Tax relief to towns and taxpayers: An explanation

| State Representative Amy Arata |
I am in the unique position of having worked on budgets at three different levels of government. I’ve served on the New Gloucester budget committee, the MSAD 15 budget committee, and now on the Maine State Legislature’s Committee on Appropriations and Financial Affairs.  My experience has been that it’s best to keep the money as close to those who earned it as possible.  I trust you, the taxpayer, as the most qualified to decide how your money should be spent.  I’m happy to tell you that I’ve worked hard with my colleagues in the Legislature to give you back more of your hard-earned money.  We made three changes to Governor Mills’ proposed budget to give you property tax relief.

State law requires that 5% of sales, income, corporate and service provider taxes be transferred to the Local Government Fund, where it is distributed to our towns as Municipal Revenue Sharing.  However, the legislature, under both Democratic and Republican control, has failed to comply with this law.  For the biennial budget, 5% was estimated to be $364,747,842.  The Mills budget only included $205,003,924, or 2.5% the first year and 3% the second year.

My committee spent a long time listening to outraged town managers and mayors, who had expected the budget to contain the full 5% revenue sharing.  If you follow Maine politics at all, you’ll know that the mayors of Portland and Waterville never agree on anything, yet they were both in the same room agreeing that we must fund more revenue sharing!  We Republicans listened, and made it a priority to negotiate more funds for property tax relief.  However, cutting almost $160 million from the budget would not be easy, as there were huge increases in the cost of MaineCare and education, and the original proposed budget left just one nickel available for every $1,000 spent!

Studies have shown that municipal revenue sharing does not necessarily reduce property taxes.  Therefore, our property tax relief plan included the stipulation that if towns had already voted for a budget, they could spend the additional revenue on road or bridge repair or on the direct reduction of taxes without requiring approval at another town meeting.

We in the Legislature also targeted tax relief to homeowners by increasing the homestead exemption from $20,000 to $25,000.  The full exemption will now save New Gloucester homeowners $422.50 per year.  To qualify for this exemption, you must own and have lived in your home for over a year and fill out a form at the town office.  If you are already receiving the homestead exemption, you do not need to reapply; you will automatically receive the increased amount.

Many on my committee wanted to include tax relief for renters as well.  The Legislature increased the number of people who qualify for the Property Tax Fairness Credit, which gives a tax credit of up to $1,200 on state taxes to renters or homeowners who qualify.  The calculation is complicated, but it benefits those whose rent or property tax is extremely disproportionate to their income.  Even if your income is so low that you don’t usually file taxes, you may still benefit from this tax credit.  To get Schedule PTFC at tax time, go to https://www.maine.gov/revenue/taxrelief/ptfcsummary.htm  The Maine Revenue Service is also available to help.

It was a difficult legislative session, but I’m proud of the part I played in securing some tax relief for you.  My experience with town and school budgeting has made me appreciate how difficult it is to plan a responsible budget when the state is inconsistent with revenue sharing and school funding.  I will continue to make consistency of tax relief a priority, which will ease your household budgeting as well.


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