HPxxxx, LD xxxx, item xxx, 125th Maine State Legislature

An Act To Enable Municipalities to Manage Property Tax Exemptions

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Tax Exemption Relief Act

Intent: Municipalities are best positioned to manage property tax exemptions within their own communities with as little State intervention as possible. This legislation gives Maine's municipalites greater control over their taxable base as impacted by tax-exempt organizations.

Background: Property taxes are the primary source of revenues for Maine municipalities. Total State Valuation for 2008 was $159,457,800,000 (source: http://maine.gov/revenue/propertytax/statistical_summary/2008/2008index.htm ). Of that value however, a full 10% or $15,987,833,451 (source: 2008 Municipal Valuation Return Statistical Summary - Section 10) is exempted by law from taxes. The rest of Maine's taxpayers end up picking up this 10% difference.

Since current state statutes control the definitions for what is exempt, municipalites have no way to "manage" the impact of exemptions on their communities. As a result, if an exempt organization aquires a prime parcel of real estate, the entire value of that parcel becomes exempt and stops contributing to the revenues of that municipality. In Maine's larger urban areas, the impact of exemptions actually approaches 15% or more (Portland 2008: Valuation - $8,289,850,000; Exemption - $1,659,961,430 or 20%).

Whereas Taxpayers cannot continue to absorb the removal of properties from the tax roles due to exemptions at such a significant level. Therefore this legislation proposes:
  1. to permit municipalities to define which exemptions to honor in their own communities;
  2. to permit municipalities to plan for and create zoning that would restrict which parts of their communities would or would not qualify for exemptions;
  3. to permit municipalities to apportion exemptions, to adopt partial exemptions, based on the tax burden within their communities;
  4. to require municipalites to consolidate their facilities into as small a footprint as reasonable within their communities so as to minimize property value exempted for government services;
  5. to require the State of Maine to consolidate their facilities into as small a footprint as reasonable in any municipality so as to minimize property value exempted for government services;
  6. to require municipalites, within their budgets and budget process, to establish and adhere to a maximum percentage of their tax base that can be exempted.
Appeals related to this Act will be handled through existing property tax appeal processes.