County seats and other communities which serve as service centers often have the highest property tax rates in their regions.
The issue of whether owners of nonprofit organizations should be taxed or assessed service fees to help reduce that tax burden has been raised repeatedly in the Legislature and in communities which have significant numbers of tax-exempt properties.
Rockland, the county seat for Knox County, has the highest tax rate in that region. Rockland’s full value tax rate — a rate compiled by the Maine Bureau of Revenue Services that allows a comparison of rates across the state — was $19.94 per $1,000 of assessed valuation in 2010. The average full value tax rate in Knox County in 2010 — the most recent year available — was $11.37.
Rockland has $223 million in tax-exempt properties, nearly one-fourth of the entire value of the community. The 24 percent of properties in Rockland that are tax exempt is greater than any other community in Knox County.
Rockland Mayor Brian Harden said Rockland’s tax rate is as high as it is, in part, because of the amount of tax-exempt properties.
“We’re a service center and the tax exempts are all here. And the state offers us no relief,” Harden said.
Harden said, however, he feels the tax-exempt properties should be separated into three categories. One of those, he said, are ones like the Farnsworth Art Museum and Library. He said the museum is a nonprofit but it has a huge beneficial impact on Rockland.
“The impact the Farnsworth has for Rockland is incredible,” the mayor said. “The people shop downtown, they eat at the restaurants and stay at the hotels.”
The Farnsworth owns property in Rockland that has a combined value of nearly $11 million. If those properties were taxed at the city’s full current tax rate, it would generate an additional $200,000 in property taxes for the city.
Museum Director Christopher Brownawell said if the museum had to pay taxes or a service fee it would add another level of difficulty for the institution, particularly in these current difficult economic times.
“The Farnsworth plays a vital role in the economic success of Rockland,” Brownawell said.
Brownawell said a 2010 study commissioned by the Maine Arts Commission found that the Farnsworth’s annual economic impact for the region was $12 million.
“Rockland would be a different place if the Farnsworth were not here,” he said.
Both the mayor and the museum director said one visible sign of the Farnsworth’s impact is the stickers. The museum gives stickers to visitors, and when they leave their numbers are many on the downtown streets of Rockland.
Harden said another level of nonprofits in his mind is government-owned properties. Rockland has a considerable number of such properties.
The mayor said, for example, he would like to be able to tax the Knox County Courthouse that is located in downtown Rockland.
The third category that the Rockland mayor has are the remainder of nonprofit agencies that own properties but do not provide an economic benefit to the city.
The Maine Municipal Association, an organization that represents municipalities, has proposed legislation on various occasions that would allow towns and cities to impose a service fee on nonprofit organizations that own properties. The most recent attempt came in 2009-2010, according to Maine Municipal spokesman Eric Conrad.
The general terms of the proposals have been service fees based on a formula that would exclude the costs of schools, since nonprofit organizations do not have children in the schools. He said one proposal has been to base the fee on the square footage of buildings owned by those organizations.
He noted that nonprofit organizations that own properties are required to pay sewer fees if they are connected to a public sewer system.
The association spokesman said Waterville is a prime example of a community that would benefit from such a service fee arrangement. That Kennebec County city has two colleges — Colby and Thomas — as well as at least two nonprofit nursing homes.
He said the efforts have not been successful in part because the administrators of the colleges and hospitals have opposed such legislation.
In Waterville, 23 percent of property in the city is tax exempt. This is more than Augusta, the county seat of Kennebec County, which has 22 percent of its properties exempt.
Conrad said the Maine Municipal Association has not proposed taxing government properties since that would make no sense because it would still be paid by taxpayers.
Hospitals also are among the top owners of tax-exempt properties. In Knox County, Pen Bay Medical Center owns $34 million in properties in Rockport and more than $10 million in neighboring Rockland.
Pen Bay Healthcare’s Chief Financial Officer Maura Kelly said in a written email statement that Pen Bay provides programs that are needed by the community.
“Our day-to-day operations as a tax-exempt organization include many systemwide initiatives — community immunization clinics, cancer and other support groups, clinical research and charitable care provided to those in need,” Kelly stated. “With these programs, and at a cost of over $4.5 million to cover charity care and bad debt last year, Pen Bay Healthcare aims to make a long-term positive impact in the communities we serve.”
County seats are generally the communities which experience the greatest amount of nonprofit organizations that own exempt properties, although there are exceptions.
Bangor has $842 million in tax-exempt properties, according to the Maine Bureau of Revenue Services. This is the highest amount in Penobscot County, although in terms of percentage of overall properties, Bangor comes in second in the county at 27 percent, with Orono first with nearly half its properties exempt due to the University of Maine being there.
In Hancock County, the county seat Ellsworth has $139 million in tax-exempt properties. This is only the third-highest in Hancock County, however, because of the presence of Acadia National Park in Bar Harbor and Mount Desert Island. Bar Harbor has a little more than $1 billion in tax exempt properties while Mount Desert Island has $175 million.
In Waldo County, Belfast has $143 million in tax-exempt properties, 18 percent of all the properties in town. The amount of exempt property is the most of any municipality in Waldo County.
In Washington County, Machias has $55 million in exempt properties, which is nearly 30 percent of all of its properties. The percentage, however, is less than in Cutler, where half the property is exempt, with the overwhelming amount ($61 million) owned by the federal government.
In Aroostook County, county seat Houlton has $65 million in tax-exempt properties, the fourth-highest amount. Limestone has $291 million in tax-exempt properties, Presque Isle $133 million, Caribou $80 million and Fort Fairfield $77 million.
In Piscataquis County, county seat Dover-Foxcroft had the most tax exempt property in the county at $52 million — 15 percent of all properties.
In Kennebec County, Augusta has $415 million in exempt properties, 22 percent of all properties. This is the second-most in the county, with Chelsea having the most with the Veterans Administration campus there.
In Franklin County, county seat Farmington has $129 million in tax-exempt properties, one quarter of all properties.
In Somerset County, county seat Skowhegan has the most exempt properties at $66 million — 11 percent of all properties.
In Lincoln County, county seat Wiscasset has the most exempt properties at $87 million, 17 percent of overall properties.
In Sagadahoc County, county seat Bath has the most exempt properties at $193 million, 16 percent of all properties.
In Cumberland County, county seat Portland has the most exempt property at $1.7 billion, 20 percent of all properties.
In Androscoggin County, county seat Auburn has the second-most exempt properties at $257 million, 12 percent of all properties. Lewiston has the most exempt properties in the county at $583 million.
In Oxford County, county seat Paris has the most exempt property in the county at $101 million.
In York County, the county seat Alfred has only $57 million in tax-exempt properties — the ninth-highest. The amount in Alfred, however, is still 19 percent of overall properties. Neighboring Biddeford has the most exempt properties in York County at $327 million.