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Press Herald Viewpoints
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Friday, April 11, 2003

COLUMN: Jim Brunelle

Tax reform ideas abound, including some from grassroots

Copyright 2003 Blethen Maine Newspapers Inc.


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One good thing about the Legislature passing a current services budget early in the session, as it did recently, is to give lawmakers a chance to consider a lot of other important matters without the usual budget-making distractions.

There's a lot left for the Legislature to do, after all. There are still revenue gaps to close and tax reforms to sort out. This is going to take concentration.

Just about everybody who ran for election last year promised to put tax reform at the top of this session's agenda, and there are a ton of proposals out there. The challenge will be to avoid confusion and get so bogged down in competing ideas that nothing gets done. That's been known to happen in Augusta from time to time.

Legislators are already under the gun as they take up this hugely important issue. As the result of a successful petition drive, a so-called property tax relief plan backed by the Maine Municipal Association is headed for a statewide referendum in November, complicating the session's search for comprehensive, effective reform.

That flawed proposal requires the state to provide 55 percent of local education costs, significantly more than it now does, but fails to spell out how the state is to come up with the money. It just orders the Legislature to do so. The initiated measure calls upon the Taxation Committee to "report out revenue-neutral legislation designed . . . to provide adequate funding for public education from kindergarten to grade 12."

A revenue-neutral plan to raise revenue, quite a trick.

Meanwhile, legislators interested in true reform have a useful guide to the problems facing them, a report developed by a blue-ribbon advisory committee assembled last year by then-House Speaker Michael Saxl.

The group, broadly representative of the state's political, economic, academic and industrial interests, pinpointed the many shortcomings of Maine's current tax mix: heavy dependence on local property taxes, a state sales tax with far too many exemptions, an imbalance of income tax rates and a general boom-or-bust volatility on the revenue side.

The report contains several specific suggestions for dealing with the problems it identifies, including the elimination of some taxes (on business equipment, for instance), raising others (meals and lodging) and broadening the base of the sales tax by doing away with nearly 20 current exemptions. It also has suggestions for increasing revenue sharing, extending property tax breaks to middle-income families and raising the personal exemption on income taxes.

In short, legislators have a full plate of tax reform to digest in the remaining months of the current session, not to mention other ideas - like tax caps - coming at them from sources outside the Speaker's Advisory Committee on Tax Reform.

One of those other ideas is the intriguing Maine Land Bank and Community Preservation Program, otherwise called the "Chebeague plan" for the Casco Bay island community where it originated.

This stand-alone, grassroots proposal is aimed at helping longtime residents in high-market areas - coastal fishing families, for example - to avoid being forced off their land by enormously bloated property taxes based on soaring market-value assessments.

The program would be open to landowners anywhere in the state, not just shorefront owners, who want to hold onto their family property for the long term. Once they register with the land bank, their property would be assessed at its market value of five years ago and would be held to no more than a 2 percent annual increase thereafter.

If at some point participants decide to sell their property at prevailing market rates, a significant percentage of the profit will have to be paid to the municipality as a penalty. Eventually, its backers say, this will help the voluntary program pay for itself without any loss of revenue to the local community and without profiteering on the part of the seller. That's the tradeoff for getting both a big property tax break and protection against eviction because of assessments that double and triple with each revaluation.

Backers of this simple and sensible program have a big sales job ahead of them. Because it involves a constitutional amendment, it must first garner a two-thirds vote in both branches of the Legislature and then be ratified by a majority of the voters in a fall referendum.

This homegrown tax relief plan, which comes up for a public hearing before the Taxation Committee next week, is the first of several practical and workable ideas that deserve serious consideration by a Legislature pledged to give us meaningful tax reform now.

- Jim Brunelle (e-mail: comments on politics and other issues for the Portland Press Herald.

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