
In 2012, about 89,000 Mainers received property tax and rent relief through the Circuit Breaker program, and the average rebate was $479, according to Maine Revenue Services data.
That’s not the full story, however.
Depending on where you live, and what the property rate is in your community, the average rebate could have been much higher or lower.
For example, Brunswick’s average rebate was $517, which was about average for the Mid-coast. Some towns averaged higher than that, for instance, Scarborough’s average was $667, while York Beach was $801. Other towns averaged lower; Caribou’s average was only $300, while Rumford’s average was $335.
By contrast, the “replacement” for the Circuit Breaker program — the Property Tax Fairness Program — offers a flat tax break of $300 for most people, with $400 going to seniors 70 and older.
The Property Tax Fairness Credit represents a savings of between $20 million to $25 million over the Circuit Breaker program, but to be fair, many more people would have been more likely to get the tax break, since the process was simplified and done with the normal tax returns.
However, those who had been getting Circuit Breaker checks greater than the average amount were counting on those dollars, often to offset property taxes in their communities or some other big-ticket yearly expense, such as property insurance.
They wrote and called in large numbers, and the Legislature — both Republicans and Democrats — got the message.
Two bills were proposed to extend tax relief to the middle class, and to seniors. Speaker of the House, Mark Eves, DBerwick, has said he wants to expand the tax credit in January. He has proposed LR 2258, “An Act To Provide Property Tax Relief to Maine Residents,” which will be considered when the Legislature reconvenes in January. The second session is usually reserved for emergency, or time-sensitive measures.
That bill uses year-end surplus revenue to increase the property tax credit for middle class families. The funds would be set aside in a separate account, and the bill further directs the Legislature to find additional funding for the tax credit.
However, the bill is hazy on that point. It is also unclear that the surplus revenue funds would be available in any given year.
Meanwhile, state Sen. David Dutremble, D-Biddeford, is appealing the exclusion of his bill to provide property tax relief specifically for seniors.
“We should be doing more to help seniors stay in their homes as long as they can,” Dutremble said in a written statement. “Ensuring they aren’t taxed out of their homes is a start.”
Dutremble pointed out that the Tax Fairness benefit for the oldest Mainers is less than the average Circuit Breaker award.
Dutremble’s bill, LR 2593, “An Act to Provide Property Tax Relief to Seniors Residing in Maine,” would freeze the property taxes of eligible seniors and reimburse municipalities for up to 50 percent of the lost revenue.
Dutremble’s plan, while it sounds reasonable, has been tried in other states, causing havoc as the population ages and younger or new residents end up with a larger and unsustainable tax bill.
An example is California’s Prop 13, which froze property taxes at the 1975 level for people who already owned a home.
Since no additional taxation would have been captured until a property was sold, people who owned property did not sell them, choosing to remain in homes with a Prop 13 tax cost, causing other properties’ values to soar around them.
Schools, and other public functions, ground to a standstill as a smaller and smaller number of taxpayers financed greater and greater shares of public services.
Only now — as the Prop 13 homeowners are either passing on or are moving out of their homes into assisted living or nursing homes — are the tax dollars being recaptured.
Not surprisingly, California’s economy, which had been on a downward spiral, is now beginning to rebound.
Dutremble’s bill does not specify where the additional revenue sharing to the municipalities whose tax base has been capped would come from, nor how it would be paid for.
Municipalities would have no choice but to increase taxes on the remaining homeowners and businesses to exempt seniors from increased taxation, creating a two-tier system that other states’ experiences have shown creates downward pressure on the overall economy.
The Legislative Council is due to meet Thursday to review appeals.
GINA HAMILTON, of Bath, is a Times Record staff writer and editor of the New Maine Times.
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