Legislature passes property tax reform bill

January 20, 2005

AUGUSTA – The Maine Legislature voted Thursday night to pass sweeping legislation to curb government spending, provide property tax relief and increase state funding of local education for Maine residents.

Thursday’s votes came after two days of debate in both the House and Senate chambers, during which 31 attempts to amend the bill were defeated. The bill passed enactment in the House by 95-49, and the Senate by 23-10. However, passage was delayed when the bill failed to garner enough Republican support to pass with the two-thirds majority needed for emergency enactment. As a result the bill, which would have taken effect immediately, will not become law until mid-September.

“I am really proud of our Democrats standing together to deliver property tax relief,” said Cummings. “This bill is the product of what I think was a remarkably bipartisan effort in the Property Tax Reform Committee. Nonetheless, it is truly disappointing that our Republican colleagues voted to delay the enactment of this bill and thus the delivery of immediate property tax relief for all of our residents.”

The property tax reform package provides an additional $250 million in state funding of local education in the next biennium, reducing the local burden and the need for increasing property tax revenues. The funding will be distributed based on the Essential Programs and Services funding model. The new law adjusts the model to ensure that all schools see an increase in funding in the first year, as the full 55 percent of state education funding is phased in.

The strict spending caps on state, local and county government are an important centerpiece of the package. Cummings commended the Governor and his fellow Democrats for standing united in their support of the bill and in delivering property tax relief with strict restraints in government spending.

“With these caps in place, local residents will be guaranteed that the state’s increase in education funding will directly translate into property tax savings, and not just increased spending,” said Cummings.

The new law will also provide direct property tax relief to Maine residents. The law will double the state’s Circuit Breaker benefits and expand eligibility. The program will now provide most Maine residents with property tax or rent refund up to $2,000. Maine residents will also see a dramatic decrease in their property tax bills thanks to a similar expansion of the state’s Homestead Exemption program. Every homeowner will see their property tax exemptions increase to $13,000 from the previous maximum of $7,000.

Maine’s Revenue services estimates that statewide, these measures will bring the average taxpayer over $200 in immediate property tax savings. The same estimates show a single elderly homeowner can expect to save $882, and a married couple with two children will save $314.

The bill, LD 1, was the product of near round-the-clock work by the Legislature’s newly formed Property Tax Reform Committee. After working on the bill for over 40 days the evenly spilt committee –7 Democrats, 7 Republicans and one Independent – came to unanimous votes on nearly all of the bill components, including the proposed spending caps. The committee recommended the bill's passage in a 12-3 vote last week.

The property tax reform bill was the first and likely the most important bill to be acted on this legislative session.

Contact:

Kaylene Waindle 287-1433/615-4187 (c)

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