121st Maine Legislature
		Office of Fiscal and Program Review
		LD 1629
		RESOLUTION, Proposing a Competing Measure under the Constitution of Maine to Create Municipal Service Districts to Reduce the Cost of Local Government, to Provide Property Tax Relief and to Increase Economic Competitiveness
		LR 2165(03)
		Fiscal Note for Bill as Amended by Committee Amendment " "
		Committee: Taxation
		Fiscal Note Required: Yes
		Minority Report
Fiscal Note
					Projections	Projections
			2003-04	2004-05	2005-06	2006-07
Net Cost (Savings)
	General Fund		$0	$0	($20,651,208)	$14,716,289
Appropriations/Allocations
	General Fund		$0	$254,286	($20,651,208)	$14,716,289
Transfers
	General Fund		$0	$254,286	$0	$0
Referendum Costs		Month/Year	Election Type	Question	Length
		Nov-03	General	Referendum	Lengthy
	The Secretary of State's budget includes sufficient funds to accommodate one ballot of average length for the general election in November 2003. If the number or size of the referendum questions increases the ballot length, an additional appropriation of $8,000 or more may be required.
Fiscal Detail and Notes
	The implementation of this bill is contingent upon approval by the voters.  If approved by the voters, this bill has the following impact.
					Projections	Projections
	General Fund Summary		2003-04	2004-05	2005-06	2006-07
	Business Equipment Tax Reimbursement		$0	$0	($8,763,692)	($21,064,966)
	Municipal Property Tax Exemption Reimb.		$0	$0	$5,842,000	$12,095,000
	Maine Revenue Services Administrative Costs		$0	$284,286	($712,189)	($747,798)
	Net Approp\Deapprop to fund EPS		$0	$0	($17,017,327)	$24,434,053
	Transfer from Dept. of Educ. to General Fund		$0	($284,286)	$0	$0
	Net General Fund Cost (Savings)		$0	$0	($20,651,208)	$14,716,289
	Limiting Business Equipment Tax Reimbursement (BETR) to property placed in service on or before April 1, 2003 will result in General Fund savings beginning in fiscal year 2005-06.  Establishing a property tax exemption for certain property placed in service after April 1, 2003 will result in General Fund costs beginning in fiscal year 2005-06 due to the 50% reimbursement requirement.  This bill also includes General Fund appropriations of $254,286 in fiscal year 2004-05 for Maine Revenue Services for the additional costs associated with administering these provisions and a transfer from the Department of Education to offset these costs in fiscal year 2004-05.
	This bill provides for a new method of determining the state and local share of funding the cost of K-12 public education beginning in fiscal year 2005-06.  This bill includes the Essential and Programs and Services model, as proposed in LD 1623, An Act to Implement School Funding Based on Essential Programs and Services, as the basis for determining the total cost of K-12 public education.  However, this bill differs from LD 1623 in that it requires the State's share to increase to 55% by fiscal year 2009-10 versus the 50% requirement in LD 1623.  This bill provides for the calculation of a maximum local mill rate expectation to be used to determine the state and local share of the cost of funding K-12 education.  The Department of Education estimates the maximum local mill rate to be 8.83 mills in fiscal year 2005-06.
	This bill also requires the Department of Education to reserve any unexpended funds in the General Purpose Aid for Local Schools program in fiscal years 2003-04 and 2004-05 and any savings from the refinancing of school construction bonds and use those funds to partially offset the cost of increasing the State's contribution of funding the cost of K-12 public education beginning in fiscal year 2005-06.  The Department of Education estimates the savings to be $6,100,000 through fiscal year 2004-05.
	The following table provides estimates for the total State and Local Operating cost of funding education based on the Essential Programs and Services model and compares the total State and Local cost of funding K-12 education based on the EPS model, adjusted for the transition percentage, with the total State and Local cost of funding education based on the current model.  The table also provides a comparison of the General Fund appropriations that are estimated to be needed to fund the state's share of the cost of funding K-12 education based on the State's contribution reaching 55% in fiscal year 2009-10.
			State and Local Cost to Fund K-12 Public Education
			Essential Programs and Services vs. Current Model
			Base Year		Projections	Projections
			2003-04*	2004-05*	2005-06	2006-07
	Total State & Local Operating Cost allocation based on EPS model (100%)		$1,256,951,694	$ 1,260,260,954	$ 1,270,125,664	$ 1,285,714,652
	EPS Transition Percentage		80.82%	82.00%	84.00%	88.00%
	Adjusted Total Operating Allocation based on EPS model		$1,015,868,359	$ 1,033,413,982	$ 1,066,905,558	$ 1,131,428,894
	Total State & Local cost based on EPS funding model (includes program costs, debt service and adjustments)		$1,467,457,416	$ 1,518,173,106	$ 1,537,199,970	$ 1,618,879,589
	Total State & Local cost based on current funding formula (includes program costs, debt service and adjustments)		$1,467,408,432	$ 1,503,862,194	$ 1,543,887,175	$ 1,589,697,612
	Net Increase (Decrease) in Allocation		$           48,984	$     14,310,912	$     (6,687,205)	$     29,181,977
	State Share Targets to fund K-12 education based on EPS model		49.89%	47.81%	49.00%	50.50%
	Estimated General Fund appropriation needed to fund K-12 education based on EPS model				$   753,227,985	$   817,534,192
	Estimated General Fund appropriation needed to fund K-12 education based on current funding model (assumes 6% growth per year)				$   770,245,312	$   793,100,139
	Net General Fund Appropriation (Deappropriation) required to fund EPS model vs. current funding formula				$   (17,017,327)	$     24,434,053
	* No adjustment in fiscal year 2003-04 and fiscal year 2004-05