Council hears bad news about property taxes

Members of the Penobscot Valley Council of Governments did not need to be convinced that property taxes are a problem. As elected and appointed officials from three eastern Maine counties, they are all familiar with the tax that everyone loves to hate.

Most of those attending the council’s annual dinner Wednesday evening in Bangor probably concurred with a comment by Edward Barrett, Bangor’s city manager, that “property taxes are going to kill us all” unless communities are given some other ways to pay for local services.

Barrett was one of three panelists who spoke to the COG on the property tax, the problems associated with it and the prospects for change. He summarized some of the problems:

Property taxes are psychologically unpalatable.

They aren’t seen as fair.

They discourage property improvements.

Revenues from property taxes also grow slowly, said Josephine LaPlante, a professor of economics at the University of Southern Maine.

Despite many people’s frustration with the property tax as a way to pay for local government, LaPlante said there remains a “vocal group” who don’t want any change. They argue, for example, that property taxes aren’t high in Maine compared to taxes in other states.

LaPlanted countered that people in other states have higher incomes with which to pay their higher property taxes.

She also suggested that Maine’s property taxes may not buy as much as taxes in other states because the cost of providing some services here is higher. Maine people are frustrated at “spending a lot without getting a lot in return,” she said.

LaPlante said she doesn’t advocate abolition of the property tax. The property tax does tap people who own property but don’t live in the state, which spreads some of the burden, she said.

She advised government officials to educate citizens about the causes for increases in local budgets. While many people blame state and federal mandates for increases in local spending, LaPlante suggested that the public also has “a higher taste for services than there used to be.”

Barrett concurred, saying that people don’t call him to say they no longer want a particular city service.

Barrett called on the Maine Legislature to give communities more ways to raise money — like utility taxes or lodging taxes or regional sales taxes or even, he joked, a tax on earth worms.

“At times, I feel quite desperate,” he said.

John Baldacci, a member of a state commission studying tax reform, told the group that property taxes were a major focus of the study.

“I know you have heard many messengers from Augusta saying that property tax relief is on the way,” Baldacci said. “I’m not going to make any promises.”

The commission’s preliminary report is scheduled to be issued on Dec. 1, with the final recommendations due to the Legislature by Jan. 30, Baldacci said.