AUGUSTA – Democratic House Speaker Mark Eves has introduced a bill to beef up a rent and property-tax credit program that has been criticized for providing significantly less relief to low- and middle-income residents than the program it replaced.

The Legislature this year repealed the Maine Residents Property Tax and Rent Refund Program, known as the circuit breaker, replacing it with a smaller property tax fairness credit.

Lawmakers adopted the change as an alternative to Gov. Paul LePage’s plan to limit the circuit breaker to people 65 or older and veterans. Both proposals were meant to help balance the two-year state budget that took effect July 1.

The program adopted by the Legislature is expected to save the state $20 million to $25 million, but lawmakers are hearing complaints from residents who came to rely on the circuit breaker, which provided tax refunds ranging from $479 to $1,600.

Mainers who qualify for the new program can receive a maximum tax credit of $300 a year, or $400 if they are 70 or older.

Residents who expected circuit breaker refunds in August won’t get them, and the tax credit won’t be available until 2014.


Few details have been released about Eves’ proposal, including how much it’s expected to increase the property tax credit. A spokeswoman for Eves said Thursday that the bill would be funded by a portion of the general fund year-end surplus.

It also would direct lawmakers to find additional funding sources to increase the amount of the tax rebate.

Eves said in a written statement that the bill is a response to growing concerns about the new tax rebate program.

“Democrats were committed to preserving property tax credits for Maine families and this bill will help ensure the funds are there to do it going forward,” Eves said.

The bill won’t be considered until January, when the Legislature convenes for an abbreviated session.

Residents who got refunds from the circuit breaker began receiving notices in July that the program had ended.


Bob Pelletier of Scarborough told the Portland Press Herald in July that the replacement program was a “pacifier.” He used to receive a $1,200 property tax refund.

“It’s kind of a joke for someone on Social Security who is barely getting by,” Pelletier said. “It’s obviously going to be a huge difference for me.”

Some commenters on the Press Herald story said they had adjusted their household budgets in anticipation of their circuit breaker refunds. A woman from Windham wrote that she used the refund check to buy heating oil.

The property tax fairness credit is refundable. However, a homeowner must file a state income tax return to receive the credit, even if the person receives only Social Security income.

Fewer than half the estimated 200,000 eligible households in Maine had applied for the circuit breaker program.

Michael Allen, the state’s associate commissioner for tax policy, said in July that the program had about 89,000 recipients in fiscal year 2011-12.


In 2011, the average yearly refund was $479 and the maximum refund was $1,600, according to Maine Revenue Services.

A study by AARP showed a 40 percent participation rate among similar programs in other states.

Under the new tax credit program, the state estimates that 125,000 people will qualify for credits totaling $34 million to $35 million.

Democrats have argued that the tax credit adopted in the state’s two-year budget was a compromise struck with Republicans and alternative to LePage’s proposal which would have limited circuit breaker to people aged 65 and older and veterans while providing no benefit to others.

Rep. Kathleen Chase, R-Wells, ranking minority member on the Appropriations Committee, recently said the circuit breaker was too complicated and confusing. She said the new program should attract more applicants because the forms will be easier to fill out.

Democrats have since said that Republicans were unwilling to give up tax breaks for high-income Mainers to fund programs for middle- and low-income Mainers.


The change in tax relief programs will save the state’s general fund an estimated $20 million to $25 million. The circuit breaker program was budgeted at just over $43 million in fiscal 2011-12.

Other tax-relief programs are available for homeowners, such as the homestead exemption, which subtracts $10,000 from the assessed value of a Mainer’s home for the purpose of assessing property taxes. Some exemptions also exist for certain veterans.

The new tax credit program aims to help Maine homeowners or renters who earn $40,000 a year or less. To qualify, individuals must have paid property tax on a home in Maine that was more than 10 percent of their Maine adjusted gross income, or paid rent that was more than 40 percent of Maine adjusted gross income.

Social Security does not count as income. Sources of income include pensions and retirement pay, distributions from an IRA or 401(k) plan, rental income from real estate, interest from dividends from stocks or bonds, unemployment benefits, as well as damages paid under court judgments.

Steve Mistler can be contacted at 620-7016 or at:

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