process

The initiative repeals the existing caps on spending of state General Funds and replaces it with a new formula that limits growth in spending for all state funds to the percentage increase in the Consumer Price Index for the most recent calendar year plus the percentage increase in state population for the three most recent years. The new formula also caps the Highway Fund and other Special Revenue Funds and requires separate calculations for these funds as well as for the General Fund. Certain expenditures are exempt from these spending limits, such as federal funds, pension fund contributions, disability payments and taxpayer refunds. Any spending over the limits set by the new formula would have to be approved as a separate measure, first by a majority of all the members of each house of the Legislature, and then by a majority of the voters at a statewide referendum election.

Any state tax increase projected to generate revenue equal to or exceeding 1/100 of one percent (.01%) of General Fund revenue in a fiscal year would require approval of a majority of all the members of each house of the Legislature and a majority of voters at a statewide referendum election. This requirement would apply to a new tax, an increase in a tax rate, the expansion of the tax base for an existing tax, an extension of a tax increase that was due to expire, or elimination of an existing tax exemption, credit or refund.

Under current law, the excise tax on motor fuels that goes into the Highway Fund is adjusted each year for inflation, based on the percentage increase in the Consumer Price Index. This initiative provides that an increase in the motor fuel tax to adjust for inflation would not take effect unless and until approved by a majority of the voters at a statewide referendum election.

Before each statewide referendum vote, specific information regarding the fiscal effects of a proposed tax increase or proposal to exceed the spending limit on state funds would have to be mailed to every registered voter in the state. The state would be required to reimburse municipalities for the cost of conducting any special statewide election for this purpose.

The initiative also creates certain reserve funds. At the end of each fiscal year, 80% of any General Fund revenues not spent would be transferred into a Tax Relief Reserve Fund which the Legislature would have to use to fund temporary or permanent broad-based tax rate reductions. Similarly, 80% of any excess revenues in the Highway Fund at the end of each fiscal year would be transferred to a new Highway Fund Reserve Fund. If the amount in this reserve fund exceeded 1% of Highway Fund expenditures, the State Tax Assessor would be required to reduce taxes on motor fuels proportionately for the following calendar year.

County and municipal government spending limits and voter approval process

The initiated legislation changes the existing spending limits for county and municipal governments to add that the growth in spending allowed cannot exceed the percentage change in personal income in Maine, averaged over the previous 10 years, plus the percentage change in the Consumer Price Index forecast for the next two calendar years.

Under existing law, counties may not exceed the spending limit without the approval of a majority of all members of the county budget or budget advisory committee and a majority of the county commissioners. A referendum vote may also be required if petitions are submitted with enough voter signatures to trigger a referendum. The initiated legislation would repeal the optional referendum process and mandate it instead.

Municipalities could not spend over the revised caps without getting voter approval, either at a town meeting, or by a separate referendum vote for those municipalities governed by a city or town council.

If approved, this citizen initiated legislation would take effect 30 days after proclamation of the vote.

A "YES" vote favors enactment of the initiated legislation.

A "NO" vote opposes enactment of the initiated legislation.

Measure Text

Do you want to change the existing formulas that limit state and local government spending and require voter approval by referendum for spending over those limits and for increases in state taxes?

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