Legislative Bulletin
October 25, 2000
On November 7, 2000 voters will elect the membership of the 120th Maine Legislature, and preparations will immediately begin for the election of leadership, committee appointments, and the first legislative session of the two-year cycle. The 120th will begin its substantive business shortly after New Year’s Day 2001.
In concert with this biennial event, MMA’s membership elected its 70-member Legislative Policy Committee (LPC) in June of this year, and since mid-summer the LPC has been working on developing the municipal association’s legislative agenda to submit to the 120th Legislature for its consideration.
In early August, the LPC held a barbeque brainstorming session where a broad menu of potential legislative issues was compiled. That list was then used as the basis for an issues survey which was distributed to the full LPC for the purposes of identifying the legislative issues of greatest importance. With the results of the survey in hand, the three standing subcommittees of the LPC were convened in early October for the purpose of winnowing the municipal wish list down to a manageable platform and further refining the municipal issues that were working their way into the platform.
What follows is the
summary of the efforts of the LPC in the form of a proposed legislative agenda
for the 2001-2002 biennium. This draft agenda is not cast in stone. It is a
proposal that is being presented to MMA’s full membership for input, comment
and suggestions. A list of all the members of the LPC is included in this issue
of the Bulletin, and all municipal officials are encouraged to contact
their LPC representatives with whatever comments they might have about the
legislative agenda that is being proposed.
On November 29, 2000 the full LPC is scheduled to convene for the purpose of reviewing the proposed legislative agenda, making whatever modifications are necessary, and adopting the Association’s advocacy platform.
Taxation. As might be expected, the primary focus of municipal concern in matters of public policy is on the property tax, both with regard to the overall burden that is placed on this most-regressive tax and the fundamental integrity of the property tax code.
Revenue Sharing:
Fulfill the Implementation of Revenue Sharing II. During the last
legislative session a step was taken to relieve the extraordinary property tax
burden that is a hard fact of life in too many towns and cities in Maine,
particularly in the state’s so-called “service center” communities. The
step taken this last legislative session, known as Revenue Sharing II, would
have slightly raised the percentage of state sales and income tax
revenue that is distributed to municipalities through the Local Government Fund and subtly adjusted the revenue
sharing distribution formula so that those extra revenue sharing funds would be
distributed to the communities in Maine that have above-average full value mill
rates.
As is often the case with legislative initiatives, the policy changes were adopted but the money didn’t follow. Instead of structurally increasing the revenues going to the Local Government Fund to provide a sustained benefit, a one-time appropriation of $3.6 million was provided to give the Revenue Sharing II system a trial run during the current 2000-2001 fiscal year. Starting July 1, 2001, Revenue Sharing II, in effect, goes dormant.
There are multi-faceted public policy benefits to the structural implementation of Revenue Sharing II. First, the policy includes a recognition that municipalities with higher-than-average property tax rates are typically providing services to a population that is far greater than the municipality’s residential population. Second, Revenue Sharing II implicitly recognizes that many communities with significantly higher property tax rates play host to large, tax exempt institutions which demand much in the way of public services. Third, Revenue Sharing II represents a tax policy contribution to a set of strategies dealing with the phenomenon of land use sprawl. One factor driving the out-migration from the state’s urban areas to the suburban and rural countryside is the sharply differential property tax rates among those respective communities.
The municipal perspective is that as a matter of policy the state should be moving away from such a sharp dependency on property tax revenues to support governmental services. One path toward that goal is to provide a modest increase to Revenue Sharing, especially where that increase is targeted to the communities with the highest tax burden.
Accordingly, the Legislative Policy Committee is recommending that the percentage of sales and income tax revenues devoted to the Local Government Fund be increased from 5.1% to 5.5%, with that .4% increase representing approximately $8 million more per year. $8 million is a modest sum when compared with the $1.2 billion raised annually through the property tax, but when targeted through Revenue Sharing II, it provides some meaningful relief.
Current Use Taxation:
Honest State Reimbursement for All Current Use Programs.
For the last 30 years there have been three “current use” taxation programs in Maine, and a fourth is being proposed on the November 7, 2000 ballot. The three 30-year-old programs provide for the “current use” assessing of forest land, farm land and open space land that is properly enrolled in the program. The new kid on the block to be considered by the voters on November 7 would provide the same assessing consideration for “waterfront land used for commercial fishing activities.”
“Current use” assessing differs from the “just value” assessing methods that must be used for all other real estate and personal property. While the “just value” methods find the property’s market value, the “current use” method is based on the market value of the property without consideration of any alternative or speculative use to which the property may be put. The current use method typically results in a substantially reduced assessed value for the enrolled property, which results in an advantage to the property owner and reduced property tax revenues for the municipality.
Of the three current use programs that have been in place since the early 1970s, the state provides reimbursement to the affected municipalities for the lost property tax revenue for only one, the Tree Growth program. There is no rational explanation why the Legislature chooses to provide reimbursement for one current use program and not the others. The impact of not reimbursing municipalities for the lost tax revenue is the same regardless of the nature of the current use program; that is, the cost of providing municipal services and education is shifted from some property owners to others within that particular town.
From the municipal perspective, the state’s current use tax programs represent a state policy which has adverse local consequences when the state, with its broad-based tax revenues, does not financially participate.
Accordingly, the municipalities will be seeking some level of financial participation on the part of the state for all current use programs, including the farm land program, the “open space” program, and the program involving waterfront land used for commercial fishing purposes if the voters adopt that program on November 7th.
The municipalities will not be seeking 100% reimbursement. Local government recognizes that the costs of implementing a current use program should be shared between the towns and the state. MMA will, however, be seeking an honest reimbursement system. Under the Tree Growth program, the statute purports to reimburse municipalities for 90% of the lost tax revenue. The way the law works in its fine print, however, the municipalities do not receive 90% of their lost tax revenue. The reimbursement shortcoming is particularly acute when high-value waterfront lands are enrolled in Tree Growth. According to MMA’s preliminary analysis, the 90% reimbursement statute is actually delivering significantly less than 90% reimbursement, on average, of a municipality’s lost tax revenue. In some communities MMA has surveyed, the level of reimbursement is less than 20% of the lost property tax revenue. Under this unfortunate system, some municipalities are much less honestly reimbursed than others.
Enact Standards of
Eligibility for the Charitable Exemption.
For well over a decade the municipalities have been seeking some reasonable standards of eligibility for the property tax exemption governing charitable institutions. The laws governing the exemption were enacted in the 19th century, and they are entirely insufficient in light of the complex reorganization of medical care facilities that is occurring in the 21st century.
The Town of Falmouth recently challenged the exempt status of a number of condominium units owned by the Maine Medical Center, and the ensuing trial conducted by the State Board of Property Tax Review revealed the remarkable shortcomings of the state’s archaic policy regarding the property tax exemption enjoyed by the “charitable” corporations.
In response, MMA will once again be submitting legislation that would provide reasonable standards to govern the property tax exemption. The proposed standards will be modeled on the statutory standards that have been working successfully in Pennsylvania since 1997. In addition to the legislative initiative, MMA is exploring a proposal to invest some resources over this biennium and the next to provide some judicial advocacy for communities that wish to challenge an application for the charitable exemption and collect better data on the true impact of the charitable exemption on the tax burden of those property owners who do not happen to enjoy a forgiveness of their tax obligation.
Repeal the Archaic
Property Tax Exemption for Pollution Control Equipment.
The fastest growing
and most poorly governed property tax exemption on the books is the exemption
for “pollution control equipment.” In 1988, there was just $175 million
worth of exempt pollution control equipment in Maine.
By 1998, that number had jumped to $363 million for a 108% increase. By
comparison, total taxable property increased just 73% over that same period.
The statute governing this exemption is hopelessly out of touch with pollution control technology. When originally created in the 1960’s, water and air pollution was reduced or controlled by discrete, end-of-the-pipeline (or top-of-the-chimney) equipment. The pollution control equipment was functionally very different from the industrial production equipment and it possessed a relatively low value compared with the mass of production equipment to which it was attached.
Today we are
presented with an entirely different environment. The reduction of pollution in
the manufacturing process requires the fundamental redesign of production
equipment. Owing to the hopelessly
ambiguous wording of the law governing the pollution control equipment
exemption, industrial property owners are seeking—and receiving from the
Department of Environmental Protection—significant property tax exemptions for
what used to be considered normal production machinery.
This represents yet another example of old property tax exemption laws not being properly maintained by the Legislature to fit the modern environment. State revenues, after all, are not exposed to the archaic wording of property tax law. To add to the municipal frustration with this exemption, the determination of eligibility is accomplished by the DEP without even so much as a consultation with the affected municipality.
And to add to the irony, virtually all of the property potentially eligible for the pollution control equipment exemption is automatically eligible for the Business Equipment Tax Reimbursement program (BETR).
For all of these reasons, the municipalities will be seeking a repeal of the pollution control equipment property tax exemption. Perhaps other interested parties will want to reconstruct a more targeted and accountable pollution control incentive program in which the state financially participates.
Growth Management. Although much of MMA’s legislative agenda is focused on matters of tax policy, there are other issues pressing on municipal government. A robust economy has reinvigorated interest in growth management at both the state and local levels, especially in southern Maine. A legislatively-created Task Force is reviewing the Growth Management Act and the state’s subdivision law with a charge to improve the effectiveness of these legal mechanisms to manage growth. The Task Force includes a broad complement of municipal planners, regional planners, real estate interests, state agency personnel and environmentalists.
Repeal the 2003 Growth Management “Drop Dead” Deadline.
Regardless of what the Task Force is able or unable to accomplish under its charge to redesign the Growth Management law, there is an element of the existing law that is completely unacceptable to the municipalities. On January 1, 2003, state law declares every municipal land use ordinance in this state to be void and unenforceable unless that land use ordinance is “consistent” with a comprehensive plan that is, itself, “consistent” with the Growth Management Act. The term “land use ordinance” is defined by law to include virtually any sort of land use regulation that a Town Meeting might enact.
If the state ever wants to enter into a working partnership with the municipalities to achieve a common goal, eviscerating municipal regulatory authority is certainly not the way to reach that end. The 2003 deadline is an ugly piece of public policy that is abhorrent to municipalities. On top of that, it is completely counterproductive to any constructive growth management result.
One plank of MMA’s legislative platform will be to repeal the drop-dead deadline in the Growth Management Law.
Education. There are two front-burner issues for municipalities when it comes to K-12 education. One focus is on the way school budgets are developed, formatted and presented to the voters for adoption. The other focus is on the level of education funding that must be provided by the property tax because of the state’s commitment to only a minority, 46% share for the operating costs of primary and secondary education. For amplification of the impact of state and federal decisions regarding education funding, refer to page 6 of this issue of the Bulletin.
The Legislature made a very important improvement to the laws governing the development of school budgets with the enactment last session of LD 1346. LD 1346 sets up an improved communications process during the development of all school budgets, as well as a more understandable format for school district budgets and a budget adoption process with greater integrity for any school district that is dissatisfied with the budget adoption process in current use.
Because it will take several years to evaluate the impact of LD 1346, the LPC does not intend to submit legislation addressing school budgets during the upcoming biennium.
The Association is setting its long-range sights, however, on the financial relationship between the state and local governments.
At issue is the state’s unfulfilled commitment to pay for a majority share (55%) of the cost of K-12 education from the source of its broad-based tax revenues. One of the issues central to its perennial debate over the state’s contribution to education is what to include in the total costs that have to be shared between the state and local governments and how to account for and control those total costs.
A method to qualify and quantify the educational programs and services that should be included in the state-local financial partnership is emerging in the development of a new foundation for the school funding formula, called Essential Programs and Services (EPS). In theory, Essential Programs and Services will define what basic school programs and services need to be provided to impart a quality education to every student.
Although not yet submitting legislation on the subject of the state’s contribution to K-12 education, MMA will be closely watching the development of Essential Programs and Services during this next legislative session. Ultimately, when EPS is able to establish appropriate staffing levels for any given school’s student population, MMA may be suggesting that the state’s share should be nothing more than the sum of the teachers’ and administrators’ salaries that fall within those staffing parameters. MMA will also be closely watching the progress of a new citizens initiative on the subject. For more information, see the sidebar below.
Excise Tax
Collection: Include the Manufacturer’s Suggested Retail Price (MSRP) on all
Motor Vehicle Title Documents.
One final
housekeeping measure to improve the uniformity and efficiency of the motor
vehicle excise tax collection process is a measure to require the
Manufacturer’s Suggested Retail Price (MSRP) to be recorded on the motor
vehicle title documents.
As it stands now, the
assessment of the excise tax for a re-registering vehicle in a new location is
something less than an efficient or highly dependable process. In attempting to
establish the MSRP, the excise tax collector must ask a series of questions to
the owner of the automobile regarding the type of auxiliary equipment that came
with the vehicle. For fully equipped vehicles, the more honest the taxpayer, the
higher his or her excise tax bill.
In order to simplify tax administration and improve excise tax accountability, the MSRP should be included on the title document so ultimate verification of the excise tax obligation would be available in any municipal tax jurisdiction. (GH)
MMA’s Proposed Legislative Agenda
For the 2001-2002 Biennium
• Revenue
Sharing:
Fulfill the Implementation of Revenue Sharing II
• Current Use
Taxation:
Create an Honest State Reimbursement for all Current Use Programs
• Accountability
for the Property Tax Code:
Enact Standards of Eligibility for the Charitable Exemption
• Maintaining
the Property Tax Code:
Repeal the Archaic Property Tax Exemption for “Pollution Control
Equipment”
• Growth
Management: Repeal
the 2003 Growth Management "Drop Dead" Deadline.
• Education:
Monitor the Development of the Essential Programs and Services Model as a
Base on which to Build an Appropriate State Share of K-12 Education
• Housekeeping:
Include the Manufacturer’s Suggested Retail Price (MSRP) on Automobile
Title Documents
A group of concerned Maine citizens, the Citizens’ Committee to
Increase School Funding, has been authorized to circulate a petition that would
require 5% of the state’s sales and income tax revenue to be distributed to
offset municipal burden for funding K-12 school operating costs.
If the citizen’s group can collect the necessary 42,000 signatures
prior to January 25, 2001, this
initiative will be submitted to the Legislature for its consideration in 2001.
The petition question reads:
“Do you want to
use 5% of the state’s sales and income tax revenues to fund grades K to 12
school operating costs, in addition to any current school funding?”
The intent of the petition is to establish the State-School
Administrative Unit Revenue Sharing Fund, and to capitalize that fund annually
with 5% of state sales and income tax revenue. According to projections by the
State’s Bureau of the Budget, if this petition is adopted an additional $107.3
million would be dedicated to offset the property tax burden associated with
K-12 education in FY 2002. The initiative clarifies that the additional revenues
could not be used by the Legislature to negatively impact the level of revenue
municipalities currently receive under the Revenue Sharing program.
Commencing on July 1,
2002 the State-School Administrative Unit Revenue Sharing funds would be
distributed to all school administrative units, provided they meet the minimum
school property tax levy requirement found in Title 20-A, section 15623. Revenue would be distributed on a monthly basis using the
existing state school aid equalization formula. The formula however, would not
be subject to any reduction formulas, hold harmless provisions, hardship
cushions or increase limitations found in any provision of state school funding
law or in any rules or regulations adopted by the department.
A copy of the full
petition is available from MMA. Contact Tina Means at 1-800-452-8786. (KD)
Donald
Guimond, Town Manager, Fort Kent
Ryan Pelletier, Town Manager, St. Agatha
David
Ricker, Code Enforcement Officer, Caribou
Thomas Stevens, City Manager, Presque Isle
Allan
Bean, Town Manager, Houlton
Roger Pratt, Assessor, Macwahoc Plantation
F.
Doug Jones, Councilor, Baileyville
Handy Pinkham, Selectman, Steuben
Kenneth
Minier, Town Manager, Southwest Harbor
Lynda Warford, Selectman, Hancock
Arnold
Gross, Selectman, Penobscot
Michael MacDonald, Asst. City Manager, Brewer
Mary
Bailey, Councilor, Old Town
Gerald Kempen, Town Manager, Orono
Jane
Jones, Town Manager, Milo
John Simko, Town Manager, Greenville
Edward
Barrett, City Manager, Bangor
Lee Umphrey, Intergovernmental Affairs, Bangor
Derik
Goodine, Town Manager, Levant
Donald Shepley, Councilor, Hermon
Ralph
Harvey, Selectman, Searsport
Russell Higgins, Selectman, Knox
Richard
Gardner, Selectman, Cushing
Andrew Hart, Town Manager, Union
Elaine
Aloes, Selectman, Solon
Janet White, Selectman, New Portland
Ed
Gagnon, Town Manager, Winslow
Ron Singel, City Administrator, Waterville
Betsy
Fitzgerald, Selectman, China
Tom Sotir, Councilor, Augusta
John
Anderson, Town Manager, Boothbay
Rodd Hopper, Selectman, Edgecomb
William
Brown, Selectman, Kingfield
Francis Sabol, Planning Board, Anson
Michael
Byron, Selectman, Manchester
Judith Stebbins, Councilor, Winthrop
John
Bubier, City Manager, Bath
David Williams, Town Administrator, West Bath
Ruth
Marden, Town Manager, Livermore Falls
Peter Nielsen, Town Manager, Wayne
Paul
Samson, Councilor, Lewiston
Phil Nadeau, Assistant City Manager, Lewiston
District 22
Richard
Chick, Town Manager, Poland
Richard Livingston, Councilor, Auburn
John
Arsenault, Councilor, Freeport
Clem Wilson, Councilor, Brunswick
Scott
Cole, Town Manager, Bethel
Sylvia Gray, Administrative Assistant, Newry
Leonard
Adler, Selectman, Otisfield
Dana Lee, Town Manager, Mechanic Falls
William
Cooper, Town Manager, New Gloucester
Anthony Plante, Town Manager, Windham
David
Clark, Councilor, Falmouth
Nicholas Mavodones, Councilor, Portland
James
Cloutier, Councilor, Portland
Thomas Kane, Councilor, Portland
David
Cole, Town Manager, Gorham
James Violette, Councilor, Westbrook
Birger
Johnson, Councilor, South Portland
Ruth McLeery Watson, Councilor, Cape Elizabeth
District
31
Richard
Haberman, Old Orchard Beach
Boyd
Long, Selectman, Kennebunk
Bruce Benway, City Manager, Biddeford
Scott
Hoar, Selectman, Sanford
Winthrop Webster, Land Use Committee, Berwick
Joseph
Benzing, Selectman, Parsonsfield
Earland Morrison, Selectman, Alfred
Leo
Guy, Councilor, Kittery
John Miller, E-911 Committee, Ogunquit
Bruce Benway (City Manager, Biddeford and Vice President of MMA)
In the last decade the municipal share for K-12 education has grown by
73%, while the state share has grown by 40%. Under Maine law since 1985, there
exists a stated legislative intent “to provide at least 55% of the cost of the
total allocation for K-12 education from General Fund revenue sources” (20-A
MRSA §15601). Although state officials continue to interpret this opening to
the 1985 School Financing Act differently, the general feeling is that under
this “intention” the state should be funding 55% of the total operating
costs associated with K-12 education.
In round numbers,
K-12 education will cost state and local government $1.45 billion this fiscal
year, not counting contributions for teachers’ retirement which is entirely
state funded. Of that total, the
state funded only 46% of the total operating cost, approximately $664 million,
leaving municipalities to fund the remaining $783 million.
In order to meet the funding “intention” established in law, the
state should have funded an additional $130 million through General Purpose Aid
(GPA) allocations. This additional
funding would reduce statewide municipal property tax commitment by 10%.
The state is not the only level of government neglecting its education
funding promise. As enacted, the Individuals with Disabilities Education
Act (IDEA) requires that the federal government pay 40% of the per-pupil cost
for special education programs (20 USC § 1411). According to officials at
Maine’s Department of Education, the federal government currently provides
only $20.3 million of that $82.3 million obligation.
If the federal government appropriately funded special education, the
statewide municipal property tax commitment could be reduced by 4%.
In FY 2001, the
decisions of the federal and state government shifted $192 million in education
funding burden to property tax payers. If the state and federal commitments to education were
honored, the statewide property tax bill could be immediately reduced by over
15%. (KD)
With just a few days remaining before Maine voters decide the fate of six
questions on the November 7th ballot,
statewide polls are indicating that at least two of the three questions that
MMA’s Executive Committee voted to oppose could go either way.
MMA’s Executive
Committee reviewed the six questions that will appear on the statewide ballot
and developed MMA’s position on those ballot measures that the Committee felt
carried a compelling municipal interest. (See article in August/September
MAINE TOWNSMAN).
The Executive
Committee voted to oppose questions 2, 3 and 4 and took no position on the three
other questions.
QUESTION #2. Do
you favor requiring landowners to obtain a permit for all clear-cuts and
defining cutting levels for lands subject to the Tree Growth tax law?
The opposition to
this citizen initiative is strong, widespread and well-financed. Heavy television advertising appears to have succeeded in
getting the message out to Maine citizens that this proposal is seriously
flawed.
If passed, this
initiative would require landowners to obtain a permit from the Maine Forest
Service before initiating a forestry “clear cut” as that term is defined in
law. The criteria for obtaining the permit would be a finding that the clear cut
is silviculturally justified, will not result in undue ecological damage, and
there are no reasonable alternatives. A new process for citizen appeal of the
proposed permit is included in the permit consideration.
The initiative would
also establish that no timber harvesting activities on land enrolled under the
Tree Growth tax law may exceed sustainable cutting levels over any rolling
10-year period. The term “sustainable level” means that the yearly allowable
cut levels may not exceed the average annual growth during the past 10 years. The clear cut permit and harvesting level requirements would
be developed into rules by a 9-member panel made up largely of loggers,
foresters, and forestry scientists.
The Executive
Committee adopted the recommendation of the Association’s Legislative Policy
Committee (LPC) to oppose the citizen initiative because there are several
serious flaws with the wording of the measure that could cripple normal and
healthy timber harvesting activity.
QUESTION #3. Do you want to allow video lottery machines
at certain horse racing tracks if 40% of the profits are used for property tax
relief?
This citizen’s
initiative is a wolf in sheep’s clothing.
Under the guise of providing property tax relief, this measure would
allow the operation of video lottery terminals only at Scarborough Downs.
According to the many
pages of statute that would be enacted if the voters adopt this measure, the net
video lottery terminal income would be distributed seven ways. Forty percent of
that income would be placed in the Local Government Fund, which is the fund from
which municipal revenue sharing is distributed. Twenty-six percent of that
income would go to the owner of the video lottery machines, twenty-three percent
would go to the person licensed to operate the video lottery machines, five
percent would supplement harness racing purses, three percent would go to the
Department of Public Safety to cover administrative costs, two percent would go
for the benefit of state agricultural fairs, and one percent would be used for
sires stakes purses.
The fiscal note on
this proposal has been prepared by the Legislature’s Office of Fiscal and
Program Review. To summarize the fiscal implications, it is anticipated that the
Local Government Fund would be increased under this measure by approximately $50
million (a 50% increase) by its second full year of implementation.
Although the
opportunity to obtain significant property tax relief is extremely tempting,
especially for those municipalities facing punishing mill rates in the $20 to
$27 per thousand range, the Executive Committee voted to oppose this proposal
for a number of reasons.
First, the Executive
Committee is concerned that the introduction of this gaming initiative, which is
so completely targeted to just Scarborough Downs, will ultimately lead to a
proliferation of similar or expanded gambling systems throughout Maine.
Second, there was a
deeply felt understanding among the Executive Committee members that municipal
leaders are not interested in developing a reliance on gambling revenue with all
the negative consequences that can accompany a pervasive gambling culture. The
Executive Committee members were concerned about the increased financial pressure on families unable to afford
the gambling temptation. The municipal officials were also concerned about the
need for significantly increased law enforcement capacity to deal with Maine’s
exposure to large scale gambling operations.
Setting aside the
concerns about high-level gambling operations in Maine, the Executive Committee
is also familiar enough with the complicated financial relationships between the
state and the municipalities to believe that the promise of property tax relief
could fade over time as the state re-adjusts its contributions to local
government. In addition, concerns were expressed about the exclusivity of the
benefits going to Scarborough Downs, the vagueness of the definition of
“video lottery machines” to potentially allow even Las Vegas-style
slot machines in Maine, and the apparent lack of strong state oversight with
respect to the monitoring and distribution of the gambling proceeds.
QUESTION #4. Do you favor amending the Constitution of
Maine to allow the Legislature to provide for the assessment of land used for
commercial fishing activities based on the current use of that property.
With this question
the voters are being asked to approve a proposed Constitutional amendment that
would allow the Legislature to provide for the assessment of real estate used
for commercial fishing purposes at its “current use” value. As a matter of
current constitutional and statutory law, forested land, farm land and open
space land is assessed for tax purposes at its “current use” rather than
market value. Under this proposed constitutional amendment, the current use
assessing requirement would also apply to “waterfront land used for commercial
fishing activities”.
Although the
Executive Committee fully understands the pressures of an exploding real estate
market on the “working waterfront”, Question #4 is an example of a solution
proposed by the Legislature with all the negative financial impacts borne by the
municipalities. Under Question #4, there will be shifts in property tax burden
in coastal communities from one class of property owner to all others because
the state is not proposing to financially address the property tax shifts it is
recommending.
Beyond the property
tax shift issue, there are many questions about this proposal that municipal
officials would like answered before they could feel comfortable supporting the
measure. Based on past municipal experience with “current use” systems, the
Executive Committee has taken the position that when there are many questions
about the details of constitutional-level policy change, the municipal position
should be “no” until those questions are answered.
The Executive
Committee has identified five essential questions to be answered:
1) Will the
implementing legislation include a reimbursement system for the lost tax
revenue, similar to the Tree Growth program, or no reimbursement as is the case
with the Farmland and Open Space programs? Legislative history suggests that the
answer to that question is “no”.
2) Under what
conceivable methodology will the current use values of these developed lands be
calculated?
3) How will the
assessors know what land should be included and what land should not be included
in the commercial fishing land designation? In some applications, the answer
will be easy, such as the lot upon which a sardine factory or lobster pound is
located. In other cases, though, the question will be tricky. The acreage will
have mixed uses. In the case of
a lobsterman with a recreational license who has a home on the coast,
with a yard going down to the water to a dock and an equipment shed, is the
lobsterman’s house lot eligible for the current use exemption? Is half of it?
4) Will there be a
meaningful penalty system for withdrawing land from the special taxation
category for short-term enrollments, or will the penalty for short term
enrollment be the mere constitutional minimum, often referred to as “five-year
back taxes, plus interest”? For short-term enrollments, where the public has
not obtained a significant benefit from the land being specially classified for
taxation purposes, the constitutional penalty is really no penalty at all, and
what is created is merely a tax deferral program with extremely limited public
value.
5) The existing
current use programs pertain to undeveloped land only. This proposal would
provide “current use” status to developed lands, such as lobster pounds,
commercial fishing marinas, etc. What is the next group of owners of developed
property that will seek a property tax break from the Legislature – a
Legislature that doesn’t have to face the financial consequences of the policy
changes it proposes?