118TH LEGISLATURE ADJOURNS

A second legislative session that began with the most destructive ice storm Maine has ever known ended with the enactment of the largest property tax relief package in Maine’s history.

The homestead exemption which will provide $46 million of property tax relief every year is clearly the capstone of a session characterized by a Legislature that responded in a most extraordinary way to the needs of municipal government.

In addition to the homestead exemption, the 118th Legislature and Governor Angus King presided over:

~An increase to General Purpose Aid to Education for Fiscal Year 1999 which will be a 6% increase over the allotment for Fiscal Year 1998. This represents nearly $17 million more than the 3% increase that was initially budgeted for K-12 education for the next fiscal year. It should be noted, however, that the additional $17 million is a one-time only increase to the educational subsidy, and the law has been expressly amended so that the GPA base for FY 2000 will not include the additional 3% increase. Just as the state is not automatically including this extra funding into its base-level of subsidy, municipal officials will want to make sure that school budgets do not incorporate this funding into their ongoing "base" of operations, because there is no guarantee that this level of state support will be continued.

~Setting aside $20 million into a fund to provide grants and loans for school units to renovate deteriorating school buildings to address life safety, ADA, and air quality concerns.

~Setting aside $10 million for the purpose of renovating the Oak Grove Coburn School in Vassalboro to make a new Maine Criminal Justice Academy to provide a much-improved environment for the training of state, county, and local law enforcement personnel.

~A long-awaited increase to the amount of reimbursement provided to local and county law enforcement personnel when they testify in District Court to prosecute traffic violations. Although for many years District Court reimbursement to municipalities was pegged at an hourly rate, the state dropped that rate down to a mere $10 per day in 1991. This Legislature increased that rate to $25 per day, which will annually divert back to the municipalities and counties over $500,000 of the traffic fine revenue that would otherwise accrue to the state.

~The appropriation of $3 million to cover the state’s share of landfill closure as the landfill closure program enters into its last year or two of existence.

~The appropriation of $600,000 of additional core funding for the state’s homeless shelters, which more than doubles what has been the annual appropriation for that purpose.

~Over $500,000 to restore both Food Stamps and SSI to the legal immigrants in Maine who could have lost those benefits without state action as a result of federal welfare reform.

~Nearly $500,000 to restore a lake water quality assessment and protection program, which could parallel and work in concert with another $500,000 for essentially the same purpose that the statewide electorate will vote on as part of an environmental bond issue in June.

But money isn’t the only issue the Legislature deals with. 559 separate legislative proposals, both new measures and bills carried over from the first session, were processed at the committee level this second session. Over 400 of those proposals received enough of a positive report from the committee of jurisdiction to be presented to, and deliberated by, the full Legislature.

Here again, with regard to the hundreds of legislative proposals that involved no money, the 118th Legislature treated municipal government with remarkable respect.

All legislation enacted throughout the second legislative session will be described in detail in the May issue of MMA’s Maine Townsman. What is provided below is a summary of the final actions of the Legislature over the last two weeks.

Until the publication of the Maine Townsman in May, municipal officials with any questions regarding a legislative outcome are invited to call MMA’s State and Federal Relations Department (1-800-452-8786) at their convenience.

LD 1551 An Act to Amend the Amount of Retainage on Public Building Contracts. Died Between Houses.

LD 1676 An Act to Preserve Live Harness Racing in the State. Died Between Houses. This bill would have diverted some gambling revenues to the municipal Revenue Sharing Fund.

LD 1730 An Act to Implement the Recommendations of the Great Pond Task Force. Enacted in House and Senate. This Act has many components that will be more fully described in the May issue of the Maine Townsman. The municipal centerpiece of this act would create a two-tiered process for municipalities interested in developing ordinances that would govern watercraft use of great ponds. First, after being approved by the local legislative body (town meeting or council), an interested municipality would submit their recommendations for regulating the use, operation and type of watercraft on great ponds within the municipal jurisdiction to the Commissioner of Inland Fisheries and Wildlife along with an implementation and enforcement plan of the proposed ordinance. These locally-adopted recommendations would not be enforceable at this stage in the process.

The second stage of the process would consist of the Commissioner then submitting to the Legislature a report on the recommendations received from the municipalities and accompany the report with legislation to implement the municipal recommendations supported by the Commissioner. The municipal regulations would only become enforceable if ultimately adopted or ratified by the Legislature.

LD 1746 An Act to Amend the Laws Relating to Development and Centralized Listing of Municipal Ordinances That Apply to Forest Practices. Indefinitely Postponed.

LD 1812 (new title) An Act to Authorize Department of Transportation Bond Issues in the Amount of $36,985,000 to Match Available Federal funds for Improvements to Municipal and State Roads, Airports, State Ferry Vessels and Terminals, Transit Facilities and Equipment and Rail and Marine Facilities. Enacted; P&SL 1997, c. 82.

This Act will place before the voters in November, 1998, a proposed transportation bond issue with a principal cost of nearly $37 million. $22.5 million of that amount will be borne by the General Fund, and the remaining $14.5 million will be borne by the Highway Fund. The total bond package is supposed to leverage over $60 million in matching federal funds. The General Fund portion of the bond will provide funds for improvements to the state’s airports, marine facilities, ferry vessels, ferry terminals, rail and transit facilities. The Highway Fund portion of the bond will provide $4.7 million for DOT highway improvements and $9.75 million to cover half the costs of FY 99’s $20 million Local Road Assistance Program.

LD 1824 An Act to Establish a System of Tax Revenue Targeting. Ought Not to Pass.

LD 1827 An Act to Authorize the Operation of Video Gaming Terminals by Certain Nonprofit Organizations. Ought Not to Pass.

This bill would have diverted some gaming revenues to the municipal Revenue Sharing Fund.

LD 1829 An Act to Change the State’s Fiscal Year from July 1st to October 1st. Died Between Houses.

LD 1836 An Act to Facilitate Delegation of the Federal Waste Discharge Permitting Program. Enacted in House and Senate.

LD 1918 An Act to Clarify the Definition of Functionally Water-dependent use as it Pertains to the Shoreland Zone. Enacted in House and Senate.

As enacted, this law establishes a ban on recreational boathouses in the shoreland zone. In addition, the enactment "deems" inclusion of the ban in all currently effective municipal ordinances.

LD 1974 (new title) An Act Regarding Maintenance of Private Ways. Enacted; PL 1997, c. 682.

Although this Act does not affect municipal roads, its provisions may be of interest to municipal officials. The Act increases the leverage of private road associations to require financial contributions from all abutters on a private way who benefit from road maintenance conducted by a duly-appointed commissioner. The law amends the existing statute (23 MRSA, Section 3101) to allow road associations incorporated as of March 1, 1998 to obtain court costs and reasonable attorney fees when successful in a collection action against recalcitrant abutters who do not contribute toward the maintenance of the private way. The underlying process of calling a meeting, appointing a road commissioner, and assessing the costs of maintenance is already provided by the same law. Exempted from this process are private ways constructed or primarily used for commercial or forest management purposes.

LD 1995 An Act to Appropriate Funds for Library Resource Sharing and for Acquisitions for the Maine State Library. Enacted in House and Senate.

As printed, this bill would have provided $1.2 million of state support for Maine’s public libraries and $200,000 to increase the Maine State Library’s acquisition budget. As finally enacted, the bill will only provide the $200,00 for the Maine State Library as one-time funding for the acquisition of books and other library resources.

LD 2046 An Act to Improve Voter Participation. Died Between Houses.

LD 2091 (new title) An Act Providing for Additional Meetings in the Event of a Tie Vote at Town Meeting. Enacted in House and Senate. This legislation is discussed in the March 13, 1998 issue of the Legislative Bulletin.

LD 2111 An Act to Reauthorize the Toxics and Hazardous Waste Reduction Laws. Died Between Houses.

LD 2116 An Act to Limit Mandatory Overtime. Enacted in House and Senate; subsequently vetoed and veto sustained.

LD 2125 An Act to Improve Public Sector Labor Relations. Enacted in House and Senate.

As originally proposed, the bill would have required all provisions of expired public employee contracts to continue during the negotiation process, including step increases in pay. As enacted, only the provisions that set out the process for dealing with grievances survive the contract expiration.

LD 2149 (new title) An Act to Implement the Recommendations of the Working Group on Motor Vehicle Fines, Enforcement and Reimbursement and to Change Certain Provisions of the Tax Relief Funds. Enacted in House and Senate.

This Act increases the amount of reimbursement to be provided a municipality or county for providing law enforcement personnel to testify in District Court from the current $10 per day reimbursement level to $25 per day. This increase in reimbursement carries a fiscal note of approximately $300,000, which in combination with the existing level of reimbursement will annually divert back to the municipalities and counties over $500,000 of the traffic fine revenue that would otherwise accrue to the state.

LD 2224 (new title) An Act to Authorize a General Fund Bond Issue in the Amount of $7,000,000 to Construct Water Pollution Control Facilities; to Clean Up Tire Stockpiles; to Investigate, Abate, Clean Up and Mitigate Hazardous Substance Discharges; and to Make Drinking Water System Improvements. Enacted in House and Senate.

This environmental bond issue hit several snags on the way to enactment. As originally printed, it was a $16 million bond issue. As reported out of the Appropriations Committee, it dropped to a $12.5 million bond issue. In the Legislature’s final days, it was whittled down to a $7 million bond issue.

As finally enacted, the environmental bond proposal that goes before the voters in November, 1998 will include:

~$3.35 million for water pollution control facilities (down from $6 million), which will leverage $10,000,000 in federal matching funds;

~$1.5 million for drinking water system improvements (down from $3 million), which will leverage over $7,000,000 in federal matching funds;

~$1.15 million for the abatement of hazardous substance discharges (down from $1.5 million);

~$1 million for tire pile abatement (down from $1.5 million); and

~Zero dollars for a watershed protection program (down from $500,000).

It should be noted that voters will be asked to approve an environmental bond in June, 1998 that was approved by the Legislature last year. That bond issue includes $500,000 for watershed protection purposes.

LD 2243 An Act to Encourage Accountability and Return on Investment for Maine Taxpayers from Economic Development Initiatives. Enacted in House and Senate (described in the March 27, 1998 edition of the Legislative Bulletin).

LD 2244 An Act to Encourage Intergovernmental Cooperation. Enacted in House and Senate.

This Act is the finally enacted remnant of the much more comprehensive recommendation of the Task Force on Intergovernmental Cooperation. As presented to the Legislature, the bill would have allowed the counties to retain more of the Real Estate Transfer Tax than the 10% they currently retain, and created a grant program to help fund the development of regionally-provided services at the county level. These two elements of the bill were deleted in final actions of the Legislature. In its final form, the Act makes some technical changes to county government law in Title 30-A MRSA to clarify that county government can develop services to be provided to willing municipal governments on a voluntary contractual, fee-for-service basis. The Act also adds four legislators to the Task Force on Intergovernmental Cooperation. The Task Force itself is established through the execution of a memorandum of agreement between the Maine County Commissioners Association, the Governor, and the Maine Municipal Association. The only money appropriated for this bill is provided for the legislator’s per diem expenses to participate on the Task Force.

LD 2252 An Act to Implement the Recommendations of the Governor’s Committee on School Facilities. Enacted in House and Senate.

This Act creates an alternative method for municipalities and school districts to receive state funding for construction and renovation projects that address student health and safety issues. The newly created revolving loan fund would provide municipalities and school districts with grants to cover 30% to 70% of the cost of approved renovation and minor construction projects and a no interest loan to fund the remaining cost. The Act also: 1) requires school districts to develop and implement CIP’s (capital improvement plans) for their classroom and administrative buildings; and 2) authorizes, upon mutual agreement of both the receiving and sending school, a receiving school to include newly incurred debt service as part of the tuition rate. This new law was backed-up with a $20 million appropriation in the supplemental budget bill.

LD 2265 (new title) An Act to Reduce Nonpoint Source Pollution from Existing Sources, Amend the Shoreland Zoning Laws and Amend the Site Location of Development Laws. Enacted in House and Senate.

This Act provides municipalities with an alternative expansion option for nonconforming structures in the shoreland zone. Details of the alternative expansion option are described in the March 20, 1998 edition of the Legislative Bulletin.

LD 2269 An Act to Reduce Mercury Use and Emissions. Enacted in House and Senate.

LD 2270 Resolution, Proposing an Amendment to the Constitution of Maine to Amend the Timing of Elections Following the Submission of a Petition for People’s Veto. Died Between Houses.

LD 2283 An Act to Implement the Recommendations of the Interagency Task Force on Homelessness and Housing Opportunities. Enacted in House and Senate.

The supplemental budget (LD 1950) appropriated an additional $500,000 for the Shelter Operating Subsidy Program, administered by the Maine State Housing Authority, which provides core funding for the state’s homeless shelters. The $500,000 supplemental appropriation doubles the annual appropriation for this program. In addition to the funding provided through the supplemental budget, LD 2283 was enacted to provide an additional $100,000 for that purpose. Therefore, the Shelter Operating Subsidy Program has moved from its original FY 99 appropriation of $500,000 to $1,100,000.

LD 2286 An Act to Implement the Recommendations of the Majority of the Joint Standing Committee on Agriculture, Conservation and Forestry Regarding Enhancing Forest Resource Assessment. Enacted; PL 1997, c. 720 (described in the March 27, 1998 edition of the Legislative Bulletin).

LD 2297 An Act Relating to the Taxation of Certain Federal Entities, the Business Equipment Tax Reimbursement Program, the Administration of the Tax Laws and to Make a Technical Correction. Enacted in House and Senate.

This Act amends the Business Equipment Tax Reimbursement Program (BETR) to provide that natural gas pipelines, pumping and compression stations, storage facilities, and other associated property are not eligible for BETR reimbursement except for pipelines less than a mile in length that are owned by the business consumer. The Act also provides that property used to generate electricity "primarily" for sale on the power grid is not eligible for BETR reimbursement. Cogeneration facilities that produce power both for sale on the power grid and to provide electricity (and other forms of thermal energy) to industrial users could be partially eligible for BETR reimbursement under this new law provided they do not sell more than 2/3’s of their power on the grid. For those cogeneration facilities that sell less than 2/3’s of their power on the grid, the amount of BETR reimbursement will be apportioned as a percentage of the amount of useful energy that the facility provides to an industrial facility.

LD 2298 Resolve, to Create a Task Force to Study Telecommunications Taxation. Passed in House and Senate.

This Act establishes a task force to study the current system of taxation of telecommunications property. The task force is comprised of 15 members: six legislators, six representatives of various segments of the telecommunciations industry, one municipal official with expertise in the area of telecommunications taxation, one representative of DECD, and one representative of the Bureau of Revenue Services. The charge to the task force is to identify and recommend methods to eliminate disparate taxation among the various telecommunciations systems, compare telecommunication businesses with other businesses in the state, evaluate strategies to ensure that the taxation of telecommunications property is easily administered and provides predictable revenues to the state, and clearly define the tax base and appropriate taxing jurisdictions between state and local government. Under this law, the task force is scheduled to meet six times and provide a report to the Legislature by January 15, 1999.

 HOMESTEAD PROMOTION BEGINS

With the short application timeframe for the Homestead Exemption in 1998, Maine Municipal Association has launched a statewide media campaign to get the word out to Maine homeowners that they need to apply for the exemption by May 15, 1998 to be eligible this year.

The media campaign includes a series of advertisements in all of Maine’s daily newspapers, public service announcements on some of Maine’s television and radio stations, and appearances by MMA staff and municipal officials on a variety of television and radio public affairs programs. Maine’s media seems to be very interested in the homestead exemption story and MMA will continue its media relations program right up to the May 15th application deadline.

Meanwhile, many Maine communities are aggressively marketing the Homestead Exemption Program locally. The vast majority are mailing the application form to their residential homeowners. Many are including addressed reply envelopes with the mailing.

In Cumberland County, the towns of Freeport, Cumberland, Falmouth and Yarmouth are jointly sponsoring a full-page advertisement of the program in two local papers, the Falmouth Forecaster and Shopping Notes.

In Augusta, City Assessor Don Cadwell beat a lot of assessors to the punch. He had his cover letter and homestead application form in the mail on Wednesday, April 8th. Cadwell mailed to just under 5,000 homeowners in the Capital City. Cadwell took a chance, anticipating the homestead exemption, and had his property tax records recoded in February to identify taxpayers whose mailing address was the same as the location of the property.

Orono Assessor Richard Sands plans to run a computer cross-check in early May to see what homeowners have not yet applied for the homestead exemption. He plans to hire temporary help to get on the phone with these people and make sure they know about the program.

In Waterville, Assessor Cindy Michaud has gone electronic with the Homestead Exemption Program. Internet users in Waterville can request an application at homestead@ci.waterville.me.us and it will be sent to them as an attachment (text file) via e-mail. The city also held a press conference on April 10th and kicked it off by having the assessor accept her first Homestead Exemption Application from State Legislator, Taxation Committee member and Waterville resident Ken Gagnon. Waterville also has two phone lines that provide answers to basic homestead questions with recorded messages.

Several mid-sized to larger municipalities are contracting with Northern Data Systems of Falmouth for mailing their application forms. For 55 cents per piece mailed, Northern Data is providing a customized cover letter, the application form, and a return envelope. The application form, with Maine Revenue Services approval, includes the homeowner's address, map and lot number and account number. Mailing lists are provided to the company as ASCII files (on computer disk). The company takes advantage of all presort postage discounts. NDS’s Travers Clark says he expects to have 40 communities taking advantage of the company’s service and he anticipates that the company with mail out 150,000 applications.

Getting Your Application Forms

Maine Revenue Services David Ledew says that all municipalities should have the necessary copies of the Homestead Exemption Application form in their hands by next Friday (April 17). Most communities, says Ledew, will have forms by Monday or Tuesday (April 13 & 14). Ledew says that many municipalities have picked up applications at Maine Revenue Services office in Augusta.

Communities that do not receive their application forms by the end of next week, should call Maine Revenue Services at 287-2011.

MORE HOMESTEAD Q & A

The Homestead Application Form is not entirely clear about the threshold eligibility requirement that an applicant must have owned a homestead in Maine for the last 12-month period. Could you explain that standard of the law?

The new law states that an eligible applicant is a "permanent resident of this State who has owned a homestead in this State for the preceding 12 months…."

Because of the way property tax law is designed, the "preceding 12-month period" means from April 1 to April 1. For this year, therefore, the pertinent 12-month period is from April 1, 1997 through April 1, 1998.

It is very important to recognize that this standard does not require the applicant to have owned the same home during that period of time; the applicant could have owned more than one primary residence during that 12-month period and still qualify. For example, if an applicant sold her home in Mt. Vernon and moved directly to another home in Sidney during the 12-month period, she would still be eligible for the exemption because she was a qualified "homesteader" during the entire tax year.

Because it is possible for people to get the wrong impression, that they must have owned the same property for the entire 12-month duration in order to pass this threshold qualification, local assessors should ensure that applicants understand that they merely have to have been homesteaders somewhere in Maine during the 12-month period, and not necessarily at the same location.

Do people who live on property with a "life estate" qualify for the homestead exemption?

Yes. The new homestead exemption law does not expressly recognize the issue of ownership by life estate because it does not have to. Under long-established case law in Maine (court decisions), the individual who lives on a property under the terms of a life estate is the owner of the property for the purposes of property taxation. There are some circumstances, however, where there is no formal life estate recorded in the local registry of deeds. Typically, in these cases the owners of the property have deeded the home over to their children with an informal understanding that the parents will have the full use of the property as long as they live. With regard to these informal "life estates," the people living on the property are not the legal owners of the property and they do not live there under the terms of a life estate, and they are therefore not eligible for the homestead exemption. Those applicants would be well advised to seek legal counsel to determine if they should formalize the life estate in order to create a future eligibility for the homestead exemption.

Where there is no deed of ownership, but only a bond for deed or a land purchase installment contract, may the buyer-occupant be granted the exemption?

No, because the buyer is not yet the owner, but becomes the owner only after the buyer has fully performed his or her obligations under the agreement and receives a deed to the property. And of course the seller-owner cannot enjoy the exemption unless the seller-owner occupies the property (which will rarely be the case in a bond for deed or installment purchase situation).

I know the homestead exemption law provides a number of information sources the local assessor can turn to when trying to determine if an applicant who owns multiple residential properties qualifies in that particular community. What does the assessor do when there is some conflict in the information provided? For example, what if the applicant registers his car in our town, and our town clerk issued his resident hunting license, but he is registered to vote in another state?

In this circumstance it is important to focus on the fact that no applicant can have more than one "permanent" or "principal" residence. The local assessor should develop and consistently implement a policy concerning which residency information will be considered primary and which residency information will be considered secondary in the few circumstances where there is conflict. In the example you have given, the assessor may ask the applicant what address was used on his federal income tax return to verify eligibility. If the assessor has not been given sufficient information to ascertain eligibility, a denial can be issued, which the applicant can appeal.

If we come across a case where the applicant lied on the application in order to make their property eligible for the exemption, what enforcement action does the municipality have to take?

The new law makes it clear that an applicant who knowingly provides false information to the local assessor for the purpose of claiming a homestead exemption is guilty of a Class E crime. In those cases (which will presumably be very few and far between) and in any case where a property has been improperly granted the exemption, even though applicant fraud was not involved, the only municipal responsibility with respect to enforcement is to contact the Bureau of Revenue Services (287-2011). The State Tax Assessor has broad authority to prosecute false tax filings of any kind. Whenever it is finally determined that any property was granted the exemption without deserving it, the municipality is expressly authorized to levy a supplemental assessment against that property to recover the value of the improperly-granted exemption.

The application form calls for the signatures of "owner(s)." If there are multiple owners of a property, must all of them sign an application, or must each of them submit an application?

It will be sufficient if only one qualifying owner applies. Thus, for the most common example, either member of a married couple who own as joint tenants may apply where both occupy the residential property. On the other hand, if only one occupied it, or if only one of several tenants in common occupied their residential property, then the only proper applicant would be the one who has actually used the property as a homestead.

ELECTION YEAR FOR THE LPC

Coinciding with the election year for the Legislature is the Maine Municipal Association’s election of a new Legislative Policy Committee (LPC). The election process gets underway this April with the mailing of nomination forms to all of MMA’s member municipalities. The purpose of the LPC is to define municipal interests and to maximize those interests through effective participation in the legislative process.

Any elected or appointed municipal official holding office in any MMA member community is eligible to serve on the Committee. There are two seats on the LPC for each State Senate District; members serve two-year terms, representing their own community and the other municipalities in their district.

LPC activities require a time commitment of about ten hours a month during legislative sessions, which includes attendance at the monthly meeting and contacts with other communities and legislators in the district as issues arise. MMA’s strength as a primary municipal advocate before the Legislature depends on the active help of a dedicated LPC.

If you are interested in serving on the LPC, you should make that interest known to the municipal officers of your community so that they can nominate you.

Your participation in the election process is very important. The municipal officers of each of MMA’s member municipalities are asked to nominate candidates and then to vote for a new LPC. Please note the following schedule, watch for the nomination forms and ballots, and exercise your franchise!

~early April, 1998 nomination forms sent out

~early May, 1998 ballots sent out

~June, 1998 run-off elections for tied races

~July 1, 1998 to June 30, 2000 term of the newly-elected LPC

For more information about LPC activities or the election process, please contact Tina Means in MMA’s State and Federal Relations Department at 1-800-452-8786.