Tax Cap Impact Could Be Severe

(Lamoine) — Maine voters will decide in either November or June whether to impose a 1% property tax cap on all municipalities. Towns and cities are crunching the numbers to determine what the impact will be should the measure pass. Part of the question would roll back valuations to 1997 valuations, and that’s where the calculation gets difficult. Land that sold after 1997 would be valued at the sale price. Construction completed after 1997 would be valued at the market price. The Maine Constitution requires that assessments all be at fair market value, and the citizens initiative appears to violate that provision.

The impact in Lamoine could be devastating. The current tax rate of 14 mills (1.4% of valuation) would have to drop 28.6% to the 10-mill cap. The valuation base would not be too drastically affected, as there have been a lot of sales and construction in the last 8-years. The best guesstimate is that the town would have to trim spending by about $650,000, or by 24% to keep the budget balanced. Many of the town’s costs are fixed, including high school tuition, special education, contracts for waste removal, snow plowing and the like. Neither the school committee nor the budget committee have tackled where that much in spending cuts could come from. There has been no indication the state would increase aid to municipalities to make up for the lost property tax revenue. It’s expected the Maine Municipal Association will launch a campaign against the proposed cap.