BROWNVILLE, Maine — Because so many residents struggle with paying their tax bills in one lump sum, Brownville officials have suggested the development of a Tax Club, similar to a bank Christmas Club.
Residents will vote on the proposal at the annual town meeting at 7 p.m. March 15.
“The comments that we’ve had from the community [have] been that it’s really hard on a fixed income to have to pay a $1,200 or $1,300 bill all at once,” Brownville Town Manager Sophia Wilson said Monday.
If the idea is adopted, those residents who wish to participate would divide their taxes into nine equal payments, according to Wilson. The participants must not owe any outstanding taxes to the town.
Under the Tax Club, residents would start paying monthly tax payments from April to December. The payments in the first four months would be equal to one-ninth of their last tax bill. When new taxes are committed in July, the balance would be re-computed for the rest of the year and the monthly payments would reflect any increase or decrease in the new tax bill, Wilson said. For those residents in the Tax Club who maintain the monthly payments, there would be no interest penalties.
Wilson said the Tax Club is being modeled after a similar club in Calais.
Calais City Manager Diane Barnes said the Tax Club in her community has been in place for a number of years and was updated in 2008 to include a written policy. She said it not only allows property taxpayers to budget their tax payments without a penalty, but it also helps the town with its cash flow.
In the Calais Tax Club, property taxpayers make 12 payments over the year, with the first few payments based on the last tax bill. That bill is then re-calculated to reflect the new values placed on properties. Participants must sign a new agreement each year.
Of the approximately 3,500 Calais residents, some of whom may not receive property tax bills, about 150 have taken advantage of the Tax Club, Barnes said Monday. Those participants include young families, senior citizens and businesses. No one has defaulted on agreements to date, she said.
“I’ve only been here since 2007 and to have 150 people take advantage of it, that’s a success,” she said. Property owners can pay their taxes at any time and could pay on a monthly basis without participation in the Tax Club, but they would end up paying interest if the bill were not paid before the due date.
Mike Starn, a Maine Municipal Association spokesman, said he is aware of some communities that have Tax Clubs, and they seem to be working. There are variations, but the concept is the same in that people pay their taxes on a monthly basis as opposed to once or twice a year.
“It’s not something that a lot of communities have aggressively jumped into, but it’s certainly something that a few communities are doing and are interested in promoting,” he said Monday.
“I think there’s always been an interest in trying what they can to ease the burden on the taxpayer to make it easier, and for many, having that one big payment broken down into multiple payments is a lot easier,” Starn said.
“I think that has provided a bit of incentive for communities to be more aggressive and more creative in the idea of a Tax Club,” such as the city of Portland has done, Starn said.
Portland has initiated a new program for the coming fiscal year that allows real estate property owners to set up a debit program in which a certain amount of taxes can be debited to the city over a 12-month period, Richard Lagarde, Portland’s treasury director, said Monday.
Similar to the Calais tax program, Portland bases the first three months of payments on the last tax bill, and the monthly payments are adjusted once the new tax bill is known.
Lagarde said the city did some internal testing first to make sure the program would work. It also helps that the city has the software to accommodate such a program; otherwise it would be an administrative nightmare, he said.
The new program, which was just introduced, is more a convenience to property taxpayers, according to Lagarde. In exchange, it “flattens out the cash flow” for the city, he explained. The only problem he envisions is if someone changes banks and forgets to tell city officials.
For Brownville’s Wilson, any kind of a program that will help local residents with their property taxes in this economy is beneficial, she says.