AUGUSTA — Nearly a dozen town officials met with legislative leaders Thursday to discuss Gov. Paul LePage’s proposal to eliminate municipal revenue sharing and what they called “dramatic changes” in the state’s relationship with towns, foreshadowing the intense debate that lies ahead over LePage’s $6.3 billion budget.

The meeting between the executive board of the Maine Municipal Association and the Legislative Council was described as informal and was not on the council’s public agenda. Although lawmakers did not attempt to bar the public or media from the meeting, the lobbyist for the MMA told the Portland Press Herald before the gathering that he preferred that the “press wasn’t lingering on every word because it will make my guys nervous and the politicians more politician-like.”

Cities and towns would lose $155 million in revenue under Gov. Paul LePage’s budget. At stake for average Mainers is the size of their property tax bills.

At stake for the average Mainer in the discussions is the size of their property tax bills. Cities and towns would lose $155 million in revenue under LePage’s budget, and unless they cut spending on schools, snowplowing, public safety or other services, the only alternative for communities to replace the lost state revenue would be to increase property taxes on homes and businesses.

The governor’s budget seeks to cushion the blow by giving towns the authority to tax large nonprofit entities such as private colleges, hospitals and other non-religious institutions that have long been tax-exempt. But many smaller towns don’t have a large nonprofit enterprise within their borders.

REVENUE SHARING CUT BACK THIS YEAR

LePage’s two-year budget proposes to eliminate revenue sharing in the fiscal year beginning July 1, 2017. The state will send towns just over $60 million in municipal aid this year, but that’s only 40 percent of what the revenue sharing law would have provided had the previous Legislature not tapped the program while balancing the current two-year budget. By law, revenue sharing is funded by 5 percent of tax receipts each month from sales, services, and personal and corporate income. The program has been in place since 1972.

Patricia Sutherland, chairwoman of the Chapman Board of Selectmen and a member of the MMA executive committee, told legislative leaders Thursday that if revenue sharing is cut, her town would have to choose between two options to generate money: cutting more trees from a 7,000-acre town-owned woodlot, or raising property taxes.

Sutherland said neither is a good option.

“We’ve trimmed back (on spending) as much we can,” she said. “We have nothing else that we can go to.”

REASSURANCES FROM LAWMAKERS

Sutherland’s comments were among the most candid in a 40-minute meeting dominated by cordiality. Legislative leaders from both parties reassured municipal officials that their voices would be heard as the Legislature begins negotiating provisions in the governor’s budget.

“You’re not without a voice here,” said Senate President Mike Thibodeau, R-Winterport. “I think we take you very seriously.”

Earlier in the meeting, Thibodeau acknowledged that there’s been a change in the relationship between state lawmakers and localities.

“Some of that has probably been tough on all of you, and some of it has been good for the taxpayer at the end of the day, too,” he said. “That doesn’t mean that it doesn’t come without challenges. I think all of us recognize that.”

House Speaker Mark Eves, D-North Berwick, said he was glad to have fought in 2014 to restore $40 million in revenue sharing.

“From my perspective … I feel like we have a really good relationship,” he said. “I don’t know if you guys feel like that or not, but one of my proudest moments over the last two years has been fighting for that revenue sharing funding. I can understand why you think it’s not good because of the decrease in revenue sharing and other things that you guys have experienced.”

He added, “You can count on us to continue that fight this time.”

Nicholas Mavodones, a Portland city councilor, replied, “I’m not sure we think we have a bad relationship. Maybe we came off too strong (at the beginning of the meeting).”

CHANGING RELATIONS WITH LOCALITIES

The tone of the meeting belied what has become a strained relationship between town and city officials and the state. LePage and his administration have repeatedly said that municipalities need to tighten their belts, just as the state has done during tough budgets.

The governor, during his tenure as mayor of Waterville, publicly opposed revenue sharing cuts proposed by Gov. John Baldacci. But as governor, he has said towns need to consolidate services, and he has taken direct aim at the deeply held desire for local control.

“I will be the first one to admit it, that when I was the mayor of Waterville, local control was important to me,” he said during his inaugural address. “And I wanted the state to pay for it, just like every other elected official in the state of Maine. Now I’m governor. It’s expensive. It’s real expensive.”

HOLDING THE LINE ON PROPERTY TAXES

The MMA has countered that state lawmakers have depleted revenue sharing to balance state budgets.

Geoff Herman, the lobbyist for the association, said Thursday that the program was one of four pillars holding together the state-municipality relationship. If the state is going to cut the program, he said, then municipal officials want the Legislature to evaluate state-enacted mandates that cost towns money, and to reconsider laws that shield property from municipal taxation.

“If unchecked, the Legislature would exempt a lot of property taxes because it’s a politically popular thing to do,” Herman said.

Regarding Thursday’s meeting, he said, “If the Legislature is bound and determined to eliminate this program, the municipal community wants to have a discussion about what it’s going to turn to for this partnership relationship with state government.” Herman noted that towns play a vital role in “stimulating the economy that generates the revenue that funds state government.”

Municipal leaders told lawmakers Thursday that they want to be participants in whatever changes the Legislature enacts and ensure that those changes don’t further increase a reliance on local property taxes.

Maine ranks fifth in the nation in its dependence on property tax revenue to fund local government, at 51.4 percent, according to U.S. Census data and an analysis by the Lincoln Institute of Land Policy.