In response to rising education costs and concerns over school funding disparities, Rep. Michael Brennan, D-Portland, has introduced a bill to add a three percent sales tax on hotel and lodging rentals. The estimated $60 million in annual revenue would support school construction and K-12 education.

Brennan’s proposal coincides with a forthcoming legislative report in March evaluating Maine’s 20-year-old school funding formula.

Addressing School Funding Gaps

The Maine Department of Education and the Maine Educational Policy Research Institute, a non-partisan entity funded by the Maine Legislature and the University of Maine, have been tasked with reviewing the essential programs and services (EPS) formula. This study stems from an April 2024 legislative mandate.

Brennan, who previously sponsored a resolution to review the funding formula, emphasized that the study will assess individual communities’ financial capacity to support their schools.

Currently, Maine funds 55 percent of essential education services statewide, but distribution varies by district based on property values, student enrollment, and economic demographics. Wealthier districts receive less state funding, while districts with lower property values receive more assistance.

Impact on Communities

The existing formula presents challenges for municipalities with high property values but lower median incomes. Homeowners in these areas struggle to fund local schools as property values rise faster than incomes.

For example, in Jonesport, the state is expected to cover only 24 percent of essential programs and services for the 2025-2026 school year, contributing approximately $276,470. In contrast, Augusta will receive $17.8 million, covering around 57 percent of its $31.3 million budget.

Lewis Collins, superintendent of the Jonesport-Beals school district, criticized the formula, stating, “Augusta gets a bundle more in state funds because they live near a river, not an ocean… How does that make any sense at all?”

Similarly, Roy Gott, chair of RSU 24, which serves nine Downeast Maine communities, supports evaluating the formula’s fairness. “If you’re not selling the property, it’s not income,” Gott said. “The value of the property should not be looked at as someone’s ability to pay.”

Potential Reforms

Brennan, who previously chaired the Education and Cultural Affairs Committee, believes the report could lead to the most extensive funding reforms since 2005.

“The report could potentially recommend significant changes to the funding formula,” Brennan said. “Communities with higher property valuation are expected to raise more. If two towns have the same property value, they would be expected to raise the same amount of dollars.”

Amy Johnson, co-director of the Maine Educational Policy Institute, which contributed to the study, emphasized the importance of accessibility. “Our work is going to include, hopefully, a more digestible version of this… What we are going to be doing is describing all options for revenue,” Johnson said. “A lot of people are hoping for less reliance on property taxes.”

What’s Next?

The report’s findings could reshape Maine’s public education funding, potentially reducing reliance on property taxes in favor of alternative revenue sources like the proposed hotel tax. While some lawmakers support this shift, others express concerns about its impact on Maine’s tourism industry.

As the Legislature prepares to review the study and Brennan’s bill, the debate over equitable school funding in Maine is expected to intensify, shaping education policy for years to come.