Opponents of the property tax cap have called it Draconian.

AUGUSTA (AP) – Property tax horror stories of homeowners being hit with five-figure bills and elderly people being forced from their homes was part of the testimony Monday as a legislative committee took up an initiated tax cap proposal.

Yarmouth retiree and tax activist Jack Wibby told the Taxation Committee that one of his neighbors gets a tax bill for $69,000 a year and another pays $29,000. Some residents can’t sell their properties, he said, because their taxes are so high.

But worst of all, Wibby said, was the World War II veteran who is being forced from his home because the former Marine can’t afford his property taxes.

“That’s double ugly,” Wibby told lawmakers as they held a hearing on a proposal to cap property taxes at $10 per $1,000 of assessed value, based on values in 1996-97.

The initiative will go to voters later this year unless the Legislature enacts it as is first, a highly unlikely scenario.

The proposal, which comes to the Legislature as a result of a successful petition drive, would also limit assessment increases to 2 percent a year while the property’s ownership remains in a family.

The bill is associated with Carol Palesky, president of the Maine Taxpayers Action Network, who defended it as “very well thought out” and not as Draconian as its opponents say.

Palesky said the cap isn’t a straight 1 percent, but rather 1 percent plus local debt service, which she said would bring average rates to about $17 per $1,000 of valuation. Municipalities’ estimates of revenue losses are overblown, Palesky contended.

Portland City Councilor Jill Duson, speaking against the measure, said Maine’s largest city’s revenues would drop from just over $70 million to nearly $18 million a year if the bill passes.

Decreases like that would end municipalities’ ability to deliver critical services, said Duson, who is also Portland’s former city school committee chairwoman.

“We see this as the sky is falling,” Duson said. “The life will be sucked out of our city … we will be smothered in our tracks.”

But Wibby ticked off a list of expenses in his town, such as lights for softball and soccer fields and a second athletic trainer, as examples of frills that burden property taxpayers.

The bill drew a string of opponents who acknowledged that property taxes are excessive for too many Mainers, but believe Palesky’s tax cap is the wrong way to go.

The Maine Education Association listed revenue losses some Maine towns would have to absorb, and the Maine State Chamber of Commerce expressed concerns that the cap would shift taxes.

“We (the state) are already overtaxed and overspent,” said the chamber’s Christopher Hall.

The Maine Municipal Association believes the cap has unconstitutional elements, including one that effectively prevents municipal reassessments. Also opposing the measure were the Maine Pulp and Paper and Maine Service Centers associations.

Maine Municipal is particularly interested in the tax cap plan because the MMA has its own initiative coming up for a second statewide vote in June. Billed as a measure to reduce property taxes, the MMA’s plan seeks to require 55 percent of state funding for public schools.

Several other proposals aimed at easing property taxes have surfaced in the Legislature this session, including some to bolster existing refund programs.

The Maine Citizen Leadership Fund, whose $125 million tax reform package would be funded by adding a penny to the state’s 5 percent sales tax or expansion of the tax base, warned of dire consequences of a tax cap would pass.

The Taxation Committee plans a less-formal review of the bill on Wednesday.

AP-ES-03-08-04 1744EST

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