AUGUSTA — House Speaker Mark Eves said Wednesday that his bill to bolster a property-tax relief program for low-income Mainers would “right a wrong” that lawmakers committed when they crafted the state’s two-year budget last year.
However, Eves’ bill will face the same obstacle that pushed the Legislature to abolish the so-called circuit breaker program and replace it with one providing much smaller tax refunds: a lack of funding.
Eves says his bill, L.D. 1751, would beef up the Property Tax Fairness program, which replaced the circuit breaker, and provide bigger tax breaks to more people. The bill is a response to Mainers’ complaints about the elimination of the circuit breaker, which provided qualified homeowners and renters with tax breaks that ranged from $479 to $1,600 a year.
The new Property Tax Fairness program provides $300 a year, or $400 to taxpayers who are 70 or older. To be eligible, residents must have paid property tax on a home in Maine that totaled more than 10 percent of their Maine adjusted gross income, or paid rent that was more than 40 percent of their Maine adjusted gross income.
Fewer than half of the estimated 200,000 eligible households applied for the circuit breaker program in 2012. Maine Revenue Services estimated last year that 125,000 people will qualify for credits in the Property Tax Fairness program, costing the state $34 million to $35 million.
The state budgeted $43 million for the circuit breaker program in fiscal year 2011-12. Gov. Paul LePage eliminated the program in his proposed budget. Lawmakers later settled on the smaller refund program as part of a bipartisan budget compromise.
Eves said Wednesday that the Property Tax Fairness program was the “best we could do” because a budget impasse threatened to shut down state government.
“Now we can do better,” the Democrat said during a public hearing before the Legislature’s Taxation Committee.
Republicans are skeptical. Several on the committee agreed that Maine’s property tax burden is high – the state ranked No. 11 nationally in property tax burden in 2010, according to the nonpartisan Tax Foundation – but several questioned Eves’ plan to use 10 percent of the state’s revenue surplus to provide more relief.
Sen. Doug Thomas, R-Ripley, said the bill relies on funding that “may not be there.”
The state has had a revenue surplus in all but four years since 1990, according to the Legislature’s nonpartisan budget office, but the amount has varied widely. The state has had revenue surpluses in the past four fiscal years, since a $43.4 million shortfall in fiscal 2008-09, the peak of the recession.
Other state funds automatically receive portions of any surplus revenue, including some that are set by law. It’s unclear where Eves’ bill would fit. The cost also is unknown, and will be addressed later by the budget office.
The bill would require that the Legislature find additional sources to pay for the program, beyond revenue surplus.
Eves said lawmakers owe it to those who are “living on the margin” and in danger of losing their homes. Other lawmakers said the elimination of the circuit breaker program provoked more response from their constituents than any other legislative action.
No one from the public testified at Wednesday’s hearing. Several progressive groups supported the bill, including Maine Equal Justice Partners and the Maine People’s Alliance. No group or individual testified against the measure.
The Taxation Committee will continue reviewing Eves’ bill in upcoming work sessions.
Steve Mistler can be contacted at 791-6345 or at: