Maine lawmakers are poised to reject along nearly partisan lines a proposal to reinstate the municipal property tax levy limits that were repealed last year after having been in place for nearly twenty years.
The now-repealed law that this bill seeks to reintroduce was originally implemented in January 2005 after “countless hours” of consideration by the Legislature’s Joint Select Committee on Property Tax Reform and was ultimately passed “by wide margins in both houses,” according to a 2006 report on the law.
“LD 1 limits growth of each municipality’s property tax levy to the growth rate of Maine’s average personal income (adjusted for inflation) plus the municipality’s property growth factor,” the report explains. “The property growth factor is different for each town; it is a measure of the new development occurring within the municipality’s borders.”
The law contains a number of exceptions to this limit — such as natural disasters or a loss of funding — and residents can vote to voluntarily exceed this limit if they so desire.
[RELATED: Janet Mills Signs Bill Repealing 2005 Limit on Municipal Property Tax Hikes]
LD 542, sponsored by Rep. Jeffrey Sean Adams (R-Lebanon), would re-implement the provisions of this law, effectively reversing the legislation signed into law in April of last year.
When the repeal of these levy limits were up for consideration in 2024, Democratic lawmakers argued that the law “has served its purpose.”
“I’m sure, at the time of putting this law to be into place nearly 20 years ago, this cap seemed necessary,” Sen. Teresa Pierce (D-Cumberland) said. “However, this statute has proven outdated and confusing for towns and their residents.”
Yet contrary to Sen. Pierce’s assertion, property tax rates have continued to rise across Maine, putting pressure on homeowners across the board and especially those on fixed incomes.
[RELATED: Sticker Shock: Maine Homeowners Burdened by Property Tax Hikes Following Recent Revaluations]
Maine Republicans pushed back against this effort, suggesting that the repeal would “limit [Mainers’] voice” and create “mistrust in public officials.”
During a public hearing in March of this year, several Mainers submitted testimony in support of reinstating these limits, pointing toward the high tax burden that residents must bear.
[RELATED: Mainers Bear Fourth Highest Total Tax Burden in America — WalletHub Study]
Harris Van Pate of the Maine Policy Institute (MPI) also testified in support of this bill, explaining that these limits “sought to balance municipal revenue needs with taxpayer protections.”
“Unfortunately, repealing these limits last session removed an essential safeguard, allowing local budgets to grow at unsustainable rates, a problem already worsened by municipal revenue sharing policies,” Van Pate said.
Testifying in opposition to municipal property tax levy limits were organizations including the Maine Municipal Association (MMA), Maine School Management Association (MSMA), and Maine Education Association (MEA).
Generally speaking, this opposition was framed, among other things, with respect to the principle of local control, wherein these limits are said to represent “state government overreach,” as said by the MEA.
“Municipal officials and residents of Maine’s municipalities know what is best for their communities. The local budgeting process, regardless of the government structure, is open and transparent. Concerns over spending and any potential impacts on property taxes should be voiced to local officials well before a budget vote is taken and the tax bills are sent,” the teachers’ lobby testified.
“Re-instituting the levy limit as proposed in LD 542 only creates an additional, ineffective, administrative burden and accomplishes none of the desired spending guardrails,” they added.
Reporting out their final recommendation on May 7, members of the State and Local Government Committee were split fifty-fifty over whether or not these levy limits should be reinstated.
Sen. Joe Baldacci (D-Penobscot) joined the Republicans in support of LD 542, while Rep. William R. Tuell (R-East Machias) voted alongside the Democrats in opposition.
The House went on to accept the Committee’s Ought Not to Pass report in a nearly partisan roll call vote of 79-62.
Although this proposal was originally on Wednesday’s Senate calendar, it was tabled pending acceptance of either Committee report.
