PORTLAND – Maine’s property tax relief program isn’t keeping pace as property taxes continue to grow.

When inflation was taken into account, Maine’s circuit-breaker program paid out less money in 2001 than it did in every other year since 1997, according to an analysis by the Maine Sunday Telegram. The payout was nearly $9 million less than during the program’s peak year in 1992.

There are several reasons.

A sharp drop-off in 1993 came as state officials dealing with a budget crisis slashed minimum income thresholds and refund amounts. The decline since 1998, say Maine Revenue Services officials, is because the economic boom raised many people’s wages beyond the minimum income thresholds.

In addition, it appears the introduction of the homestead exemption program in 1998 helped lower the property tax burden of some households, officials said. That program exempts from property taxes the first $7,000 of each home’s value, excluding secondary homes.

Critics say the current circuit breaker program is too limited to deal with the growing burden property taxes are placing on elderly and low-income households.

Not enough homeowners qualify for the program, they say, and the refunds – which averaged $341 in 2001 – are too meager to help homeowners.

A better-funded circuit breaker program, said Sen. Peter Mills, R-Cornville, is the “most rational, simple and least expensive way of addressing the problem of the property tax.”

Mills described the program as a “laser-targeted benefits system” because it directs aid only to people who are threatened with being taxed out of their homes.

In contrast, the homestead exemption uses a “carpet bombing” strategy to deal with the tax problem, he said. Rather than targeting the aid, the homestead exemption provides tax savings to everyone, including the owners of seaside mansions. Mills said the program’s benefits are so diluted that the program is a waste of money.

“It’s meaningless to those who need it,” he said, “and chump change for those who don’t.”

If the state fails to provide meaningful relief, some warn, then it faces the risk of a grass-roots revolt that could fundamentally transform the tax system and also the state’s political structure.

Activist Carol Palesky’s Maine Taxpayers Action Network is gathering signatures for a referendum that would cap both assessments and tax rates.

The group started the drive June 5 and a month later had gathered 8,000 signatures, putting it on pace to reach the goal of at least 60,000. It has until Jan. 23, 2003, to collect the needed signatures to get on the November 2003 ballot and June 5, 2003, to get on the 2004 ballot.

While increasing funding for the circuit breaker program would keep Mainers from being taxed out of their homes, Mills said, the additional funding won’t stop the push for a tax cap because many of its supporters are relatively well-off seniors who don’t want to pay for education.

“Suppose we double the program’s funding and distribute that money in a very targeted and intelligent way,” Mills said. “Does anybody really believe it would cut off the impetus for revolt?”