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Fighting for the Future of Maine's Coastal and Island Communities
Online Journal

Welcome Property Tax Relief

Hannah Pingree's Online Journal

About the Maine Property Tax Relief Package

After years of talking and debating and several consecutive ballot questions, the Legislature has taken its first bold steps in nearly a decade to advance real property tax relief for Maine homeowners. By a margin of 95 to 49 in the House and 22 to 11 in the Senate, the Legislature enacted LD 1. The special committee on property tax relief, chaired by Senator Damon and independent Representative Woodbury, worked for more than a month (mostly over the holidays!) to improve the Governor's initial proposal. By all accounts, the committee did good work on what was a difficult job, securing bi-partisan support and adding (and removing) several provisions to the Governor's initial proposal that will make a real difference for property tax payers who are carrying the greatest burden but can least afford it.

For me, the portion of this new law which will double the current rebate available under the Maine Homeowners and Renters Property Tax Program (also called the circuit breaker) is most exciting because they will make a direct and significant difference to those people most in danger of losing their homes and those most affected by rapidly rising valuations. For example, today, a low income senior paying $3000 in property taxes with a $20,000 yearly income (which translates into 15% of their income being spent on property taxes) would currently be eligible for a $1000 rebate through the program. The new expanded benefit doubles that rebate to $2000, giving those most in need the most support. And the program is now tiered to help families in higher income brackets (who were not eligible for any rebate before) with proportunately high property taxes some support as well. In addition, the double of the homestead should provide a modest increase to every Maine homeowner in all communities.

The bill LD 2 and a number of other proposed constitutional amendments regarding property valuation issues that were reported out by the property relief committee look less certain for passage at this point and will be taken up again this week. Only a constitutional provision to allow the working waterfront to be taxed at current use (like farms and open space are now) looks most certain to pass. The current use taxation proposal could be good news for coastal communities like ours, although it is only one of the several major initiatives the Working Waterfront Coalition hopes to pass this legislative session to help protect the working waterfront. Major components of the new law include:

Expansion of the Circuit Breaker/Maine Homeowners and Renters Property Tax Program:

To learn more about the Maine Residents Property Tax Program and get an application, visit the Maine Revenue Services' Tax Relief Web page available at the Maine.gov site.

Projected Increase in Circuit Breaker Funding

w/ Passage
of LD 1
in Funds
Deer Isle$180,532$273,555$93,023
North Haven$51,735$120,825$69,089
Isle Au Haut$7,107$9,367$2,260
Swan's Island$43,304$74,647$31,343
Mount Desert$209,201$491,969$282,768

Doubling of the Homestead Exemption
Education Funding
Spending Caps
Municipal and County Spending Caps
School Funding Outcome (Some Adjustments Still to Be Debated)

Some schools in the initial Department of Education projections were scheduled to lose school funds next year. But after much wrangling, a new "transitional" fund was put into place that assured that no school got less than their allocation from the previous year, and every school got an minimum of a 5% increase over last year (unless their real actual costs of educating went down). So, for the schools that were projected to lose money in the first year, like Vinalhaven and Deer Isle/Stonington, we will now be looking at at least a 5% increase. It isn't a lot, but better than a loss at this point.

Many of us representing small, isolated and rural communities were concerned that the new EPS model didn't take into consideration the additional costs of running small schools, whether it be increased transportation costs or just the general reduced economies of scale when it comes to a very small student population. The good news is that in the negotiations for final passage of LD 1, the House and Senate passed an order that requires the Legislative Education Committee to reconsider these small school adjustments in the formula and recommend changes and/or a re-weighting of the formula by March 15th of this year. I look forward to working with our local superintendents when it comes to better explaining to policy makers the challenges of providing education in small schools and in isolated rural areas.

The new EPS (essential programs and services) school funding formula was intended to make school funding more fair, setting a benchmark how much a school should be spending per student and then ensuring communities had adequate funds to put behind each student. The new formula is still based on the old school funding formula which takes in consideration a community's ability to pay, which is based on the total valuation of a town and the average year-round income of residents. In the formula valuation makes up 85% of the weight and income is only 15% of the total. In addition, within LD 1 the state set a mill rate cap that says if a community is spending over 8.26 mills per student on education (using the EPS guidelines) then the state would make up the total portion being spent over 8.26 mills.

For high valuation communities like ours, which often have low mill rates and fall below the 8.26 mill cap for education spending, there is not much of a chance for property tax relief through school funding— which is why programs like the circuit breaker offer much more tangible benefits. The only significant school funding increases for us under LD 1 come from the state picking up an increased share of special education. Over the next 4 years, the state share of local special education costs will be increase to 100% of the total costs (with the qualification that 15% of the total school population may be deemed special education) and many towns are seeing increased funds as a result of this increase.

How does school funding provide property tax relief to any Maine community?

The new school funding that is distributed to schools under LD 1 may partially be used for increased school funding in schools not spending a sufficient amount per student, but 90% of the total funds must go back to local tax payers— thus the new state funding is intended to make up the local share, not add to the overall school budget.

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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.