Property Tax Year vs. Fiscal Year

Training for: Legal Notes

Question: We’ve seen the term “tax year” used in statutes and in MMA Legal Services materials. Are the municipal tax year and fiscal year the same?

Answer: No, although they are often confused.

State law defines the property tax year as the period between April 1st and the following March 31st. See 36 M.R.S. § 502. This is a uniform time frame intended to allow for equitable valuation of property across the state. All real and personal property is valued based on its status (ownership and value) on the first day (April 1st) of each tax year. Exemptions from property tax are also determined based on the tax year.

Property taxes assessed based on an April 1st status are “committed” to the collector later in the same tax year after municipal budget needs have been determined. Property tax bills and lien notices reference taxes assessed and committed during the tax year. Municipalities have no home rule authority to alter the statutory property tax year from April 1st through March 31st by local vote.

The municipal fiscal year (FY) is a 12-month period (except during transition to a new FY) determined locally, which corresponds to the dates a municipality opens and closes its books for the annual budget. The fiscal year is used primarily for budgeting and auditing purposes. The municipal officers (select board or council) may determine or change the municipal FY unless otherwise provided in a municipal charter. See 30-A M.R.S. § 5651. Any twelve-month period may be chosen. In the past, most municipalities operated on a calendar year FY (January 1st to December 31st). However, many municipalities have now adopted a July 1st to June 30th fiscal year, which also corresponds to the statutorily mandated FY for schools. See 20-A M.R.S. § 15003.

For more information on both topics, see MMA Legal Services Assessment Manual and our information packet on “Changing the Municipal Fiscal Year,” available at no charge to members on our website (www.memun.org). (S.F.P.)

Question: We’ve seen the term “tax year” used in statutes and in MMA Legal Services materials. Are the municipal tax year and fiscal year the same?

Answer: No, although they are often confused.

State law defines the property tax year as the period between April 1st and the following March 31st. See 36 M.R.S. § 502. This is a uniform time frame intended to allow for equitable valuation of property across the state. All real and personal property is valued based on its status (ownership and value) on the first day (April 1st) of each tax year. Exemptions from property tax are also determined based on the tax year.

Property taxes assessed based on an April 1st status are “committed” to the collector later in the same tax year after municipal budget needs have been determined. Property tax bills and lien notices reference taxes assessed and committed during the tax year. Municipalities have no home rule authority to alter the statutory property tax year from April 1st through March 31st by local vote.

The municipal fiscal year (FY) is a 12-month period (except during transition to a new FY) determined locally, which corresponds to the dates a municipality opens and closes its books for the annual budget. The fiscal year is used primarily for budgeting and auditing purposes. The municipal officers (select board or council) may determine or change the municipal FY unless otherwise provided in a municipal charter. See 30-A M.R.S. § 5651. Any twelve-month period may be chosen. In the past, most municipalities operated on a calendar year FY (January 1st to December 31st). However, many municipalities have now adopted a July 1st to June 30th fiscal year, which also corresponds to the statutorily mandated FY for schools. See 20-A M.R.S. § 15003.

For more information on both topics, see MMA Legal Services Assessment Manual and our information packet on “Changing the Municipal Fiscal Year,” available at no charge to members on our website (www.memun.org). (S.F.P.)