Developing the Tax Reform Proposal
sidebar to It's Time...for Tax Reform
(from Maine Townsman, August/September 2002)
By Geoff Herman, Director of State & Federal Relations, MMA
1980—2002. Year after year, Maine’s municipal leaders and appointed municipal officials identify the State’s over-reliance on the property tax as the issue of highest priority and maximum concern, with no close second. Many of the intractable problems municipal officials grapple with find their root origin in the property tax burden — problems like residential and commercial dislocation, development pressure on open land, highly disparate property tax mill rates among municipalities, and the inability to put the infrastructure in place to support growth and economic development. Tax reform has been the centerpiece plank in MMA’s legislative agenda throughout the 1990’s and into the 21st Century. Survey after municipal survey places the issues of taxation as the urgent top priority.
1980—2002. The deep history of MMA’s involvement with comprehensive tax reform also includes the numerous legislative studies, commissions, blue-ribbon panels and task forces the Association has observed, catalogued, participated in, advanced or supported over the last 20 years. All of those studies and reports define the fundamental problems with Maine’s tax code similarly: over-reliance on the property tax, highly unpredictable state revenues, narrow sales tax base and a steep income tax rate structure that contributes to volatility. The net effect of all these studies, commissions, task forces and reports, however, has been negligible.
1996—2002. Public opinion polls commissioned by MMA in 1996 and earlier this year provide overwhelming confirmation that the general public is also very concerned about the pressure on the property tax and unabashedly supportive of comprehensive tax reform.
1997. MMA advanced LD 1772, An Act to Comprehensively Realign the Tax Structure of the State, which was rejected by the Legislature.
1998. The $7,000 homestead property tax exemption, strongly supported by MMA, was enacted by the Legislature. The homestead exemption provides $40 million of property tax relief, representing slightly less than a 3% reduction in property tax burden for Maine residents. During the four years since the creation of the homestead exemption, some legislators and some members of Governor King’s administration have leveled criticism at municipal officials for “gobbling up” the benefits of the homestead exemption through increased (and, by implication, unnecessary) local spending.
1999. MMA advanced LD 1940, An Act to Create Standards of Eligibility for Certain Tax Exempt Organizations, which was rejected by the Legislature.
2000—2002. Along with the prime sponsor, Rep. Barney McGowan (Pittsfield), MMA strongly supported LD 2086, An Act to Implement the Recommendations of the Education Funding Reform Committee. This legislation would have sent to the voters a comprehensive tax reform package that would have established a limit on property taxes for K-12 education and directed the Legislature to expand the base of the sales tax and address overly-steep income tax rate structure. The Legislature rejected this tax reform proposal, refusing to send it to the voters as a referendum. Much of the debate on this legislation focused on the inability of the Legislature to enact comprehensive tax reform on its own initiative (see April 2002 Maine Townsman).
May 2002 After the Legislature adjourned in late April, MMA’s 70-member Legislative Policy Committee (LPC) regrouped for its last meeting before the 2002 LPC elections. At that meeting, the LPC unanimously adopted and transmitted a recommendation to the Association’s Executive Committee that the governing board take the steps necessary to develop a tax reform proposal to be advanced as a citizen initiative.
July 2002. MMA’s 2002-2004 Legislative Policy Committee is elected.
June – August 2002. An 18-member Tax Reform Steering Committee, specially appointed by MMA’s President Gary Brown, convened four times during this two month period. Using several proposals as working models, the Steering Committee handcrafted its recommended tax reform initiative. On August 13, 2002, the Steering Committee voted its unanimous support for the final proposal and advanced it to the Association’s newly-elected Legislative Policy Committee.
August 7, 2002. MMA’s 12-member Executive Committee unanimously endorses the work of the Tax Reform Steering Committee and authorizes MMA’s President, the Chairperson of the Tax Reform Steering Committee and MMA’s Executive Director to take whatever action necessary to advance the final recommendations of the Steering Committee and the Legislative Policy Committee.
August 22, 2002. MMA’s 70-member LPC reviewed the initiative developed by the Steering Committee and by unanimous vote recommend that the Association’s Executive Committee proceed with the advancement of the proposal as a citizen initiative.