The governor is pushing his plan to freeze property values for people who call Maine home to protect them against tax spikes driven by the real estate market – a plan he says will give real relief to taxpayers.
Detractors, however, from all sides of the political spectrum, say the proposal would simply shift the tax burden, not reduce it, and force tax rates up.
Gov. John Baldacci held a press conference on Friday to unveil his latest version of the so-called freeze, which was defeated in several forms in the last Legislature.
“I know of the opposition to this proposal. But I’m certain we need to do more for Maine residents,” Baldacci said. “I appreciate all the work that’s gone into this in previous Legislatures, but I’m asking them to tackle it again.”
Baldacci likens his tax proposal to tax breaks now given to woodlands, farms, open space and working waterfront. It would apply to all primary Maine residences – not second homes or businesses – and allow all valuations to go up by the rate of inflation or some similar measure, and not spike along the waterfront or in other desirable areas.
People who sell their homes would pay a penalty equal to the difference in what they would have paid in taxes in the previous five years.
Because the proposal would not treat all property equally for tax purposes, it would require a constitutional amendment. That means two-thirds of the Legislature has to approve the proposal, and then it must got out to voters on a statewide ballot.
Some say Baldacci’s plan amounts to a tax break for the property rich, shifting the tax burden over time to the poor side of town. Others worry about shifting the burden onto businesses or new home or second-home buyers.
“Property tax exemptions, no matter what they’re for, tend to shift the burden to other people,” said Geoff Herman of the Maine Municipal Association. “If your property is growing very quickly in value, you’re going to be advantaged by this,” he said, but it puts at a disadvantage those whose property is worth less, because they will now be assuming more of the tax burden.
Christopher “Kit” St. John of the progressive Maine Center for Economic Policy made a similar argument last month, saying, “It means more property tax relief to people who own million-dollar homes on the water … borne by people on the back roads. It’s fundamentally unfair.”
Republican leaders also are criticizing the plan, saying it would simply force the tax or mil rate up to make up lost revenue under the freeze. And, it would shift the burden onto business owners, renters and new home buyers.
“From what the governor has said, I don’t see how the plan would combat rising mill rates,” said Rep. Bob Crosthwaite, R-Ellsworth, the assistant House Republican leader. “It seems that if a town lost revenue because they could not revalue a residence, they would merely increase the mil rate on the frozen valuation.”
“I give the governor credit for trying to be bold,” Crosthwaite said. “Unfortunately, I just don’t see the numbers adding up on this proposal. The best way to keep rising taxes in check is to control government spending – at all levels.”
The proposal is being sponsored for the governor by the chairs of the Taxation Committee – Sen. Joseph Perry, D-Penoboscot County, and Rep. John Piotti, D-Unity – and by Rep. Leila Percy, D-Phippsburg, and Rep. Dick Woodbury, an independent from Yarmouth.
Comments are no longer available on this story