Low-income, elderly Mainers will be eligible for twice as much property tax relief next year

Posted May 01, 2014, at 6:49 a.m.

AUGUSTA, Maine — Starting next year, low-income Mainers will be eligible for twice as much property tax relief as this year, with some elderly residents able to receive up to $900 when they file taxes.

The bill, LD 1751, passed with broad bipartisan support and was quietly signed into law by the governor earlier in April. While it didn’t dominate headlines such as Medicaid expansion or welfare reform, some advocates are hailing the bill as the single biggest achievement of this legislative session.

“This is the best thing that happened for working families this year,” said Ben Chin, political engagement director for the liberal Maine People’s Alliance. “This is something that really flew under the radar, but is a really good example of bipartisanship. More people should know about it.”

Property tax relief used to come to homeowners and rent payers in the form of the “circuit breaker program,” a stand-alone state program that sent checks to Mainers who paid a high percentage of their income on property tax or rent.

The circuit breaker program became a casualty of budget negotiations last year. In his budget proposal, Gov. Paul LePage proposed gutting the program almost entirely. Ultimately, Democrats retained a broad property tax relief program, but at a much smaller level than before, with something they called the Property Tax Fairness Credit.

Where circuit breaker maxed out at $1,600, the maximum Property Tax Fairness Credit came in at $400 for those older than 70 and $300 for those younger. It was available to anyone earning less than $40,000 annually who paid more than 10 percent of their income in property taxes or more than 40 percent of their income in rent. The credit also was applied through the state income tax filing — so it meant no more separate process for property tax relief.

The passage of LD 1751 doubled the maximum credit to $600 for anyone younger than 65 and $900 for senior tax filers. It also changed eligibility rules to account for more kinds of income, which means some will no longer receive the credit. About 112,000 Maine tax filers will likely be eligible next year, according to Maine Revenue Service.

The bill was sponsored by House Speaker Mark Eves, D-North Berwick, who said he considered the bill a “huge accomplishment,” though there’s more to be done. The credit still doesn’t come close to the amount of property tax relief available under the old circuit breaker program, and many Mainers are still feeling the pinch, he said.

“This is a first step,” Eves said. “We’re going to continue fighting for property tax relief, which we all know is very important, particularly for low-income seniors on a fixed income. They’ve lived in their homes their entire lives, and they’re being priced out of it. It’s a theme I’ve heard on every campaign I’ve ever run.”

But there’s some disagreement on the best way to address the property tax burden.

Garrett Martin, executive director of the liberal-aligned Maine Center for Economic Policy, said that to reduce municipal property taxes, the state must make good on its promise to fund 55 percent of local schools. That’s a promise the state made in 2004, which its fallen far short of fulfilling.

As Martin sees it, the lack of funding for local education — combined with declining levels of state aid for municipalities and a huge income tax cut implemented by LePage back when the Republicans had legislative majorities — have forced local government to pick up a larger share of the tab. The only way it can do that is to raise property taxes.

Martin also called Eves’ bill “the most significant piece of legislation” from the session, but he said it represented only a stopgap solution.

“It’s a big step in the right direction, from our perspective, but it falls well short from protecting low- and middle-income households from property taxes being raised again,” he said.

Jonathan Haines, a spokesman for the conservative Maine Heritage Policy Center, said it’s not a lack of funding from Augusta that’s driving up property taxes, it’s “profligate spending at the local level.”

Eves’ bill will have a positive impact on taxpayers’ wallets, Haines said, but that didn’t win him over.

“In the short term, any tax relief seems like a good thing — especially for the person who gets help paying a devastating tax bill,” he said. “But without property tax reductions and spending reform at the municipal level, we’ll be discussing how to stop property taxes from harming our most vulnerable neighbors again in the next legislative session.”

Follow Mario Moretto on Twitter at @riocarmine.

 

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