If you’re planning a trip to Aruba with the money you expect to save on your property taxes thanks to recent tax relief efforts, don’t buy that sunscreen just yet.

It’s still too early to tell how many Mainers will get a break. Still more numbers to crunch. But the answers are just weeks away for many taxpayers.

We are midway through town meeting season, when smaller communities tally votes on their new budgets. Meanwhile, city officials are putting the finishing touches on their spending figures. The earliest that communities will set their property tax rates is June, local officials say.

That means no one can predict with certainty just how Mainers – who have voted three times in the past 1 1/2 years on contentious tax-relief ballot measures – will fare.

What is known at this point?

Many Maine property taxpayers should see lower bills, especially homeowners who live in southern Maine or in communities along I-95 corridor.

Because a big chunk of the relief will be provided through more education money from the state, those residents expected to reap the greatest benefit live largely in the most populous towns and cities where student enrollments are higher and where English is considered a foreign language by more students.

Gov. John Baldacci’s recipe for tax relief, prompted by an angry public and passed by the Legislature in January, included the following ingredients:

• millions of dollars more in public school aid;

• tax breaks for primary homeowners;

• tax refunds targeted to those with high property-tax-to-income ratios; and,

• spending caps at all levels of government.

Not everybody is happy with state lawmakers’ efforts. Local officials in some towns are griping about meager raises in their school subsidies, while others are miffed that the state gave homeowners a tax break and told the towns to pay for half of it.

Will all homeowners’ tax bills go down?

“The answer is unequivocally ‘No,'” said Geoffrey Herman, spokesman for Maine Municipal Association, which represents most of Maine’s towns and cities. “The answer was never ‘Yes.'”

Here are some of the factors to keep in mind as your town prepares to set your new tax rate.

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State lawmakers agreed to boost the state’s share of public school financing to 55 percent over a four-year period, starting this year. But each community will only get that money for programs and services considered “essential” by the state.

A school’s student-teacher ratio, how much it must spend on English as a Second Language programs and other factors will influence the actual amount each district receives.

For that reason, many rural schools where student-teacher ratios have dropped due to declining enrollment may not see an increase in state money for education even though their costs may not have declined at a similar rate, says Jim Rier, policy director of school funding for the Maine Department of Education.

“You’d be hard pressed to see tax relief occurring in those towns,” he said – tax relief, that is, that results from greater school subsidies from the state.

Where to look: Compare your district’s education spending last year to this year.

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But that’s not the only component of tax relief aimed at homeowners.

The Homestead Exemption slices off a portion of the assessed value of a person’s primary home. The Legislature enlarged the slice.

This year, the owner of a $100,000 home should be paying taxes on a home valued at $87,000, a reduction of $13,000. Last year, the exemption lopped off $7,000.

There is one hitch. Although lawmakers essentially doubled the exemption, they didn’t fund it with state money. Towns and cities will be expected to pick up the other half.

In communities where the property tax base is spread out among many commercial and industrial properties and/or seasonal homes – as found in southern Maine and service center areas like Lewiston – those other property taxpayers will pick up much of the additional Homestead Exemption for homeowners.

But in largely bedroom communities found in rural areas, homeowners could end up paying for half of their own tax relief, said the MMA’s Herman.

What to do: It’s done automatically, no application needed.



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State lawmakers also sought to keep property taxes in check by imposing caps on local spending. The caps, determined for each community through a complicated formula, can only be exceeded by a vote of town residents.

According to a recent random survey, it appears that in most area communities – even those where property tax reform measures are not expected to help ease the tax burden – local officials have been doing their best to keep a lid on spending.

In Jay, local spending was cut by more than $100,000 to keep taxes from going up.

“There’s not much tax relief for Jay,” said Town Manager Ruth Marden.

The state’s new formula had earmarked less school money for Jay than last year. But last-minute “transition adjustments” brought funding levels back to just above last year’s amount.

(In a related move that would affect property taxes in Jay and some other towns and cities, the Legislature is considering eliminating the business equipment tax. Marden says that considering Jay’s two paper mills, the measure “would be devastating for us.”)

Al Landry, a retired mill worker who has lived in Jay for 50 years and is “struggling along to keep up” with his taxes, predicted, “We won’t see any help” this year.

Landry, a member of the budget committee, pins part of the blame on the Legislature, but also points a finger at town residents for spending more than they should.

Residents of Lisbon voted last week to exceed the school spending cap, though some voters were scratching their heads trying to understand the new law, according to reports.

In Poland, another town that stands to lose education money under the new state funding formula, the tax rate may actually be heading up, said Town Manager Richard Chick.

By contrast, Lewiston homeowners are expected to benefit from both legislative and local efforts aimed at tax relief.

Officials have projected a drop in the tax rate from $27.70 mills to $27.35.

Lewiston schools got a $3.5 million increase in state aid this year, partly due to an influx of non-English-speaking refugees and largely due to past underfunding by the state. School officials used only a portion of that additional money, passing along more than $1 million to the city for tax relief.

The Homestead Exemption should further benefit homeowners in Lewiston, where many new commercial ventures have taken root in the past year.

Lewiston City Manager Jim Bennett said he expects the average homeowner in the city to pay $112 less in property taxes in 2006 than in 1997, more than a 5 percent savings.

In Auburn, the picture is less rosy.

City schools got about $500,000 more in state aid than last year, but total spending is up about $2 million. City officials are still mulling the school budget and their own municipal budget.

Laurie Smith, community relations manager for the city, was unenthusiastic about the Legislature’s actions.

“So far, I don’t see that we’re getting tax relief from the state with regard to educational funding,” she said.

What to look for: If town or city leaders want to exceed the caps established by the Legislature, a vote by residents is required.



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Homeowners whose tax bills go up or stay the same despite all the changes could still get some relief after all.

The Legislature also broadened the Maine Resident’s Property Tax and Rent Refund Program, better known as the Circuit Breaker.

Under the program, the state gives money to homeowners and renters who pay more than a certain portion of their income in property taxes or rent.

The expanded version of the program goes into effect in August for the current tax year and was extended so that people filing for the refund were given five additional months to apply.

Where to go: Applications will be mailed to individuals who filed applications in prior years as well as other Maine residents. Beginning in August the applications may be downloaded from www.maine.gov/revenue (select Forms/Publications). Applications are also expected to be available at most postal offices, public libraries and city/town offices.

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Phil Harriman, who served as spokesman for a failed effort last year to impose a statewide 1 percent property tax cap on all municipalities, said state government doesn’t appear to be keeping its promise of tax relief.

“It should come as no surprise to property taxpayers that the Legislature’s behavior has just exacerbated the property tax problem,” he said. “It has simply shifted the burden or blame, as the case may be, onto the municipalities.”

But House Speaker John Richardson, who shepherded Baldacci’s tax package through the Democrat-controlled Legislature, called it a “historic and monumental” achievement.

“By and large this has been a success,” he said, while acknowledging barbs tossed by Herman and some local officials.

“If the cities and towns are increasing their taxes, they need to look inward to trim their sails,” he said. Every school district is getting an increase in aid, he said. Some more than others.

Getting a small increase is better than getting nothing at all, he said. “If the complaint is, ‘I didn’t get enough’ (of an increase), that’s better than ‘I didn’t get anything,'” he said.

The taxpayers praising the Legislature’s work are parents of public school students and homeowners on fixed incomes, he said. And that’s fine with him.

In passing the property tax relief legislation, lawmakers included a provision that requires the State Planning Office to compile budget figures and tax rates from all municipalities. That office is expected to report back to the Legislature at the start of the next legislative session on just how many Mainers got tax relief.


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