By Scott Taylor,Staff Writer

LEWISTON – Calling Maine’s tax system broken, city officials Friday tossed out a citywide property revaluation.

“What I want people to do is to take those letters they got from the assessor last week and throw them in the trash can,” said City Council President Renee Bernier.

The revaluation decreased property taxes for businesses but increased them for most homeowners, in spite of budget cuts.

Mayor Lionel Guay, City Administrator Jim Bennett and city councilors said they could not allow that to stand.

“In effect, what we were asking homeowners to do through this reval was to accept that we were asking for less money to fund next year’s city budget and in the same breath requiring five out of six homeowners to pay more in property taxes than they did last year,” Guay said. “There is just something fundamentally wrong with that picture.”

City assessors will continue to meet with property owners to review individual assessments, but they will not be used to determine property taxes this year, Bennett said. Tax bills will be mailed in September.

He called on state legislators and Gov. John Baldacci to fix Maine’s tax system. Bennett said he hopes the issue becomes key to this year’s election. He invited incumbents, as well as challengers, to work on the issue.

Lewiston began its property revaluation – the first since 1988 – last June. It hired the private appraisal firm CLT to survey business, commercial and multi-family properties. The city began working on residential property values in September under the direction of city Assessor Joe Grube. He said then that the city’s assessed value was about 87 percent of market value.

The revaluation notices were mailed out last week. They showed an average residential property tax increase of $503. Tax bills for many commercial and business properties went down, however.

Bennett said city officials had heard from too many residents who would be harmed by the increases. Those people convinced him it was not time for a revaluation.

“This has nothing to do with my people, the assessing staff or any of the work they’ve done,” Bennett said. “The answers they got were right, based on the formula we have to use. That only means that the formulas are wrong.”

Property taxes account for most of the revenue for government in Maine, Bennett said. That puts the bulk of the burden on residential property owners, including the elderly and those on fixed incomes. Rising real estate prices are especially hard on fixed-income residents.

“They’ve been in these homes for years, and I think many of them plan on dying there,” Bennett said. “So being told they can sell their homes for an additional $50,000, that does not help them.”

Legislators should consider letting cities issue their own homestead exemptions to give residential property owners a break on their taxes. Bennett also talked about letting elderly homeowners put off paying their taxes until they sell their homes.

He doubted current tax reform efforts would help. The Taxpayers Bill of Rights, or TABOR, seeks to cap government spending. That would stop cities like Lewiston from increasing overall property tax collections, but it wouldn’t keep tax burdens from shifting to homeowners.

“If someone thinks they’ll solve this problem by just voting for TABOR, I think they’re wrong,” Bennett said.

Lawsuits possible

Bennett speculated that both he and Grube could face jail time for rejecting the valuation.

“It really depends on how they want to enforce this,” Bennett said.

But Dave Ledew, director of the property tax division of the Maine Revenue Services, downplayed any official sanctions. State law requires cities to keep their assessed property values no lower than 70 percent of the market value. Lewiston does that now, according to state records.

“Officially, at this point they comply with state law,” Ledew said. “I don’t think they’ll comply next year if they do this, but right now they are fine.”

However, the city is opening itself up to civil lawsuits, especially from those who would pay lower taxes under the new valuation, Ledew said. Cities are required to levy fair and equitable property taxes according to the state constitution. The new valuation would do that, spreading the tax burden fairly.

“Cities have protection from civil suits when they have fair, equitable valuations,” Ledew said. “If they don’t, they lose that protection and open themselves up legally.”

Local businesspeople may support the city’s decision to reject the revaluation if it shelves plans for a stormwater utility, said Chip Morrison, president of the Androscoggin Chamber of Commerce.

The so-called “rain tax” proposal created fees based on the amount of paved surfaces a property has. Properties with more paving – including roofs, sidewalks and parking lots – would pay more to the city.

“That really does shift costs onto businesses,” Morrison said. “If they do both, if they shift taxes and create this utility, they’ll no longer be equitable.”

The stormwater utility fees are still included in Bennett’s draft budget.