November 08, 2024
Column

It’s time to reduce property taxes

Believe it or not, I’ve had fun representing the governor in the current property tax reduction discussions in the Legislature. I and many others have spent 40 days and some long nights working with the Joint Select Committee on Property Tax Reform on the proposals submitted by the governor on Dec. 1.

The long hours have been worth it. The dedicated efforts of all members of the Joint Select Committee, expertly led by Sen. Dennis Damon, D-Trenton, and Rep. Richard Woodbury, U-Yarmouth, have produced a strong, bipartisan package of property tax reduction opportunities for Maine people. This has been accomplished through the development of good working relationships among committee members, legislative leaders and the governor. In content and process, the work of the Joint Select Committee has produced a win for Maine citizens.

The final committee package follows the blueprint submitted by the governor. It offers property tax reduction in the broad public interest, not for special interests. It reduces the property tax burden for all Maine residents.

It respects local decision-making. It will improve Maine’s business climate because it offers property tax reduction without raising other Maine taxes.

As I write, the Joint Select Committee is finally reviewing its work.

The entire committee endorsed expanding property tax relief for all Maine residents. Homeowners and renters – 230,000 of them – will be eligible for greater property tax refunds. Homeowners may receive a $2,000 maximum refund, up from the current $1000 maximum. Renters will be eligible for a refund based on 20 percent of their rent, up from the current 18 percent. The committee is also reviewing the homestead exemption, proposing that the current $7,000 valuation decrease for property tax assessments on Maine principal residences becomes a $13,000 valuation decrease.

The committee’s report establishes uniform spending caps for municipal, county, and state government, set at about 3.4 percent a year. These too will help reduce Maine’s tax burden toward a ranking in the middle third of states.

As the governor proposed, the committee’s final package includes a 55 percent state share of education funding, phased-in over four years. In the biennial budget, the governor funded the additional $250 million without raising state taxes or cutting vital services. In fiscal year 2006, this makes available at least $146 million in property tax reduction. Budget officials and voters across the state will decide if they want to spend more on education than the state asks them to, or use the extra state funding for property tax relief.

Some suggest the state should pay 55 percent of school funding in two years. That means spending $90 million more this year. The governor knows we can’t afford this while keeping other taxes down and protecting vital services.

Overall, the governor’s proposal and the committee’s work permit an 8 percent reduction in property tax burden for Maine residents in the first year – with more to come.

I can’t thank all the members of the committee enough for their attention to the governor’s legislation and the improvements they added.

I also want to thank them for the light they’ve shed on a landmark bill, proposed by the governor and enacted two years ago. That’s the Essential Programs and Services school funding model. The committee taught legislators, educators and Maine citizens about the new focus EPS brings to school funding: a focus on what every student needs, wherever he or she lives in Maine, to succeed in school.

Some have questioned whether EPS is modeled after urban or suburban schools. It’s not. It’s based on student needs determined from studies of high-performing, cost-efficient schools all over Maine. The range of high performing high schools extends from a student enrollment size of 64 to 2,400. There are rural schools in our state that are some of the best.

Essential Programs and Services funds students, not towns or schools. It makes sure that every student in every part of the state has adequate funds from state and local contributions to achieve well. That’s the right opportunity for our students and our state.

Some have asked if, through the EPS model, we’re requiring all students to have laptops. We’re not. EPS provides each school with technology monies per pupil, but leaves how best to spend those funds to local decisions.

Finally, EPS school funding for fiscal year 2006, approved by the Joint Select Committee, makes sure that every community can transition into the Essential Programs and Services model without an unintended negative financial consequence. Current law requires transition planning and funding – the committee has made this promise real, protecting small, isolated schools and others transitioning to full EPS funding.

Concerns about school funding today would be the same under the old school funding formula and under EPS. The biggest changes affecting school funding are based in reality.

It’s true that parts of Maine – especially places along our coast, lakes, rivers, and mountains – are experiencing large increases in property valuation. That affects school funding.

It’s also true that student numbers are declining in parts of Maine, while others are experiencing increases.

At the State Planning Office we monitor population and economic changes in Maine. From school funding to economic development to health care, all of us – whether we live in a city, a suburb, or in the country – will together be grappling with these changes now and into the future.

The property tax proposal endorsed by the Joint Select Committee will help Maine people resolve the challenges of today’s world. It deserves strong support in the full Legislature and among our citizens. And the committee deserves our thanks.

Martha Freeman is Maine’s Director of Planning


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