Tax package headed to Legislature Special committee OKs two Baldacci proposals

AUGUSTA – The Legislature’s special committee on property tax reform met its deadline Friday night by referring two bills crafted to lower the state’s tax burden to the House and Senate for a final vote next week.

Gov. John E. Baldacci called on lawmakers to give his legislation support by at least a two-thirds margin when the bill comes up for a vote next week.

“It would be really good if we could pass this into law and enact it because that way it’s operational and the funding is in the budget and people can plan on it,” the governor said. “That way we can send a strong, clear message that the work is completed here.”

With one member absent, the Joint Select Committee on Property Tax Reform voted 11-3 in favor of LD 1. The bill is designed to provide an additional $250 million to local schools to bring the state’s share of education costs to 55 percent over four years. The bill also contains nearly $14 million in additional educational funding to reimburse communities that would have lost money under the original version of the proposal. Three Republicans on the committee – Sen. Richard Rosen of Bucksport and Reps. Vaughn Stedman of Hartland and Earle L. McCormick of West Gardiner – voted against the bill and plan to support a minority report that would require the state to reach the 55 percent target in two years.

“We still think the voters spoke in November and in June and they had a choice between a five-year ramp or a more immediate timetable for educational funding, and in both cases they wanted this Legislature to solve the problem and fulfill the obligation now,” Rosen said.

The committee also voted 14-0 in favor of LD 2, a constitutional amendment that would give municipalities a local option to limit the level of tax increases for homestead land.

The package expands the Homestead property tax relief benefit from $7,000 to $13,000 and recommends a number of constitutional amendments in the form of separate legislation that would give municipalities greater flexibility in establishing local tax relief options. Renters and homeowners would also receive additional relief under an expanded circuit-breaker program, also known as the Maine Residents Property Tax Program. Maximum benefits under the program would increase from $1,000 to $2,000 and income thresholds are eliminated.

The major hang-up in negotiations Friday centered on what circumstances must exist to exceed state, county, school and municipal spending caps in the bill and the criteria governing the override process. In the end, the lawmakers agreed on near-uniform spending cap calculation formulas with clear definitions for the circumstances under which the caps could be exceeded. They also agreed that only a majority vote would be required to override the caps at the state, county and municipal levels of government.

Aside from the two-year educational funding increase request, Republicans and Democrats on the committee agreed the two bills should help lower the state’s tax rate. Rep. Eddie Dugay, D-Cherryfield, said the legislation is more stringent than what was originally proposed by the governor.

“Overall, I think it’s a good bill,” he said. “It’s not a perfect bill, so I think you’ll see some amendments coming.”

The governor praised the committee members for their “long hours of work” on the property tax bill, adding he was pleased they had followed the “the blueprint of my proposal.”

“All Maine residents can achieve reduced property taxes under this legislation,” he said. “I commend the committee for accomplishing this without raising other taxes.”

Baldacci and legislative leadership have scheduled a vote on the bills in the full Legislature for Thursday to meet a deadline they claim was forced by the possibility of two competing citizen initiatives on state spending limitations. If the two groups are successful in obtaining enough signatures next week to get on the November ballot and the Legislature failed to enact the law by or on Thursday, LD 1 would wind up on the fall ballot along with the petitioner’s questions, which would appear as competing measures.

Geoff Herman of the Maine Municipal Association said he has checked with local town clerks and there is no chance that either of the reforms sought by Mary Adams and the Taxpayers Bill of Rights group or the Maine State Chamber of Commerce initiative will garner the more than 50,000 signatures needed.

“The initiatives aren’t going to be submitted, so the argument over the time frame doesn’t exist,” Herman said. “The part that hasn’t been cleared up for me is that if they now know there is no reason to rush the deadline, why are they rushing it?”