MaineBusiness.com

This is a tale of two Portland car owners.

Shara Epperson renewed the registration on her 2006 Honda Civic last week and paid $109.60 in excise tax at City Hall.

Buddy Richards did the same for his wife's 2003 Buick LeSabre. He paid $138.08.

If voters approve Question 2 on the Nov. 3 ballot, to cut the excise tax by an average of 55 percent on vehicles that are less than six years old, Epperson will save money next year. That makes her inclined to vote for the initiative.

Richards, who knows that the Buick wouldn't qualify for the discount and fears that the city will cut more services if it loses a big chunk of excise money, said he'll vote against the measure.

"Nobody like to pay taxes," he said. "It's a no-win situation, but you have to do it."

The excise tax is clearly an unpopular tax. But the vehicles that voters drive, and the way they view local taxes and the municipal services where they live, are likely to influence how they vote on Question 2.

Supporters of the measure, drafted by the conservative Maine Heritage Policy Center, see it as another way to pressure town and city governments to tighten their belts. In that sense, Question 2 complements the spending limits proposed in Question 4, the so-called TABOR II measure, also drafted by the group.

The excise tax was targeted because supporters of the cut say it's higher here than in most states and burdensome to lower-income drivers, who must come up with cash before they can put a car on the road.

It's also unfair, they say, because it's based on a car's sticker price, not what the buyer actually pays.

Cutting the tax in half, they say, will encourage more people to buy newer vehicles. To broaden the appeal and give it a green tint, the measure would exempt hybrid and super fuel-efficient vehicles from the sales tax and three years of excise taxes.

Towns and cities can absorb the loss, estimated at 2 percent to 3 percent of their revenue, supporters say. But opponents, including municipal government and business leaders, say the measure goes too far.

Excise taxes, on average, bring in 40 percent of municipal revenue. That income, the towns point out, has taken a big hit during the recession, as fewer cars have been sold.

The proposed reduction would force communities that have already trimmed services to make further cuts, opponents of Question 2 say. Towns would have to choose, perhaps, between plowing and road maintenance, or raise property taxes.

They also note that the excise tax is only a small fraction of the total cost of buying a new car, so cutting it in half would do little to boost sales.

In Portland, the measure would cut $3.6 million from annual city revenue, said Nicole Clegg, a city spokeswoman.

Declining revenue led the city to eliminate 93 jobs last year. Now, Question 2 has department heads and labor leaders meeting to discuss contingency plans, Clegg said.

"Whatever we do, it would mean a cut in services," she said. "There's no way around that."

Statewide, opponents say, the measure would take $80 million a year from towns and cities, money used largely for snow plowing and road repairs. Mainers will have to choose between poorer roads and higher property taxes if the measure passes, said Lizzy Reinholt, a spokeswoman for the No on 2 Campaign.

"Excise taxes go directly back into the community, and generally back into maintaining roads," she said.

Reinholt rejects a claim by the policy center that the tax discourages people from buying new cars. No one decides against buying a new car, which has an average price above $25,000, because of $600 or so in excise tax, in her view.

Extending the break to hybrid vehicles and cars that get at least 40 miles per gallon on the highway is just a "greenwashing" tactic, she said. It's a way to make voters think they're helping the environment, even though those cars cost more and make up less than 4 percent of new car sales.

"There's no way to spin this to say this is helping the average Mainer," she said.

But Martin Sheehan, the policy center's communications director, has generated figures to counter that argument. Using a $24,095 Toyota Prius, the best-selling hybrid, as an example, he calculated that a buyer would save $2,434 over five years in sales and excise taxes.

While supporters and opponents have competing statistics, the underlying issue is whether towns and cities can lower taxes by being more frugal.

There's still enough fat in most towns to absorb the excise tax cut, Sheehan says, whether by reducing hours at the library or transfer station, or something else.

"They probably have to cut something," he said. "Every business in Maine and every person is cutting something."

Staff Writer Tux Turkel can be contacted at 791-6462 or at: tturkel@pressherald.com