AUGUSTA — Rep. Gary Knight, R-Livermore Falls, submitted a bill last year that would ensure that landowners receiving significant property tax breaks in the Maine Tree Growth Tax Law were using the program as intended: To commercially harvest timber.

If, at some point, unwitting landowners discovered they didn’t belong in Tree Growth, Knight’s bill would have given them a new way to pull out of the program while avoiding punitive penalties. 

Now a year later, the bill, LD 1138, is heading to the House of Representatives for a vote. However, the legislation is significantly different than the proposal Knight originally envisioned. 

And nobody seems to like it that much. 

“It was hard to get everybody to agree,” Knight said. “At the end of the day, it probably ticked a lot of people off, which probably means we did our job.”

The Forest Products Council and the Small Woodland Owners Association of Maine said the original bill and subsequent versions went too far and could have jeopardized a 40-year-old law designed to promote the state’s wood products industry. Those interest groups were successful in persuading lawmakers to change the bill. 

Now those who think the tax-abatement law is overdue for serious reform believe LD 1138 doesn’t go far enough.

So goes the politics of Tree Growth, a 40-year-old tax-abatement law that is considered a successful conservation program that also bolsters the state’s forest products industry. Few disagree with the latter. However, there’s a persistent problem: Some landowners are exploiting Tree Growth as a tax shelter. 

Bouncing the scofflaws is a priority for the Maine Municipal Association, which is concerned that towns are losing tax revenue.

The MMA had supported Knight’s proposal to add language that essentially made landowners enrolling in Tree Growth say that they understood the purpose of the program is to harvest timber. 

For Geoff Herman, with the MMA, the attestation would prevent landowners from later claiming they didn’t understand the requirements of a program, which can deliver a 95 percent reduction in property taxes.

“(Commercial timber harvesting) has always been the standard of the law, but the landowners have never been made to say it, sign their name to it,” he said. “The idea was that if the law made them recognize that standard, the honest ones would admit they didn’t belong in Tree Growth.”

The attestation still exists in the proposed law, but Herman believes it was unnecessarily watered down even after the Taxation Committee voted unanimously to endorse it. 

SWOAM’s Tom Doak acknowledged that his group asked lawmakers to wordsmith the attestation, but he believes it still achieves the same effect. 

Rep. Michael Shaw, D-Standish, disagrees. Shaw said the weaker language could allow landowners to wriggle out of Tree Growth and avoid withdrawal penalties. 

“Tree Growth is a good program, but it’s a tax-shifting program,” Shaw said. “It’s a tax cut for one, but it shifts the burden because the neighbor has to make up for it.”

Herman still believes the current attestation is a step in the right direction. However, he said, another provision in the bill missed the mark.

Currently, landowners in Tree Growth can transfer their property into other tax-abatement programs, such as the Open Space program. The latter doesn’t offer the same deep property tax discount as Tree Growth, but it allows a landowner who has completed their 10-year forest management plan to receive tax breaks while continuing to conserve their land. 

Knight’s bill goes a step further. 

His plan was to create a “soft landing” for landowners who hadn’t realized their property was enrolled in the program, such as land conveyed through inheritance.

Knight initially proposed a small administrative penalty for such cases. However, stakeholders eventually created a new tax-abatement category in the state’s Open Space tax law, Managed Forest Open Space. The bill now allows landowners to move into the new tax-abatement category and receive an additional 10 percent tax break with certain discounts available in Open Space.

Initially skeptics said the provision would allow potential scofflaws to parachute out of Tree Growth and still get tax breaks. But the debate soon shifted to another proposal that allows landowners to keep property management plans confidential. 

Forest management plans in Tree Growth are confidential because the forest products industry says documents contain proprietary information, such as competitive timber and stumpage fees.

The new management plans in Knight’s bill would enjoy the same confidentiality. 

Herman, with the MMA, said there’s no reason to exempt such documents from the state’s Freedom of Access Act. 

“If you are in this tax-benefit program and you’re not in there for commercial harvesting interests, then it’s hard to make a claim that you should have a proprietary protection of your forest management plan,” he said.

The Legislature’s Judiciary Committee agreed when it was asked to give a FOAA review of the proposal. 

“If no commercial harvesting is required to take place, we do not understand why the plan should be considered ‘proprietary business information,'” the Judiciary Committee wrote in a March 15 memo to the Taxation Committee. 

The Judiciary opinion created upheaval in Taxation, which had reached unanimous consensus. Knight said that public inspection of the management plans was a nonstarter for SWOAM; the group worried that making the new plans public could lead to similar pressure to disclose forest management plans. 

“They saw it as a slippery slope,” Knight said. 

Doak, with SWOAM, said there was no reason to make the new management plans public since the people charged with enforcing the program, town assessors, could inspect the plans upon request.

Others suspect that public inspection of some management plans will show what many town assessors have criticized Tree Growth for: that some management plans can’t be executed or enforced.

Ultimately, SWOAM’s argument won. On Thursday, a majority of lawmakers on the Taxation Committee voted to keep the new Managed Forest Open Space plans confidential.

The vote goes against the recommendation of the Judiciary Committee, even though three members of that panel also sit on Taxation. 

Taxation’s vote overrides Judiciary’s advisory opinion. 

Knight, who submitted the bill last year on behalf of a constituent, is sensitive to the perception that his legislation could be seen to benefit someone like state Treasurer Bruce Poliquin, who in 2004 was allowed to enroll his Georgetown property in Tree Growth despite deed restrictions that appear to prevent him from harvesting timber. 

“A lot of people say this bill was to accommodate certain individuals (such as Poliquin),” he said. “It’s not true.” 

Even critics of the bill support Knight’s statement. The problem with LD 1138, they say, is the problem that’s plagued Tree Growth repeatedly over the years: Entrenched positions on a law that in some cases is giving tax breaks to landowners who don’t deserve them. 

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