May 26, 2018
Bangor Latest News | Poll Questions | Memorial Day | Bangor Day Trips | Center for Wildlife

Bangor council debates fees for nonprofits

By Eric Russell, BDN Staff

BANGOR, Maine — As much as 40 percent of the city’s assessed property value is exempt from property taxes.

The businesses that make up that 40 percent receive the same level of services in areas such as road maintenance, police and fire response, and trash collection, but their tax bill is zero.

City councilors cannot legally require these nonprofit organizations to pay taxes, but there are other options. In fact, Bangor already receives what are called payments in lieu of taxes from some nonprofit businesses in the city, including the Bangor Housing Authority and, in the past, Brookings-Smith Funeral Home. Other examples include an annual fee that the University of Maine pays the town of Orono instead of property taxes.

On Monday, councilors debated the idea of creating a more formal payment in lieu of taxes program with the hope that, as municipal budgets get tighter and tighter, other sources of revenue might help provide stability.

Councilor Cary Weston, who initiated the discussion and invited members of Bangor’s legislative delegation to talk about the issue Monday, said it’s worth starting the conversation.

“We should at least explore options and look at areas where this has been successful,” he said.

Sen. Joe Perry, D-Bangor, has served on the Legislature’s Taxation Committee for many years and said the idea of fees for services or payments in lieu of taxes is not new.

“Every two years we take up legislation to assess some sort of service fee for nonprofits,” he said. “It’s never easy.”

Rep. Adam Goode, D-Bangor, agreed that most attempts at addressing the issue have fallen short.

Bangor, like many service centers, has many more tax-exempt properties than smaller neighboring communities. Those nonprofits range from multimillion-dollar hospitals such as Eastern Maine Medical Center to threadbare churches that exist week to week on donations. Under a payment in lieu of taxes program, a business would pay a fee based on its size.

Perry said that is part of the problem of the payment in lieu of taxes idea: Where do you draw the line?

“For those [nonprofits] that have never paid property taxes before, that could be a big expense,” the senator said.

Eric Conrad, spokesman for the Maine Municipal Association, said early Monday afternoon that there is no state law that would require nonprofits to pay any fees to their host municipality.

“It’s not a legal question but a relationship question between municipalities and nonprofits,” he said. “Given the steep reduction in revenue sharing from the state to municipalities in recent years, I’m not surprised the discussion has come up.”

Conrad said the MMA has no official stance on payments in lieu of taxes but said there is no question that nonprofits benefit from and receive taxpayer-funded municipal services. He said the MMA likely would take a stance if there were statewide legislation proposed on the issue.

Perry, however, said the political climate in Maine suggests that even if a law requiring nonprofits to pay a fee were to pass, it might not last long.

“I can just see the signature gathering starting,” he said, referring to the state’s increasingly popular people’s veto process.

Councilors in Bangor at least seemed open to discussing and researching the idea further but agreed that it would take an extensive education to get nonprofits on board.

“It could be a significant source of revenue for the city,” Councilor David Nealley said.

Have feedback? Want to know more? Send us ideas for follow-up stories.

You may also like