And out come the wolves BY AL DIAMON

When the Maine Legislature meets in special session on August 21 to debate tax reform, it will not be because legislators believe tax reform is a good idea. Most of them regard it as a horrible concept, causing political problems by enraging powerful special interests. Voting for tax reform ranks right up there with sponsoring a resolution to designate "Al Qaeda Appreciation Day" for insuring that one will never again be a viable candidate for public office.

What makes tax reform so unappealing to our elected representatives is the fact that in order to shift the tax burden from unfair levies, such as the property tax, to broad-based revenue sources, such as the sales tax, somebody, such as the average homeowner, is going to end up paying less, while somebody else, such as the aforementioned powerful special interests, is going to pay more.

Given that the special interests have lots of high-powered lobbyists, while homeowners have none, you may be getting a glimpse of why, under normal circumstances, almost nobody in Augusta wants to get involved in anything remotely resembling tax reform.

Except these are not normal circumstances. The Maine Municipal Association, a group that represents cities and towns, organized a petition drive last year that collected nearly 100,000 signatures calling for a referendum on a proposal to force the state to pay 55 percent of the cost of local education. You’ll get to vote on that measure in November, which, in effect, means you’ll be deciding whether to approve significant tax reform.

In requiring the state to live up to its 1985 promise to meet the 55 percent threshold, the MMA plan will shift the burden of paying for education from the property tax — which last year provided over $909 million for schools — to the state’s general fund — which begrudgingly handed over $702 million or a little more than 43 percent of the total.

"If voters approve the referendum, it will provide the Legislature with a clear message and blueprint," MMA executive director Chris Lockwood wrote in his organization’s July newsletter. "The proposal was [a] result of frustration with the Legislature’s refusal and inability to address tax reform."

The MMA plan provoked hysteria at the State House. Governor John Baldacci claimed it would "bankrupt" the treasury, because it would cost an additional $264 million a year. House Speaker Pat Colwell upped the ante, setting the figure at $300 million.

Baldacci and Colwell apparently got their math training at the same institution that turns out auditors for the state Department of Human Services (motto: The Bigger the Margin of Error, the Better). In 2002, Maine spent just over $1.6 billion on schools. Fifty-five percent of that is about $886 million or $184 million more than the state paid out last year. The MMA estimates its plan will require an additional $200 million next year, which seems about right. (That added expense would be offset if local officials pass the savings from reduced demand for property taxes on to taxpayers, resulting in a 15-percent reduction in the average homeowner’s bill.)

The MMA referendum doesn’t say how that extra $200 million should be raised, but one way to do it would be to expand the sales tax to cover professional services, such as auditors, lawyers, consultants, and other pests. Baldacci opposes that idea, as do lobbyists representing auditors, lawyers, consultants, and other pests. Instead, the governor is backing a plan that would gradually increase state spending on schools over five years until it reached the 55-percent level.

Baldacci has said his proposal would cost about $200 million a year, money he’d get from expected growth in state revenues. Somehow that $200 million is different from the $200 million the MMA wants to spend, because the governor’s $200 million wouldn’t result in bankruptcy. The reason for that is because he says so, that’s why.

Even such staunch opponents of the MMA plan as the Portland Press Herald editorial board have characterized Baldacci’s financing scheme as "wishful thinking." Less polite observers (me, for instance) have characterized it as "an enormous political fraud."

Nevertheless, Baldacci wants the special session to put his plan out to the voters in November as a competing measure to the MMA proposal. The governor and legislative leaders from both parties hope the public will be so confused by these two questions, most people will check off the third option on the ballot, which is "none of the above."

What’s really going on here is an all-out campaign to defeat tax reform. The best way to thwart that effort is to vote for the MMA plan. If it passes, it will force the Legislature to make tough choices about the state’s woefully out-of-date tax system.

But given the animosity tax reform faces at the State House, we should keep in mind what they say at the Department of Human Services auditing office:

Don’t count on it.

If I taxed your patience, email me at ishmaelia@gwi.net