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Sunday, November 10, 2002

Homegrown tax reform catching fire

Copyright 2002 Blethen Maine Newspapers Inc.

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HARPSWELL — One day last July, while waiting at his wharf for a truck to deliver a load of bait, Malcolm "Laddie" Whidden scribbled down some ideas on how to change the state's tax law. Just a few days before, he had visited Chebeague Island, where an angry crowd of 140 people told state and local officials that rising assessments are forcing people out of their homes. "If we don't do something now, we will lose the whole coast of Maine," Whidden explained on Friday afternoon as lobstermen landed and weighed their catch. "It will become a playground for rich people. Even the well-to-do here will be replaced by people who are richer than them."

Whidden's proposal, which was later refined by a group of Chebeague residents, is now being circulated in Augusta and has caught the attention of some of the state's major players in the debate over tax reform. Some say the proposal's homegrown lineage may give it a political advantage over proposals created by special interest groups or policy makers.

The proposal, officially called the "Maine Land Bank and Community Preservation Program," and informally known as the "Chebeague proposal," would affect how all commercial and residential properties are assessed statewide.

A voluntary program modeled after the state's Tree Growth Tax Law, it would limit the increase of land assessments for those who agree never to sell their land. Those who enter the program but later want to sell are hit with significant financial penalties that towns would use to offset the loss of income.

Its supporters believe there would be enough money in penalties to allow the program to pay for itself.

The proposal was supported unanimously two weeks ago at a Rockland conference focused on rising property taxes and shrinking access to the working waterfront.

"The Chebeague proposal tries to get at the essence of the problem by saying we don't look at the land as an investment or a commodity," said Nate Michaud, a community planning and development officer at the Island Institute, which hosted the conference attended by 75 people from all sections of coastal Maine. "We value the land because of history and ancestry, because we want to have it for our kids. That is the value for us."

The Chebeague proposal is a mixture of the most politically appealing parts of California's Proposition 13 and Maine's own Tree Growth Tax Law, adopted in 1972.

This is how it works:

Those who join the program would have their land assessed at the market value it had five years before. Starting from the year they join, the increase in assessment would be limited to 2 percent annually or the rate of inflation, whichever is less. The building, though, would be assessed at its fair market value. The land would stay in the program as long as it remains in the family.

People who decide to sell the land on the open market would pay a penalty of 30 percent on the difference between the assessed value and the selling price.

"This is really for people who have land they want to hang on to for the long term," said David Hill, a Yarmouth resident who has a summer home on Chebeague and helped draft the proposal.

He said the proposal would also curb sprawl because people wouldn't carve off parcels in order to pay their taxes.

He said it could be used by anyone, not just people who have water frontage.

Those in a community who don't participate in the program would see their taxes go up slightly, said Bette Tellinghuisen, a Chebeague Island resident who helped draft the plan.

For example, she said, if everyone on Chebeague Island joined the program, the tax rate in Cumberland would rise 56 cents per $1,000 of value. After one year, though, if just one typical island cottage left the program and was sold on the open market, the town would reap a penalty of $52,000. Over time, the penalties would exceed the tax break that island property owners receive and reduce the town's tax rate, she said.

Sen. Peter Mills, a Skowhegan Republican who is involved in tax reform efforts, said the Chebeague proposal is stimulating and politically clever and deserves to be submitted as a bill so legislators could discuss it. But he is skeptical about whether many people would actually participate because of the high withdrawal penalty. He noted that a much weaker penalty keeps many farmers from joining a state program in which farmland is assessed for its agricultural value rather than its taxable value as house lots.

"It may not be everything people hold it out to be," he said. "These farmers weren't interested in a program that was designed right for them."

The program would also allow out-of-state vacation homeowners to join, even wealthy ones, and that may prove politically unpopular, said Rep. David Etnier, D-Harpswell.

Still, Etnier said the idea holds a lot of promise, and he is giving the group advice about how to present the proposal in Augusta.

Town assessors may find the complexity of the program a "nightmare" to administer, said Michael Starn, a spokesman for the Maine Municipal Association. In addition, the annual income from the penalties would be hard to predict from year to year, making it difficult for town officials to create their budgets, he said.

Cumberland assessor Bill Healey, however, said the program shouldn't be difficult to administer once it was set up. He added that it appears to accomplish some important goals.

Chris White, a Cranberry Island resident involved in efforts to find affordable housing for young families on the island, said the proposal would help protect traditional fishing villages from being transformed into exclusive summer resorts.

"We don't need speculators," he said. "We want to keep the communities by encouraging people to stay on the land."

Whether it benefits wealthy people or poor people is not the point, Tellinghuisen said.

"It is only going to benefit those who want to stay where they are and pass the land on to others who will be good stewards of the land," she said.

Staff Writer Tom Bell can be reached at 791-6369 or at:


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