Legislature presented with measure to reverse property tax relief program cuts

By Christopher Cousins, BDN Staff
Posted Feb. 19, 2014, at 3:49 p.m.

AUGUSTA, Maine — Democrats in the Legislature took another step to portray themselves as champions of Maine’s property taxpayers Wednesday with the introduction of a bill by House Speaker Mark Eves that seeks to effectively restore some of the cuts made in recent years under Republican Gov. Paul LePage’s administration.

“Maine residents want to live and prosper in our communities and Main Streets and this credit will help them be able to do so,” said Eves, D-North Berwick, to members of the Legislature’s Taxation Committee. “We owe it to those who are living on the margins or getting by on a Social Security check to move the measure forward.”

LD 1751, An Act to Provide Property Tax Relief to Maine Residents, seeks to increase the new Property Tax Fairness Credit offered to Maine families in lieu of the former “circuit breaker” program, which saw reductions for several years running before being eliminated last year.

The Property Tax Fairness Credit provides $300 to families with incomes below $40,000 who pay either 25 percent of their income in rent or more than 10 percent of their income in property taxes. The benefit for senior citizens in the program is $400.

Eves proposes increasing those caps to $400 for most families and $500 for senior citizens. An amendment he offered Wednesday would expand what is considered income in the formula to include retirement income and capital gains and lower the eligibility threshold to include families spending 8 percent or more of their income on property taxes. He proposes to fund the program by funneling 10 percent of state revenue surpluses to a new Property Tax Fairness Fund.

Opponents of the bill, which was introduced Wednesday to the Legislature’s Taxation Committee, said that though they support lower property taxes, Eves’ proposal relies on surplus revenues that in many years don’t exist and adds to an already confusing set of relief programs.

“I don’t think there’s going to be any money there,” said Sen. Doug Thomas, R-Ripley, a member of the committee. “What’s the point of having this fancy program based on revenue that doesn’t exist?”

According to Eves, the circuit breaker program at its height provided some 90,000 Maine households with average tax refunds of $475 a year, with some receiving refunds of up to $1,600, four times the maximum benefit offered by the Property Tax Fairness Credit.

“Since the bipartisan budget passed, we’ve heard from many constituents who were greatly impacted by the changes made to the Circuit Breaker program,” said Eves. “At the time we were negotiating the budget, this was the best we could do. But now, without the pressure of a state shutdown and higher revenue projections, I believe we can do better.”

Several organization voiced support for the bill, including the Maine Center for Economic Policy, the Maine Education Association, the Maine Municipal Association, Maine Equal Justice Partners, the Maine Community Action Association, the Maine People’s Alliance and the Roman Catholic Diocese of Portland. No one other than some members of the Taxation Committee testified against it.

Geoff Herman of the Maine Municipal Association said his organization is concerned that the Property Tax Fairness Credit as it exists doesn’t benefit enough Mainers but that lowering the threshold to 8 percent of a family’s income, as Eves proposes, will help.

“The way the property tax refund program is now, you have to have a huge amount of property taxes to meet it; that’s coastal property tax money,” said Herman. “When you get down to 8 percent, you’re moving into inland property tax relief.”

Eves’ bill is only one of the ways the Legislature is trying to provide property tax relief. Last week, the House and Senate both endorsed a bill that would restore $40 million in revenue sharing to Maine towns and cities, which was reduced last year after LePage proposed cutting it altogether in this biennium. That bill, LD 1762, awaits action by LePage.

Pressure to reform Maine’s property tax system is also coming from the Legislature’s Education Committee, which in recent months has received the results of a long-awaited study of the state’s school funding formula by California-based Lawrence O. Picus & Associates. The $450,000 study recommended, among other things, bolstering the state’s circuit breaker program or other property tax relief programs as a way to partially reduce funding inequalities for residents and school districts across Maine.

The Education Committee, which is in the midst of developing legislation based on some of the other Picus recommendations, referred the task of improving tax relief programs on Wednesday to the Taxation Committee under an as-yet unwritten bill.

“The way to solve this inequity problem is through a circuit breaker-type program,” said Rep. Pete Johnson, R-Greenville, the ranking Republican on the Education Committee.

The work session on LD 1751 is scheduled for Feb. 26, which is when the Taxation Committee is likely to make a recommendation to the full Legislature.

http://bangordailynews.com/2014/02/19/politics/state-house/legislature-presented-with-measure-to-reverse-property-tax-relief-program-cuts/ printed on August 21, 2014