AUGUSTA, Maine — Sen. Debra Plowman, R-Hampden, says there are a significant number of Mainers filing for rent relief under the state circuit breaker program who are not paying their rent and she wants to close that loophole. Others are not sure it’s a problem.
“What we have going on now is that people are getting the help to pay rent from the circuit breaker program but they are behind on their rent and the landlord gets stuck,” she said. “It’s wrong and we should fix it.”
Plowman said the current law requires Maine Revenue Services to make sure a person applying for rent relief under the program is renting. The agency also has to check what the rent amount is, but not that the person is up to date on the rent, she said.
The purpose of the program is to help both renters and homeowners affected by high property taxes as measured as a percentage of their income. Plowman said landlords are “ripped off” when they do not get the rent payments they expect from tenants.
“That is what the program was set up to do, to help with the high property tax burden in some areas of the state,” she said. “This gets around that and needs to be stopped.”
Plowman believes the problem is widespread. She said when she explained a bill she is proposing at a GOP Senate caucus, several people gave examples of what she called a loophole in the law.
“Legislative aides stood up and said, ‘My senator has that problem, my senator has that problem, my senator has that problem,’” she said. “It was amazing how many people without us knowing it had similar complaints from landlords.”
Plowman said her bill would require a notarized letter from a landlord saying a person’s rent was up to date as part of the application process for rent relief. She said the application could not be processed without that letter.
But Rep. Seth Berry, D-Bowdoinham said in an email that he has “not seen data to suggest that there is a problem here that needs to be solved.” He is the lead Democrat on the Taxation Committee that will consider the bill.
He said he would have to be convinced the legislation is needed and that it did not undermine the goal of helping those hit directly, or indirectly, by a community’s high property taxes.
“Not letting our most burdened taxpayers use their refund for past due rent payments would defeat this purpose, and lead to more unpaid bills and unnecessary evictions,” he wrote.
Berry is worried the measure would be a continuation of the tax code “going in the wrong direction” set last year by the tax changes adopted by lawmakers. He said to save the state $22 million a year, the maximum payment under the program was reduced.
“There are many major loopholes in Maine law, but this is not one of them,” he said. “One real loophole is the double dip, which allows companies to be reimbursed hundreds of thousands of dollars for taxes which they literally never paid and never will pay.”
Berry said while his first impression of the proposal is negative, he is confident it will get a full hearing by the committee. He said there are a number of other tax bills before the panel and that it will be a busy session for the committee.
Rep. Gary Knight, R-Livermore Falls, the committee co-chairman, agrees. He said he supports Plowman’s bill because he has heard from House members of similar incidents of renters gaming the system.
“Will this be a high priority? Not as high as others, probably,” he said. “We have got the budget coming in that’s going to be loaded with tax situations, the pension relief bill.”
Knight said the $93 million proposal by Gov. Paul LePage to eliminate the tax on pension income will occupy a lot of committee time. He said he supports the goal of the bill, even though its cost may mean it has to be phased in and not implemented all at once.
Knight and Berry agree that the panel will face a lot of work this session both from carry-over bills from last year, as well as new proposals such as Plowman’s bill.