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Hannah Pingree's Online Journal

The Governor's Property Tax Reform/Relief

Hope this finds you all well, recovered from too much Thanksgiving turkey and ready for the holiday shopping season (or even better— done with the shopping season)!

On December 3rd, the 122nd Legislature was sworn in, and unlike the opening of most legislative sessions, which are usually limited to electing Constitutional officers (Secretary of State, Attorney General, etc) and basic ceremony, December 3rd launched the start of real policy making around property tax reform. The Legislature established a special select committee on Tax Reform, and referred two tax reform bills (Legislative Document 1 & 2) to that committee. I believe it was an important and crucial step that discussions on property tax reform and relief started immediately and hopefully this positive momentum will continue.

I have included links directly to the two property tax reform bills, links to useful information on the bill and my own basic thoughts and concerns on the proposals. Some of this may be simple to understand, some of it is more complicated (and we are all still sorting it out), but I hope all of this information is somewhat useful.

The public hearing on this legislation will occur tomorrow at 9am in Augusta at the State House. I am sorry for the late notice, but would love any and all to join me at this hearing if you are interested and want to make your opinion known. If you can't attend, I have also listed a number of links to committee members, their email addresses and the address of the committee if you want to send in a letter or written testimony. Lastly, if you can't attend but are interested, you can listen to tomorrow's hearing online and the link is pasted below.

I believe that relief and reform of property taxes is one of the crucial issues facing the future and future viability of our island and coastal towns. Again, I am very interested in hearing your concerns, thoughts, and reactions. And again, I have included details below about how YOU can get involved in this debate. Please email if you have questions and/or comments or call me at 867-0966.

The Basics of LD 1 & 2

The basics of the bill are listed at the following two websites, one provides the actual bill text and the second a staff summary of the very specific contents.

You'll find the full text of the bill from The Joint Select Committee on Property Tax Reform and a detailed staff summary of the very specific contents from The Office of Fiscal and Program Review, both located on the Maine.gov Web site.

Overall, the Governor's proposal seeks to reduce property taxes in four ways:

  1. by increasing school funding;
  2. by imposing spending limits at all levels of government;
  3. by increasing eligibility for the circuit breaker, and;
  4. changing the constitution to allow local options to limit the increases in local homestead valuations.

After reading the summaries online and below, I believe you will come up with your own thoughts and conclusions. My initial thoughts— and I am still learning a lot about all the implications of this proposal— are that this is a very good framework for legislation and a good start. But it is not perfect and with some tweaking, could be more helpful to coastal taxpayers. That said, I commend the Governor for jumpstarting this conversation and providing an effective framework. What follows is a quick description of the changes and some of my additional suggestions:

LD 1
School Funding

Increase School funding to 50% of EPS costs in current biennial budget by FY07; and to 55% of EPS costs in next biennial budget, by FY09. (over 500M in school funding) Description and implications:

Spending Limits
Homestead Exemption

No changes to current policy— these policies exempt part of the value of a residence from any property tax at all. Taxes are reduced only for the primary homes of Maine residents. For example, a flat $7000 exemption in a community with a 20 mill property tax rate equates to $140 in reduced taxes for every resident household in that community.

Circuit Breaker
LD 2 - A Change in the Maine Constitution
Valuation Limits
My Thoughts
School Funding

The Governor's provision includes a major increase in school spending over the next 4 years, likely to put close to half a billion more dollars into school spending, with specific provisions that much of that funding must go back to tax payers. The new funding model is improved and bases funding on a more rational, per-studentformula, but still works somewhat on the existing formula and will do little to increase the limited funding (low-receiver, high valuation) for coastal towns. Aside from some possible increases in special education funding, island and coastal towns will not benefit all that much from increases in school funding. That being said, these increases were needed in other parts of the state, so I support these provisions, but I believe other provisions like the circuit breaker and constitutional changes are important.

Spending Limits

I am still learning more about these spending limits and would be interested in hearing community comments. Basically, it is somewhat reasonable to ask the state, counties and communities to limit the increase in growth of their budget to a "reasonable" increase every year, to limit burden on the tax payers. The limits are pegged to increases in inflation and/or increase in per capita income.

Circuit Breaker

The changes in eligibility to the circuit breaker, allowing more middle income families and individuals to qualify for the $1000 rebate program is a good first step and will be helpful for our towns. BUT, the circuit breaker program is an incredibly effective way of targeting relief to the people who need it the most (those paying a great deal of their income in property taxes) and I was hoping the Governor's plan would have also increased the maximum $1000 rebate for lower income people. In 1990 the circuit breaker reimbursed tax payers burdened by property taxes up to $3000, and in the face of a budget crisis that reimbursement was reduced to $1000. Getting this program back up to something near $3000 would be a huge and helpful step for the most struggling families. I will continue to advocate for these increases over the coming weeks and would love your help in doing this as well.

The other program— basically a state financed reverse mortgage program to allow property tax payers to borrow money from the state to pay their taxes if they are more than 6% of their income, with the money being paid back at the time of sale— is not something I feel comfortable with. I believe relief should be real and not a loan. The short term effects of this may allow some individuals and seniors to stay in their homes, but does nothing to preserve communities in the long term as people who used this program would eventually be forced to sell their home (or their kids would have to sell it after they die) and, therefore, it would likely reduce the amount of property held by year-round residents.

Valuation Limits

I am very much in favor of finding ways to reasonably reduce the burden on year-round resident property taxpayers that comes from vast inflation of property values based on demand. Clearly, we have all seen this come to a head in each of our communities. The bill proposes a limit on homestead valuations to be based on inflation. That would be helpful for current residents but doesn't address the already inflated valuations and does pass the burden onto new residents and young people looking to buy homes and land. I am not sure if this is the most fair way to go about making reform as it just shifts the burden from one year round tax payer to another and could end up with a very unfair property tax system. Several other plans which are more fair alterations of this are being proposed, including the Vermont plan which allows local communities to exempt up to 50% of homestead valuations for year-round residents, thus passing the burden onto seasonal residents. This portion of the debate - around changing the constitution— is likely to be complicated and cause serious and sustained debate about what is best, most equitable and fair.

How To Testify, Send in Comments, or Listen Online Tomorrow

If you can attend the hearing tomorrow to tell your story, talk about your concerns or make specific comments on this bill, the hearing begins tomorrow at 9am at the State House. It is likely to last all day so if you are traveling by boat, getting there anytime in the morning should allow you to testify. If you have to return via ferry, the committee can accommodate you and allow you to testify in time to leave. Please email me if you plan to go to the hearing so I can work out with this arrangement with the committee and they can make a place for islanders.

Again, this hearing will take place at 9am (probably all day), tomorrow, December 14th at the State House. (I believe they are meeting in the Appropriations Committee Room tomorrow but it will be easy to find once you arrive at the State House).

If you can't attend and want to present testimony you can do it in a variety of ways— by mail or email is best. Testimony via email, mail and in person should begin by addressing the two committee chairs: "Committee Chairs, Senator Dennis Damon and Representative Dick Woodbury, Members of the Committee"... Then proceed with your testimony which can be your personal story, thoughts, whatever you want to say to the committee. Keeping it somewhat brief, personal and specific is most useful— whether you are there in person or sending it via email or mail. You should also be sure to include your name, address, and contact information. I would love to see (but don't have to see) if you submit testimony so cc me at hannah@pingree.com. It would also be good to cc Martha Freeman (State Planning Office) and the Governor on any testimony you send. Following is the contact information:

Committee Member Emails

You can send the committee an email and send it to the chairs and cc all the other members if that is easiest.
Chairman Senator Dennis Damon (D-Hancock): dsdamon@panax.com
Chairman Dick Woodbury (I-Yarmouth): RGWoodbury@aol.com
Senator Peter Mills (R - Somerset County): pmills@mainelegal.net
Senator Joe Perry (D - Penobscot County): KJJJPerry@aol.com
Senator Richard Rosen (R-Hancock): rrosen113@aol.com
Rep. Arthur Lerman (D-Augusta): alerman2@yahoo.com
Rep. Ben Dudley (D-Portland): bfdiii@maine.rr.com
Rep. Edward Dugay (D-Cherryfield): eddiedugay@midmaine.com
Rep. Jackie Norton (D-Bangor): RepJackie.Norton@legislature.maine.gov
Rep. Nancy Smith (D-Monmouth): RepNancy.Smith@legislature.maine.gov
Rep. Harold Clough (R-Scarborough): RepHarold.Clough@legislature.maine.gov
Rep. Vaughn Stedman (R-Hartland): No email Rep. Earl Bierman (R-Sorrento): RepEarl.Bierman@legislature.maine.gov
Rep.Earl McCormick(R-West Gardiner): RepEarle.McCormick@legislature.maine.gov
Rep. Patrick Flood (R - Winthrop): RepPatrick.Flood@legislature.maine.gov

cc (send a copy)

The Governor: Governor@maine.gov
Me, Rep. Hannah Pingree: Hannah@pingree.com

Postal Mail

Maine State Legislature
Joint Select Committee on Property Tax Reform
5 State House Station
Augusta, Maine 04333

And if you can, also send a copy to:

Martha Freeman
Maine State Planning Office
38 State House Station
Augusta, ME 04333

Governor John Baldacci
Office of the Governor
#1 State House Station
Augusta, ME 04333-0001

Rep. Hannah Pingree
92 Mills Street
North Haven, ME 04853

LISTEN

To listen to the hearing online visit The Joint Select Committee on Property Tax Reform Web site and click on the audio link at the top of the page.

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Hannah Pingree OnlineHannah Pingree is the House Representative of Maine District 36 covering Brooklin, Deer Isle, Frenchboro, Isle au Haut, part of Mount Desert, North Haven, Stonington, Swans Island and Tremont and Vinalhaven. Paid for by the Committee to Re-Elect Hannah Pingree, Foy W. Brown, Treasurer. Logo by Amy Fischer Designs of Camden, Maine.