Tax-cap law produces mixed results Maine plan based on Calif. measure that raised fees, reduced services

PORTLAND – The California law on which the Palesky tax-cap proposal in Maine is based has had the desired effect of lowering property taxes but also caused side effects such as higher fees and erosion of local control.

Maine municipal and school officials are deeply concerned about the potential effects of the proposal spearheaded by tax activist Carol Palesky that will appear on the state referendum ballot in November. It would limit property taxes to $10 per $1,000 of assessed value, based on values in 1996-97.

The Maine initiative is modeled closely after California’s Proposition 13, which was passed by that state’s voters 26 years ago.

The Maine Sunday Telegram, which examined the impact of the law in a town of 7,000 residents in Northern California, says it remains popular and continues to keep property taxes low, especially for longtime homeowners.

In the town of Fort Bragg, a number of people who haven’t moved in 30 years typically pay less than $1,000 a year in taxes. Newcomers pay nearly three times as much but still less than many homeowners in southern Maine.

“If it hadn’t been for Proposition 13, I wouldn’t be living here,” said Andy Johnston, who figures his property on a bluff overlooking the Pacific Ocean is worth $1.2 million. “It would be the home of some rich dude who could pay $20,000 in taxes.”

But there’s a flip side, the Portland newspaper said. Local services have been scaled back, schools are overcrowded, local control has eroded and the average resident pays more fees, such as $1 a day to ride the school bus.

Proposition 13 sets a statewide property tax rate of 1 percent with exceptions for existing debt. After it passed, the law provided $7 billion in immediate property tax relief.

But about 100,000 public sector jobs were eliminated, mostly in California’s public schools, and 75 branch libraries were closed.

The cap resulted in a tax shift, with the state picking up most of the cost of education. But California increased its reliance on other sources of revenue that are more volatile, such as the state income tax.

New fees and taxes were introduced at the local level and booster clubs picked up school teams’ travel costs. Services regarded as unessential, such as recreation programs and libraries, have been the biggest recipients of cuts.

“I would give anything to have Proposition 13 undone,” said Robin Watters, manager of the Fort Bragg library.

Under Proposition 13, cities have become less interested in attracting industrial and office development and new housing, said Bob Christofferson, Fort Bragg’s interim city manager.

Developers instead of taxpayers now pay for infrastructure for new developments. But that has pushed the cost of homes higher.