Maine governor Paul LePage's plan to eliminate state revenue sharing with municipalities in exchange for allowing them to tax larger nonprofit organizations has raised concerns at hospitals and private colleges in the state as well as in many rural communities, the Portland Press Herald reports.

As part of a comprehensive tax reform proposal announced by the governor last week, towns and cities in Maine would be allowed to collect property taxes from nonprofits with an assessed value of $500,000 or more, while churches and government-owned entities would remain tax-exempt. In exchange, municipalities would no longer receive their share of the roughly $60 million in tax revenues they currently get from the state. To help offset the revenue loss, municipalities would receive some $9 million in telecommunications taxes collected by the state.

According to the Maine Municipal Association, which lobbies on behalf of local governments, an estimated one hundred and fifty towns and cities would benefit from the legislation if it passes, while some three hundred and fifty communities — mostly in suburban or rural areas in northern, western, and Down East Maine — would have to raise property taxes or reduce municipal services to offset the loss of revenue.

Jeff Austin, a lobbyist with the Maine Hospital Association, told the Press Herald that while it is too early to say how much the governor's proposal would cost the state's hospitals, the figure is "easily in the tens of millions" of dollars — on top of the roughly $100 million annually in unreimbursed care that hospitals provide to uninsured Mainers.

"Our members are not in a position where they can afford to absorb tens of millions of dollars [in taxes] from the state," said Austin. "The Maine legislature has reviewed this year after year and always rejected it. The vast majority of states don't tax hospitals and the reason is very simple: A tax on a hospital is a tax on our customers."