“Maine should establish a program that would be administered by municipalities to allow property tax increases to accrue and be paid, with interest, when the property changes hands.”
That’s what we said in this column four years ago.
Wednesday, what seemed like a good idea then finally became law. Whether municipalities now take advantage of the program is the next question.
The bill signed Wednesday by Gov. John Baldacci was sponsored by Rep. Kathleen Chase, R-Wells, who spent 18 years as that town’s tax assessor before joining the Legislature.
Back in 2006, the state was facing a series of citizen initiatives designed to curb rapidly escalating property tax increases. One of the most potent arguments was that people on fixed incomes were being driven out of their homes by rapidly increasing property tax rates.
So, we suggested a solution:
“The criteria for the program would be simple,” we wrote in 2006. “Seniors who reached 65, had retired from full-time work and had relatively fixed incomes would agree to enter the program. From that point forward, their property tax payments would never increase. If they paid $2,000 per year when they entered the program, they could count on paying that amount until the property changed hands.”
The recently enacted program is slightly different, but it is similar in major respects.
Property owners would have to be 70 years old to qualify for the new program, have lived in their homes for at least 10 years and have household incomes of less than 300 percent of the federal poverty level.
Then, just as we had suggested, the taxes would have to be repaid, along with 0.5 percent interest above the established rate for delinquent taxes.
Some news stories about Chase’s bill have suggested that seniors would be able to defer their entire tax bills until the home was ultimately sold.
A reading of the bill, however, is more in line with what we had first suggested: Taxes would be frozen at a certain rate and only increases would be deferred.
Maine actually had an “Elderly Tax Deferral Program” in the late 1980s and early 1990s, until it was discontinued by the Legislature in 1993.
Under that program, the state paid the deferred portion of the property tax to the community, and was reimbursed when the property was sold.
The idea was to spare communities the loss of tax revenue, which gets at the obvious question mark with the new program.
It is entirely optional, so municipalities may choose not to participate.
We hope that will not happen, and we’re betting no town or city government wants to see an elderly person squeezed out of their home by mounting property taxes.
When the current municipal budget crisis passes, municipalities should adopt this program.