121st Maine Legislature
		Office of Fiscal and Program Review
		LD 1629
		RESOLUTION, Proposing a Competing Measure under the Constitution of Maine to Reduce Property Taxes by Increasing State Funding for Education, Providing a Local Option Municipal Sales Tax and Increasing the Maine Residents Property Tax Rebate
		LR 2165(05)
		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	$65,403,724	$65,473,461	$123,610,417
Appropriations/Allocations
	General Fund		$0	$65,403,724	$65,473,461	$123,610,417
	Other Special Revenue Funds		$0	$956,561	$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
	Additional Appropriation for the General Purpose Aid for Local Schools program		$0	$30,000,000	$0	$0
	Additional Appropriation needed to fund EPS in LD 1629		$0	$0	$29,660,913	$86,363,596
	Additional appropriations associated with the expansion of the Maine Residents Property Tax program.		$0	$34,447,163	$35,812,548	$37,246,821
	One-time appropriation for a local option sales and use tax.		$0	$956,561	$0	$0
	Net General Fund Cost (Savings)		$0	$65,403,724	$65,473,461	$123,610,417
	This bill includes a General Fund appropriation of $30,000,000 in fiscal year 2004-05 for the General Purpose Aid for Local Schools program within the Department of Education.  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 2007-08 versus the 50% by fiscal year 2009-10 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 8.55 mill cap on the full value education mill rate.
	This bill also provides for a transition adjustment through fiscal year 2007-08 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 2007-08.  Since this legislation does not specify the transition amounts for fiscal years 2006-07 and fiscal year 2007-08, this fiscal note assumes that the transition adjustment declines evenly over the 3-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 by fiscal year 2007-08 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 in FY 2009-10 vs. 55% by FY 2007-08
			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 based on EPA model approved in PL 2003, c. 504		80.82%	82.00%	84.00%	88.00%
	EPS Transition Percentage based on EPA model in LD 1629		80.82%	82.00%	86.25%	93.00%
	Adjusted Total Operating Allocation based on EPS model approved in PL 2003, c. 504		1,015,819,375	1,033,413,982	1,066,905,558	1,131,428,894
	Adjusted Total Operating Allocation based on EPS model in LD 1629		1,015,819,375	1,033,413,982	1,095,483,385	1,195,714,626
	Total State & Local cost based on EPS funding model (includes program costs, debt service and adjustments) approved in PL 2003, c. 504		1,467,408,432	1,518,173,106	1,537,199,970	1,618,879,589
	Total State & Local cost based on EPS funding model (includes program costs, debt service and adjustments) in LD 1629		1,467,408,432	1,518,173,106	1,565,777,797	1,683,165,321
	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%	50.00%	52.50%
	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				782,888,899	883,661,794
	Additional General Fund Appropriation required to fund EPS model in LD 1629 vs. P.L. 2003, c. 504				29,660,913	86,363,596
	* No adjustment in fiscal year 2003-04 and fiscal year 2004-05
	This bill includes a General Fund appropriation of $34,350,000 in fiscal year 2005-06 to support the additional costs of the expansion of the Maine Residents Property Tax program.  It also includes $97,163 for the administrative costs associated with this expansion.
	This bill also provides for a limited local option sales and use tax.  The revenue associated with this provision can not be estimated at this time and will depend on the number and size of the municipalities that elect to impose this tax. This bill also includes a one-time General Fund appropriation of $956,561 in fiscal year 2005-06 for Maine Revenue Services for certain costs associated with establishing a municipal local option sales and use tax.