121st Maine Legislature
		Office of Fiscal and Program Review
		LD 1629
		RESOLUTION, Proposing a Competing Measure under the Constitution of Maine to Create Municipal Budget Caps, Reduce the Cost of Local Government through Increased State Education Funding and Provide Property Tax Relief
		LR 2165(04)
		Fiscal Note for Bill as Amended by Committee Amendment " "
		Committee: Taxation
		Fiscal Note Required: Yes
		Majority Report
Fiscal Note
					Projections	Projections
			2003-04	2004-05	2005-06	2006-07
Net Cost (Savings)
	General Fund		$0	$0	$40,000	$20,315,995
Appropriations/Allocations
	General Fund		$0	$0	$40,000	$20,315,995
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
	Additional Appropriation needed to fund EPS in LD 1629		$              -	$              -	$              -	$ 20,235,995
	Department of Audit appropriation		$              -	$              -	$       40,000	$       80,000
	Net General Fund Cost (Savings)		$              -	$              -	$       40,000	$ 20,315,995
	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 Programs and Services model, as approved by the Legislature in Public Law 2003, c. 504, 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 PL 2003, c. 504 in that it requires the State's share to increase to 55% by fiscal year 2009-10 versus the 50% requirement in PL 2003, c. 504.  This bill also provides for the calculation of a full value education mill rate that is required to raise the total maximum local share of the cost of funding K-12 education and establishes a 10 mill cap on the full value education mill rate.  The Department of Education estimates the mill rate expectation to be 8.55 mills in fiscal year 2005-06.
	This bill also provides for a transition adjustment through fiscal year 2009-10 for municipalities that experience an adverse fiscal impact as a result of the phase-in of the essential programs and services model and the maximum local share mill rate expectation method of determining the local contribution of funding K-12 education.  This bill proposes a transition adjustment amount of $10,000,000 in fiscal year 2005-06 with the amount declining in each successive year through fiscal year 2009-10.  Since this legislation does not specify the transition amounts for fiscal years 2006-07 through fiscal year 2009-10, this fiscal note assumes that the transition adjustment declines evenly over the 5-year period.  This fiscal note also assumes that the transition adjustment amounts are included in the estimated General Fund appropriation amounts needed to fund K-12 education based on the Essential Programs and Services model in this measure, thereby affecting the distribution among individual school units.  The impact to each local school unit can not be determined at this time.
	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 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 50% in fiscal year 2009-10, as approved in Public Law 2003, c. 504, versus the 55% State contribution proposed in this legislation.
			State and Local Cost to Fund K-12 Public Education
			Utilizing the Essential Programs and Services Model
			Comparison of 50% State Contribution vs. 55% by FY 2009-10
			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		1,015,819,375	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)		1,467,408,432	1,518,173,106	1,537,199,970	1,618,879,589
	State Share Targets to fund K-12 education based on EPS model approved in P.L. 2003, c. 504		49.89%	47.81%	49.00%	49.25%
	State Share Targets to fund K-12 education based on EPS model in LD 1629		49.89%	47.81%	49.00%	50.50%
	Estimated General Fund appropriation needed to fund K-12 education based on EPS model approved in P.L. 2003, c. 504				753,227,985	797,298,197
	Estimated General Fund appropriation needed to fund K-12 education based on LD 1629				753,227,985	817,534,192
	Additional General Fund Appropriation required to fund EPS model in LD 1629 vs. P.L. 2003, c. 504				0	20,235,995
	* No adjustment in fiscal year 2003-04 and fiscal year 2004-05
	This bill provides a cap on growth for municipal budgets and applies to municipalities' appropriations for fiscal year 2005-06 and thereafter. The Department of Audit will require an additional Auditor III position beginning in fiscal year 2005-06 to handle this new responsibility of determining municipal compliance with the appropriation limitation process specified in 30-A MRSA §5721-A.  The estimated costs in fiscal year 2005-06 is $40,000 and $80,000 in fiscal year 2006-07.  The additional computer programming costs associated with the requirement to reduce a municipality's share of state revenue sharing when a municipality exceeds its budget cap can be absorbed by the Treasurer of the State utilizing the resources of the Local Government Fund.