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: jbrune@maine.rr.com) comments
on politics and other issues for the Portland Press Herald.