Bill would broaden church property tax exemption

Posted April 02, 2013, at 9:51 a.m.

AUGUSTA, Maine —The Legislature’s Taxation Committee took testimony Monday on a bill that would ensure cities and towns cannot charge property taxes on a church’s parsonage.

Current law allows towns to charge property taxes on the portion of a church property that is used as the residence for clergy, although the first $20,000 of that property’s value is exempt.

Sen. Anne Haskell, D-Portland, the bill’s sponsor and committee’s Senate chairwoman, said not all towns tax parsonages.

Haskell also noted the $20,000 exemption became law years ago and that most parsonage properties were worth much more than that now.

“I think that number was probably put in place quite a long time ago for a parsonage,” Haskell said. It may have been considered a large sum at the time, she said.

“But I think we have always intended as a basic tenet of the exemption that churches and their parsonages should be exempt from property taxes in the state of Maine,” she said.

The Rev. Linda Campbell-Marshall, pastor of Aldersgate United Methodist Church in Rockland, said her church eventually lost its parsonage property as its assessed value rose and the taxes on it increased.

“We found we could no longer maintain a residence in the neighborhood of our church because of the tax base,” Campbell-Marshall said.

Michael Lane, the church’s treasurer, said the taxes increased from from $2,600 to $6,900 over six years.

Campbell-Marshall and Lane explained that the church had always paid the tax without protest. Lane said real estate values during the time were relatively flat. He said the church was willing to pay taxes on the parsonage, but when they later added an expanded parking lot the city began charging taxes on that as well.

“And we were never able to get any rational explanation from the assessor as for the reason for these increases,” Lane said. He also noted the church was unsuccessful in filing tax abatement requests with the city’s assessor.

Haskell’s bill, LD 998, also removes the exemption limit of $6,000 for a church’s personal property.

Campbell-Marshall said her church, like many in Maine, works to support the community with a food pantry, several local nursing homes and by helping many who find themselves in need.

She said the support churches offer to their communities shouldn’t be undermined by a property tax that is outdated and isn’t evenly applied across the state.

“Resources are limited, but we will not be able to solve society’s problems by taking a pound of flesh from others who are providing services to the same populations,” Campbell-Marshall told the committee. “We need one another; we need to support one another.”

Other nonprofits that are exempt from property taxes include private colleges, hospitals, veterans organizations and fraternal clubs such as the Masons.

Speaking in opposition to the bill was Geoff Herman of the Maine Municipal Association. He agreed the $20,000 figure was archaic, but there were other property tax exemptions in the state, including those for war veterans and the blind that also did not keep up with current home values.

“I won’t try to say the tax code for this state is not in a shambles,” Herman said, “because it is. This is not the only archaic dollar provision that’s embedded in law that has practically never been amended since it was first enacted back in the 1920s.”

Herman said all those exemptions should be revisited and reconsidered by the cities and towns.

“The problem that municipalities have is exemptions always lead to greater exemptions and always roll in the direction of greater exemptions,” Herman said.

The committee will likely take the bill up again this month to consider amendments and to vote on passing it on to the full Legislature.

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