It used to be when a town revalued its property or
built a new school, the cry would go out from anguished citizens that they
were being taxed out of their homes by increases approaching 20 percent.
But by the next year the increase was back down to 3 or 4 percent and
the furor died away. Property-tax reform was discussed but nothing was done.
Times have changed.
Recently, Cumberland was faced with a sharp increase to fund a new
middle school. To blunt the impact on most homeowners, they revalued the
town, resulting (as expected) in precipitous increases in the assessments
on shorefront properties, as high as 100 percent or more, most on top of
similar increases only five years earlier.
When confronted by anguished Chebeague Islanders, town leaders would
only shrug their shoulders and say, "We're just obeying the law." They were
right. But is the law right?
What has changed is the source of pressure on property taxes. Before,
it was our spending. If we decided a new school was needed, we'd raise taxes.
If taxes got out of hand, we'd cut spending. We had control of the system.
Now we have outside pressure. With the near death of the stock market,
people who still have money left to invest are looking for something with
a respectable rate of return. So they're investing in Maine's relatively
cheap land.
They're flocking to our lakes, rivers, ponds, mountains, shores and
wilderness areas and paying top dollar. And when they do, as mandated by
law, up go the taxes on their neighbors, driven not by the service needs
of the local population but rather by the demand for their land. And driving
out long-time residents.
Now there's a new demand for tax reform, with Carol Palesky's tax cap
in the forefront. Hers is a truly scary proposition that deserves to go no
further than it has already. But it may be the last refuge of people who
can find nothing better.
There are several more viable plans. Each has its merits and would
result in property-tax relief for some people. However, none addresses skyrocketing
assessments. What good is a 20 percent reduction when your increase exceeds
100 percent?
In Harpswell's Grange Hall and around a Chebeague Island kitchen table,
ordinary folks may have found a true solution for the entire state - the
Maine Land Bank Program.
It doesn't address all of the state's taxation issues, but it squarely solves the problem of runaway land assess- ments.
The idea is simple and completely voluntary. It takes the concept of
Maine's existing Tree Growth Tax Program and extends it to any land that
any person intends to own for a long time. It's not for speculators.
Partially based on assessment cap programs in 13 states, land in the
program is assessed at the value in place up to five years ago. Subsequent
increases are limited to 2 percent or the cost of living, whichever is lower.
The land can be passed to direct relatives and remain in the program.
If an owner, for whatever reason, decides to sell the land outside
the family, a sizable penalty will be paid, thereby reducing the profit realized
from the sale. These penalties will more than offset the reduced tax revenues.
Once the program is up and running, it will support itself, costing the municipalities and the state nothing.
Not only will people avoid eviction by the taxman, communities will
maintain their continuity. For some small communities, that may mean their
very survival.
Small businesses, including shore- based fishermen, will be able to
take advantage of a cost-reduction mechanism at a time when it is sorely
needed.
An added benefit is that young people will be motivated to stay in
their family homes or return when the time comes, thereby reducing the "brain
drain" exodus of youth from Maine.
The land bank program stands on its own, but it could happily co-exist
with almost any of the other proposed tax-reform measures.
How would I like to see this long strange trip end? First, I'd like
people to put Carol Palesky's tax-cap proposal on hold. Second, the Maine Land Bank
Program should be enacted as soon as possible. And, third, people should
demand that our new governor and Legislature finish the job and enact comprehensive
tax reform within the next year.
- Special to the Telegram
