Governor’s Property Tax Relief Cuts Receive Cold Response

February 9, 2017

“The governor’s office has not provided an analysis of how  many Mainers will benefit from the property tax credit, but according to the Maine Center for Economic Policy, 213,000 Maine homeowners are ‘at risk of higher property taxes’ if the exemption is repealed. That organization estimates that in Rockland, 971 homeowners would see a $424 property tax increase, 1,100 Belfast residents would see a $448 increase,1,047 Waldoboro residents would get a  $306 tax increase and 371 Damariscottans would see a $341 property tax hike.”

by Andy O’Brien (Rockland) Free Press, February 9, 2017

In his State of the State address on Tuesday evening, Gov. Paul LePage made his earnest appeal for the Legislature to pass his far-reaching budget that would cut income taxes, expand sales taxes and cut property tax relief programs. The governor said his main goal in his “do-no-harm budget” is to support people who “liberals consider expendable” and protect them from liberal activists “harming our elderly” by taking the policies of Greece and Venezuela and “trying to turn our state into a socialist utopia.” 

“Our limited resources are needed for helping the most vulnerable in our budget — our elderly, disabled Mainers, homeowners,” said the governor. “We need to make sure that our elderly, our physically disabled and our mentally ill are cared for.… When it comes to the most vulnerable citizens, we all should pledge to do no harm. We need to make sure that they become a priority.”

In the first public hearing of the budget on Monday, the LePage administration presented his “do-no-harm” plan to eliminate the homestead property tax relief exemption for homeowners under 65 years of age. 

However, the provision was met with strong opposition from municipal officials and even advocates for the elderly. Lewiston City Administrator Ed Barrett testified that the plan would have a “real impact” on low-income residents because they generally have less expensive homes and the homestead exemption allows them to receive a substantial tax break.

“The budget proposal will raise the property taxes of every non-senior resident homeowner in Lewiston by $376,” said Barrett. “In my office at City Hall, two of our staff members who own homes in Lewiston and are single parents would lose their exemption. On the other hand, I would not. Believe me, they need this exemption much more than I do.”

Last session, the Legislature increased the homestead exemption on property valuations from $15,000 to $20,000, which will take effect on April 1. The LePage administration is also proposing to include a property fairness tax credit to provide people paying more than 5 percent of their income toward property taxes with a refundable tax credit of up to $750 for homeowners under 65 and up to $1,000 for people over 65. 

The governor’s office has not provided an analysis of how  many Mainers will benefit from the property tax credit, but according to the Maine Center for Economic Policy, 213,000 Maine homeowners are “at risk of higher property taxes” if the exemption is repealed. That organization estimates that in Rockland, 971 homeowners would see a $424 property tax increase, 1,100 Belfast residents would see a $448 increase,1,047 Waldoboro residents would get a  $306 tax increase and 371 Damariscottans would see a $341 property tax hike. 

Leo J. Delicata, an attorney with Legal Services for the Elderly, said his organization couldn’t support the proposal despite the fact that it helps some of his clients. 

“Understanding and believing in the nature and obligations of a community, it is not possible for me to approach this initiative with such a narrow focus,” said Delicata. “That others will be intentionally disadvantaged to assist older adults, especially at a time when our budget is not in a state of crisis, is not a decision that we can support.”

Approximately 7 percent of Maine seniors live below the poverty line compared to 20 percent of Maine children, according to the Kaiser Familiy Foundation.

City officials also came out to oppose the governor’s initiative to permanently freeze the percentage of sales and income tax distributed to municipalities through revenue sharing at 2 percent. Statutorily, towns and cities are supposed to receive 5 percent of state sales and income tax revenue, but the governor has reduced that amount in recent years. Speaking in opposition to the proposal, Bangor’s tax assessor Phil Drew said that Bangor’s residents end up supporting a lot of the infrastructure burden of visitors and commuters, but that revenue sharing helps defray those costs. 

At Monday’s budget presentation, the governor also made his case for eliminating the income tax by name dropping the creator of the TV show “Law & Order”:

“And I’m telling you, of the people I’ve spoken to — I’m sure you’ve heard of the name Dick Wolf,” said LePage. “His name’s on credits on several stations, and I’ve met him. And he tells me, ‘You know, Governor, I’d move here in a heartbeat if you guys weren’t so unreasonable with your overall tax structure.’ He said, ‘If you were more reasonable and you pay as you go, a consumption tax base, I do believe a consumption tax is better than a tax that taxes your income.’”

Efforts to reach Wolf, who reportedly lives in New York City, were unsuccessful. At 12.7 percent, New York has the highest combined state and local tax burden in the country, according to the conservative-leaning Tax Foundation.