Panel opposes cuts to Maine property tax relief programs

Posted April 09, 2013, at 6:51 p.m.

AUGUSTA, Maine — Members of the Legislature’s Taxation Committee have opposed two provisions in Gov. Paul LePage’s proposed state budget that would dramatically scale back property tax relief programs.

Committee members voted in recent days against portions of the proposed two-year budget that would bar anyone younger than 65 from taking advantage of the state’s circuit breaker and homestead exemption programs.

The committee is at work preparing recommendations on its portion of the state budget for the Legislature’s budget-writing Appropriations Committee.

LePage’s budget proposes limiting the circuit breaker, which offers about 200,000 low-income homeowners and renters a maximum property tax or rent refund of $1,600 a year, to elderly residents. The program now has no age restrictions. Committee members opposed the provision, which would save the state $73.4 million over the next two years, in a 7-3 vote.

The LePage administration is also proposing to limit the homestead exemption to residents 65 and older and double the exemption amount to $20,000. Currently, under the homestead exemption, anyone who has owned a home for at least a year doesn’t pay property tax on the first $10,000 of property value. The homeowner’s hometown receives a reimbursement from the state to make up for the lost tax revenue.

Taxation Committee members opposed that change, which would save the state $9.1 million in the next two-year budget cycle, in a 9-2 vote.

Committee members on Tuesday delayed a vote on what is perhaps the most controversial element of LePage’s budget proposal: a plan to eliminate revenue sharing with municipalities for two years. The move would save the state nearly $200 million, but municipal leaders have argued it would almost certainly lead to local property tax hikes.

During a work session Tuesday, Taxation Committee members said they didn’t want to see the proposal take effect but they needed to find an alternative for balancing the budget.

“We can’t send a piece of paper up to Appropriations that’s just wishful thinking,” said Sen. Doug Thomas, R-Ripley. “Until we have alternatives, I don’t see where we have any choice.”

Rep. Ryan Tipping-Spitz, D-Orono, said lawmakers owe it to the state’s towns and cities to signal that they’re willing to find an alternative, rather than sign off on the revenue sharing elimination.

“I think it’s important to tell them that we have their back on this issue,” he said. “I think it’s important to say, ‘We’ll work on a solution that doesn’t result in such bad cuts for their towns.’”

More than 50 towns have submitted resolutions to the Legislature opposing LePage’s budget, largely based on proposals they say will result in local property tax hikes.

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