November 25, 2024
Archive

UM-hub Orono considers impact on revenue

ORONO – If passed in November, the proposed Palesky tax cap would mean deep cuts for Orono, largely because the town already is running on a leaner budget due to its large amount of tax exempt property, according to the town manager.

Of the approximately $650 million of assessed property in town, about $260 million is considered tax exempt.

“We’re already running leaner than a lot of our counterparts because of our tax exempt property,” Town Manager Cathy Conlow said.

Conlow noted that the impact of the large amount of tax exempt property in the town already is felt by residents who pay a higher mill rate than most communities of similar size.

Orono’s mill rate is $24.20 per $1,000 of valuation.

The tax cap referendum was initiated by a citizen petition and is on the Nov. 2 ballot. If it passes, it would cap property taxes at 1 percent of their assessed value, which equals $10 per $1,000 of valuation.

If the proposed initiative passes, Orono is faced with a total reduction of $3.9 million – approximately $2.1 million for the school department and $1.8 million for the town.

The largest amount of the town’s tax exempt property – more than 80 percent – comes from the University of Maine. With nearly $230 million considered tax exempt, the university gives the town about $500,000 a year to help pay for fire services and the town’s code enforcement officer, according to the town manager.

“[UMaine] doesn’t do anything to cover other services,” Conlow said.

“It’s essentially to help pay for the cost of services provided by the town, including things like fire services and wastewater treatment,” UM spokesman Joe Carr said.

The agreement is an “amicable” one negotiated annually by the town manager and UM’s vice president for administration, according to Carr.

In addition to the University of Maine, the Maine State Housing Authority pays the town for its Orono property, which is considered tax exempt by the state. The difference is that a federal mandate requires housing authorities to pay a portion of their property taxes.

No other entity in Orono voluntarily pays any sort of fee in lieu of taxes, according to town officials.

Other tax exempt entities who do not pay the town any fees in lieu of taxes include:

. Local schools – $12.4 million.

. Charitable organizations – $5.9 million.

. Churches – $5.2 million.

. Municipal property – $3.7 million.

Town officials already have discussed cuts in the services they provide to residents if the tax cap measure passes, but must have permission from the Legislature to charge fees for mandated services.

“We can cease and desist doing certain [nonmandated] services, such as garbage collection,” Conlow said. “But state legislative authority is required to instate fees [on mandated services].”

Most of the services Orono provides are mandated by the state and residents cannot be charged a fee unless approved by the Legislature.

“We feel the impact today in Orono of the tax exempt property,” Conlow said. “[But] it translates to deeper cuts if Palesky passes.”


Have feedback? Want to know more? Send us ideas for follow-up stories.

comments for this post are closed

You may also like