Legislators suggest task force tackle challenge of property tax reform

Yahoo

16-05-2025

The Legislature's Taxation Committee hears public feedback on bill proposals in Augusta. (Emma Davis/ Maine Morning Star)
With bipartisan agreement that Maine's property tax burden is too high, legislators are pushing for some tweaks to tax credits this year, however they're holding off on substantial reform until a task force can study the issue.
Among its work on 18 bills on Thursday, the Taxation Committee removed the policy changes from a bipartisan plan from legislative leadership to provide property tax relief. Instead, the committee members unanimously agreed the bill should be exclusively focused on the creation of a task force that would report back legislative recommendations starting next year.
'The truth of the matter is with 2,000 bills that we're working in five months,' said co-chair Sen. Nicole Grohowski (D-Hancock), 'I actually think taking a break and being able to focus on one thing for a period of time is the way we can get the best outcome for Maine people.'
The Maine Legislature is approaching its expected final month of work for the first year of the two-year session and is overall considering dozens of bills that aim to reform property taxes.
Some have received favorable votes from the Taxation Committee including on Thursday a plan to expand the Property Tax Fairness Credit. The committee also earlier advanced a proposal to increase the state's tax exemption for homeowners and another to expand property tax relief for veterans and their survivors, with the latter passing both the Maine House of Representatives and Senate this week.
The committee's recommendations largely fell in line with the positions of Gov. Janet Mills' administration, including committee members unanimously opposing on Thursday attempts to reinstate previously repealed programs related to property taxes.
'We did take the time and really work the task force,' Rep. Shelley Rudnicki (R-Fairfield) said, referring to the several hours the committee spent Thursday morning hashing out the details of its composition and deadlines. 'I think it makes sense right now to go that way rather than try to piecemeal things.'
A bipartisan bill, LD 1770 sponsored by Senate President Mattie Daughtry (D-Brunswick) and co-sponsored by House Speaker Ryan Fecteau (D-Biddeford) and Senate Minority Leader Trey Stewart (R-Aroostook), among others, initially sought to both increase the property tax fairness credit and establish a Real Estate Property Tax Relief Task Force.
The committee unanimously decided to advance an amended version of the bill that only included the latter, which now sets LD 1770 on a likely path to passage. The Mills administration had some concerns about the policy changes in LD 1770 given the tight budget year but was fully supportive of the task force component.
Stating that they'd like to wait for the recommendations from this task force for major reform, the committee unanimously rejected most of the other property tax bills it considered on Thursday. These included LDs 432, 1304, 1464, 1537, 1591, 1610, 1729 and 1798.
'We are taking all of this, all of this information, seriously,' said Rep. Tracy Quint (R-Hodgdon), 'and that is why we are sending it over to the task force, because they can take the appropriate amount of time to see which bills can be properly worked and implemented.'
Other lawmakers withdrew their own bills, including Rep. Steven Foster (R-Dexter) who withdrew LD 614, which sought to modify certain property tax assessment methods.
'I believe a long term answer to this problem requires much more than occasional increases to the Homestead exemption, tax credits, or other temporary fixes,' Foster said. 'I think the task force and its work this bill would establish may provide that answer.'
Daughtry had outlined that the task force would be required to be geographically diverse and composed of legislators, economists, tax experts, real estate professionals and representatives of low-income and older residents.
The committee added additional specifications, including that those representing low-income and older residents be people with that lived experience and that one member must represent municipalities with fewer than 10,000 residents and different forms of government — i.e. both cities and towns.
While the committee had wanted the task force to complete its work within the current 132nd Legislature, it ultimately compromised, given concerns about staff workload in light of changes on the federal level raised by Michael Allen, associate commissioner for Tax Policy in the Department of Administrative and Financial Services.
With the Republican majority in U.S. Congress pushing for a budget plan with new tax breaks, cuts to Medicaid and other programs, Maine state government will likely have to return to readjust state spending and operations once the details are finalized, Allen said.
'That means we're looking at conformity sometime in the middle of the summer of a very complicated bill, which is going to probably require this committee to come in to evaluate any proposal by the governor,' Allen said. 'It may take two or three weeks just to figure out what exactly Congress did and its impact on state revenue.'
Therefore, the committee agreed to have the task force issue an interim report in January 2026, but also have the ability to continue its work until December 2026, when a final report would be due.
Rep. Gregory Lewis Swallow (R-Houlton) was alone in offering a different take on the task force. He thinks limiting it to only studying property taxes is too narrow.
'Everything is synergistic on this issue,' Swallow said. 'When you deal with one tax, you're dealing with another tax.'
The state has incrementally expanded the Property Tax Fairness Credit, the latest of which occurred last year. The credit allows taxpayers to receive back a portion of their property tax or rent paid during the tax year, with the value calculated by the degree to which the 'base benefit' exceeds 4% four of a person's annual income.
In the 2023 tax year, the state essentially returned just under $80 million to taxpayers through the credit and after the latest expansion the state has returned about $115 million to taxpayers in 2024, though that number may change as returns come in.
Allen said 33,463 taxpayers have benefitted from the expansion, with an average tax cut of $678, including 7,672 people who would have earlier been ineligible.
Another adjustment could be coming.
The committee unanimously voted to advance LD 715, sponsored by Rep. Nina Azella Milliken (D-Blue Hill), which would allow for people over the age of 65 with an annual income of $36,000 or less to receive a credit equal to the amount by which the 'base benefit' exceeds 3% of their annual income, a decrease from the current 4%.
Former state Rep. Ron Russell introduced this plan last session, and while his bill passed both chambers, it ultimately did not get funded.
On the other hand, the committee voted 8-3 against LD 1665, sponsored by Sen. Anne Carney (D-Cumberland), which covered similar ground but with a wider scope. It proposed increasing the benefit base to varying levels based on age and number of children.
The majority of the committee ultimately rejected the plan, with Grohowski and Quint agreeing that the state shouldn't muddy the waters by adding another track for people with dependents to the property tax fairness credit when the state already has a specific child tax credit, which the committee has separately recommended be expanded.
Enacted in 2022, the Property Tax Stabilization Program allowed people 65 years old and over to freeze their property taxes at the previous year's level regardless of income, as long as they owned a permanent residence for at least 10 years and were eligible to receive a homestead exemption. Mills allowed the law to take effect without her signature.
However, the Legislature repealed that program after just one year in effect, following skyrocketing cost projections, concern about wealthy property owners taking advantage due to a lack of income restrictions and the administrative burden it left on municipalities.
The eligibility expansion for the Property Tax Fairness Credit and the creation of a Property Tax Deferral Program had been some of the ways lawmakers tried to soften the blow of this repeal last session.
With unanimous votes among those present, the Taxation Committee rejected Republican proposals to reinstate the program, albeit with some changes aimed to address the program's shortcomings.
LD 1481, sponsored by Rep. Wayne Parry (R-Arundel), would add income limits for eligibility, and LD 1541, sponsored by Sen. Joseph Martin (R-Oxford), would exempt all Mainers over 65 from property taxes. The latter bill is co-sponsored by Republican leaders, Sen. Trey Stewart of Aroostook and Rep. Billy Bob Faulkingham of Winter Harbor.
'We should have fixed it,' Parry said of the program during a Wednesday press conference, 'not gotten rid of it.'
In 2024, the Legislature repealed a law that limited the total levy that could be raised by a municipality via property taxes each year. LD 542, which is sponsored by Rep. Jeffrey Sean Adams (R-Lebanon), proposed reestablishing municipal property tax levy limits.
The State and Local Government Committee was split on the proposal and not along party lines. Six legislators voted for its passage, while six voted against it. The majority of the House opposed the bill on Tuesday, with a 79-62 vote against passage, and the Senate tabled it on Wednesday.
Regardless of how the Legislature's final votes come down, the Mills administration is also opposed to both bills, so they would likely get vetoed.
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