Lawmakers Argue about Three Percent Surcharge to Fund Public Education

June 22, 2017

Sarah Austin is a policy analyst with the Maine Center for Economic Policy. The head of the group helped write the ballot question that imposed the surcharge. Austin says the extra money is coming, just maybe not right away. “We’re still expecting most of the funding from Question 2. It looks like there is some shifting into different fiscal years that pushes it out, but for the most part, this is still money that’s on the table and part of current law.”

WABI-TV, June 22, 2017

Legislators are fighting about a three percent tax surcharge to fund public education.

Voters approved it in November.

Democrats want it to stay.

Republicns want to roll it back.

Paul Merrill breaks it all down for us.

A Maine Revenue Services Report shows the money Maine has taken in since the new tax surcharge took effect is basically flat.

Mike Allen is Associate Commissioner for Tax Policy.

“It was concerning because we would have thought, with the surtax, we would have received more in estimated payments, yet we didn’t.”

Sarah Austin is a policy analyst with the Maine Center for Economic Policy.

The head of the group helped write the ballot question that imposed the surcharge.

Austin says the extra money is coming, just maybe not right away.

“We’re still expecting most of the funding from Question 2. It looks like there is some shifting into different fiscal years that pushes it out, but for the most part, this is still money that’s on the table and part of current law.”

According to Maine Revenue Services, Maine’s new top tax rate of more than ten percent essentially raises the state income taxes for about 7,000 taxpayers by 33%.

Allen says the income from that group is the first to slip away when the economy goes south, so that makes it a shaky funding source for Maine classrooms.

“The next time the economy goes into recession, the amount of revenue from that surtax is going to go down. It’s going to go down significantly, and if the state has committed those dollars to sending them back to the towns, we’re not going to have that revenue to send back to the towns during that next downturn.”

The state is supposed to fund 55% of public education, but it never has.

Supporters of the tax surcharge say the extra money it generates will help Maine hit that mark even if there are a lot of variables year to year.

“This idea that schools are expecting a very consistent stream of funding isn’t necessarily one that’s based in reality, and also, this question makes 55 percent the ceiling and then holds back anything above that for future years whenever we do need it.”