Voters on Election Day are being asked to decide a referendum question known as the Taxpayers Bill of Rights, also known by its acronym, TABOR. At first glance, Question 1 seems simple enough: “Do you want to limit increases in state and local government spending to the rate of inflation plus population growth and to require voter approval for all tax and fee increases?”

Behind that straightforward question, a battle rages over who controls budgets and spending at every level of government.

How TABOR Works

Cities and towns and county government would be required to base the next fiscal year’s spending budget on one of two formulas. The first joins the Consumer Price Index — considered a measure of inflation — with population growth; the second considers growth in property values. Under TABOR, the lower of the two options is automatically selected, and requires a two-thirds majority of the legislative body (local, county or state), to exceed it, followed by a mandatory referendum election. TABOR would require the same two-thirds approval for any tax and fee increases: if the proposed fee or increase does get approved by the legislature, the city council, or at town meeting, TABOR requires that decision to go to before a public referendum for approval by the voters.

If the state has a budget surplus at the end of the year, TABOR would require 80 percent to be used for tax relief; the remaining 20 percent would be saved in a rainy day fund.

School spending would be tied to inflation and enrollment.

Campaign rhetoric on Question 1 is heating up as Election Day draws near. Accusations of distortion and outright deception are coming from both sides of the debate. What is at stake is control of the purse strings, and by extension, control of government.

“There is a disconnect between what the government takes and what people earn,” says TABOR spokesman Roy Lenardson. “Peoples’ incomes can’t keep up with government spending. We bleed people to death, and schools are unaffordable. Maine people have to pay the higher cost of living, so government should absorb it within the budget too.”

Lenardson cites the “sticker shock” coastal and island communities are experiencing in their property valuations. “There’s no end in sight for islands…and that trend is moving from the coast to inland lakes areas. It’s attributable to out-of-control spending.”

Citing data compiled by the Maine Revenue Service and the State Planning Office, Lenardson points out that property valuations in many island communities increased significantly over the five years between 1995 and 2004.

“I’m not an islander, but it’s not unreasonable to ask if that money was well spent,” says Lenardson. “Our real goal is to reconnect the taxpayer with government. It’s power sharing. TABOR says to government, `You still have power to tax and the power to spend; you just have to check with us. Now you are going from an American Express platinum card to a debit card.'”

Equally emphatic on the other side of the debate are municipal officials who have watched expenses increase along with valuations. Geoff Herman, director of State & Federal Relations for the Maine Municipal Association (MMA), and Lenardson concur on at least one point: municipalities should spend less when they have less. “I don’t disagree with that. These discussions are had at the local level now, and always have been,” says Herman. “There is a democracy at the local level. There are no limits on home rule; [towns] can make decisions to adopt TABOR themselves. Some towns have even adopted referendum rules, though none with two-thirds majority requirements [like TABOR’s]. If all decision authority is in local hands already, why approve TABOR where voters in town X have the authority to tell your town how to do its own accounting?”

Herman says MMA has been traveling the state attending meetings “almost every night” to answer questions about TABOR’s potential impacts. He doesn’t sense a tax revolt or a “pitchfork rebellion,” but rather that people are coming to absorb information. Herman says he hears the most concern about spending at the state level.

Ironically, TABOR does not address state spending as stringently as local. Modeled after a similar taxpayer initiative in Colorado that wrote its spending limits into the state constitution, the Maine TABOR differs in that it is statutory. “It gives the legislature unenforceable limits,” says Herman. “If the legislature needs to increase the fee on ATV registrations, under TABOR you’d need two-thirds vote in each chamber and a statewide referendum. That’s not going to happen. When people learn more about the mandatory referenda provision, they don’t buy into that.”

Critics of TABOR say the way it links budgets to population will prove especially problematic to rural communities. They say annual population data is unreliable. Annual census data project flat populations in most Maine towns, but those estimates are adjusted with every decadal census. “That can be a 20 percent downward population correction,” says Herman. “All `umbrella’ communities [towns and cities at the “top” of the state in eastern, western and northern counties] are hammered by TABOR because of that formula.”

Christopher St. John of the Maine Center for Economic Policy has been watching the TABOR debate closely and warns voters to study the proposal carefully, and not the campaign rhetoric. “TABOR proponents have a fanciful interpretation of the language in their proposal. They call it a `growth limit’ with flat funding, and publicly disagree that there will be negative adjustments, when the math says there will be. Any budget cut is extremely difficult, and would only mean cuts in services,” says St. John.

If TABOR does pass, islanders will have to get used to TABOR’s mandated two-thirds town meeting votes and referenda. With year-round populations that are hanging on, and with school enrollments flat or negative, their populations swell in summertime, causing peak demand on services.

A similar pattern occurs in service center communities, but on a daily basis rather than seasonal. Evan Richert, State Planning director in the administration of former Gov. Angus King, often said, “Maine’s population isn’t so much on the rise as it is on the spread.” People have been sprawling around the state, moving out of the cities into suburbs. They commute into town for the daytime and use services, but they don’t pay taxes there. MMA’s Herman says because of summer visitors to the coast and islands, or commuters coming into the cities, “TABOR lacks rationale. It really doesn’t work for either,” says Herman.

Tough Choices for Schools

Island communities typically don’t fit the mold of any statewide funding formula, including the present one, because costs are typically much higher for services, utilities and schools. George Joseph, who serves as part time superintendent for both Vinalhaven and Carrabasset Valley in western Maine, says the current funding model, using so-called “essential programs and services” or EPS, already imposes spending limits. “We already have to have a special article in our district to spend over that,” he says.

Vinalhaven would have to reduce spending by just under one-half of one percent (0.42%) next year under TABOR guidelines. That doesn’t seem like much, but it sounds ominous to Joseph, who cites the “island factor” of high costs compared to mainland communities. “A half-percent cut would be very difficult to deal with. I am very apprehensive about it,” says Joseph. “The cost of doing business on islands is 30 percent higher. We pay 32 cents per kilowatt-hour for electricity when the mainland is paying 14 cents. That’s no fault of anyone, it’s just that our prices are not in sync with the rest of the world. So to live within the confines of the TABOR is unrealistic.”

TABOR’s mandated supermajority override of its spending limits, followed by mandated annual referendum votes, seem to Joseph like overkill when the formula in place already requires Vinalhaven to override it.

TABOR spokesman Roy Lenardson counters, “Every town has right to spend more. This notion of pretending that things are going to get terrible under TABOR is disgusting. I ask people, `How is it working for you?’…TABOR references where we are standing in 2006. Whatever we are spending next year is based on that.”

Even with a 0.42 percent cut, Vinalhaven would have to cut staff at its schools. Between 60 and 70 percent of the school costs are personnel. But it isn’t easy for islands to hire part-time teachers to meet state student-teacher ratios; nobody will take the job because of the logistics of island commuting. And losing a full time teacher could jeopardize the next year’s classes and introduce instability into the system. Schools and communities statewide are shouldering many new expenses that result from legislated state and federal mandates, such as Maine Learning Results, No Child Left Behind and student assessments. “You lose local control,” says Joseph.

Vinalhaven town manager Marjorie Stratton concurs. “We have local control now. It’s always been the beauty of small town government in Maine, with town meetings. It’s just a matter of people getting involved. They have the power if they’re willing to get involved in town meeting and raise their hand, or not. All articles can be amended or capped, or you can tweak it to the town’s needs…I don’t think we need a statewide referendum.”

Leaders at the state level face the same tough spending choices, according to state Rep. Hannah Pingree (D-North Haven). Pingree says growth in state spending remained relatively flat between 2003 and 2005. “The four years I’ve been in the legislature, government hasn’t grown; it’s been similar to what TABOR limits would allow,” says Pingree. “We spend most of the state budget on K-12 [education] and the disabled or infirm. You have to ask, `Which of those programs do you want to cut?’ We’re a poor, spread-out, rural state. That’s what drives our spending at the state and local level. If people can make a good living, if there are jobs, that’s how you cut the cost of Medicaid. Our tax burden is relative to our income.”

Both sides of the TABOR debate agree that reform of Maine’s tax system and cutting income taxes is an important priority, but achieving a fairer tax system has proven to be a legislative battle. For now, the decision is over who will control the purse strings. At town meeting — the original and most democratic of forums — the majority of votes decides the outcome; if you don’t show up, your voice isn’t heard. On Nov. 7, the outcome of the Question 1 debate will be decided the same way.