AUGUSTA (AP) – Variously called tax reform or tax relief, changes in Maine tax policy of all kinds are under discussion again at the State House. So on Monday, the Legislature’s Taxation Committee conducted a sort of open-mike session, allowing lawmakers and others to give their thoughts about how changes should be made.

Much of the discussion to date has focused on the desirability of lowering the state’s top income-tax rate and doing more to curb property tax increases. Those two goals have some eyeing a broadening of the state sales tax as a way of raising enough revenue to offset reductions in other tax lines.

Despite a wide range of options and opinions, key members of the Legislature’s Democratic majority are hoping to put forth a plan relatively soon.

“The Taxation Committee is intent on developing a tax reform package … say, by April 1 or so,” the panel’s House chairman, Democratic Rep. John Piotti of Unity, said Monday as the free-form listening forum got under way.

“One of our ground rules,” Piotti added, “is we have the right to be flexible.”

Both supporters and critics of property tax reform undertaken by the last Legislature hope to build on what was known as LD 1 – school funding legislation to ramp up aid to local schools while setting target caps on local spending in an effort to tamp down property tax increases.

A second-year status report released by the Baldacci administration last month purported to show that the new law has had some success. But, to take one troublesome area, the findings by the State Planning Office suggested 81 percent of school administrative units exceeded recommended growth limits.

Critics charge LD 1 has failed to answer public demand for property tax relief. Even proponents of the original legislation say more action is required.

“I think this is the year we can all be successful,” Senate Majority Leader Elizabeth Mitchell, D-Vassalboro, told Taxation Committee members Monday.

Among those offering specific proposals for change were House Speaker Glenn Cummings, D-Portland, and Assistant Senate Minority Leader Richard Rosen, R-Bucksport. Neither claimed to be speaking for his caucus.

Aiming to lower the tax burden in Maine, Gov. John Baldacci and the Legislature agreed in 2005 to boost the state’s share of local school costs to 55 percent by 2009 and to establish spending caps for the state, its 489 municipalities and 16 counties, and for local schools.

In addition, the measure enacted as LD 1 increased property tax rebates.

State voters had approved an initiative backed by state educators and municipal officials in June 2004 that called for an immediate boost in state support for local schools.

A proposal advanced by Baldacci this session seeks to freeze the value of the land of primary residences of year-round Mainers until the property is sold. At the point of sale, the town could recapture five years of back taxes that would have been paid if the valuation had not been frozen.

The proposal is modeled after an existing provision in the Maine Constitution that gives valuation breaks for woodlands, farmlands, wildlife management lands, open space and working waterfront land, according to the governor.

AP-ES-02-26-07 1438EST

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