Municipal revenue sharing is probably not the most popular topic in coffee shops and local diners, but in the Maine State House, a bitter debate is brewing.

On January 22 Boothbay Town Manager Jim Chaousis joined hundreds of other municipal leaders who packed the State House on January 22 to speak out against the potentially significant cuts in state aid to municipalities, also known as revenue sharing.

A provision built into last year's state budget required lawmakers to find $40 million in tax breaks and economic development incentives, or else that money would be stripped from the towns’ and cities' projected $65 million municipal revenue fund. 

Revenue sharing has been a Maine law since 1972. The statute requires the state to share 5 percent of sales tax revenue with municipalities, but in recent years the state has failed to meet the statutory requirements.

According to a campaign by the Maine Municipal Association, if municipal revenue sharing were fully funded as required, about $146 million would be dispersed to towns for fiscal year 2015. However, towns and cities are projected to collect 41 percent of what they're supposed to get.

According to a study by Dr. Emily Shaw of Thomas College, Maine municipal revenue sharing has declined since 2008, while all the revenues collected from state and property taxes have increased. In response, municipalities have needed to decide to reduce expenditures or increase revenue from other source. Many have done both.

Last year the town of Boothbay received $95,865 in state aid. For this current fiscal year, the town is projected to receive only $61,811 from the state. If lawmakers fail to find a solution to the budget shortfall, Boothbay could end up with only $19,019, which would cause steep property tax hikes and significantly limit local services. But that's the worst case scenario.

In the midst of a bitter budget feud, municipal leaders like Chaousis are less concerned about partisan bickering and more worried about the steady decline of municipal aid and the implications it has on town budgets, property taxes and local services.

While the towns of the Boothbay region are not quite in dire straits compared to other towns and cities forced to make multi-million dollar cuts in services, municipalities and businesses leaders around the state have rallied against further reduction to revenue sharing. Municipal leaders claim that there are ways to find tax breaks and savings in the state budget, while sparing significant harm to local property taxes and local services. 

On February 4, Democrats on the state's Appropriations and Financial Affairs Committee in Augusta approved a bill to restore the $40 million dollars in state revenue sharing without Republican members present. Republicans were outraged, along with Gov. Paul LePage, who threatened to veto the bill if it passed the Democrat-controlled legislature. 

When LePage was mayor of Waterville, he publicly lambasted Gov. John Baldacci for proposing to decrease municipal revenue sharing. As governor of Maine, LePage has referred to municipal revenue sharing as “welfare” for municipalities.

“Times have been tough for a bout a half a decade so there is a lot of people that want to crackdown on welfare and fraud of welfare, so if you can tie municipal revenue sharing to welfare then you can get people's interest,” Chaousis said. “But it's completely wrong, which has made it more of a partisan discussion.”

Chaousis said he is optimistic a bipartisan compromise can be implemented to restore revenue sharing to its current levels for this fiscal year, but he warned that if state legislature continues to decrease the amounts disbursed to cities and towns, the good tax mechanisms that have bolstered municipalities 40 years will cease to exist some day.