Maine lawmakers propose costly compromise on property taxes

The top Democrat and Republican in the Maine Senate are backing a property tax relief compromise that may run into cost-related hurdles in a tight state budget environment.

The proposal from Senate President Mattie Daughtry, D-Brunswick, is sponsored by Senate Minority Leader Trey Stewart, R-Presque Isle, House Speaker Ryan Fecteau, D-Biddeford, and several other members from both parties. It would increase the maximum property tax fairness credit from $1,500 to $2,000 for taxpayers younger than 65 and from $2,000 to $2,500 for taxpayers 65 and older.

It would also establish a property tax relief task force with 13 voting members and at least two nonvoting members that would use data collected at the local, county, state and national levels and make recommendations by Dec. 15 on improving the property tax process and reducing Maine’s tax burden. That could include changing laws and the Maine Constitution, per the bill.

Lawmakers on Wednesday referred the bill to the Legislature’s tax committee, with a public hearing not yet scheduled and a fiscal note also not yet available. But while likely popular among Mainers, the $500 increase in the tax credit available to homeowners and renters who meet certain income limits may struggle to receive funding as Gov. Janet Mills and the Democratic-controlled Legislature debate how much spending to add to the $11.3 billion budget that left only about $127 million in unspent revenue through 2027.

Still, the partnership between Daughtry and Stewart is notable after their two caucuses clashed and failed to reach agreement earlier this year on a short-term budget to fill a $118 million MaineCare shortfall. The cost of housing is one of Maine’s most pressing issues.

Democrats ended up passing another spending deal without GOP votes, and Mills has previously bickered with members of her own party over not signing bills she argued were too costly in a tight fiscal environment. Mills proposed a cigarette tax hike and cuts to various health and child care programs in January to close a projected $450 million shortfall through 2027.

Daughtry said Maine families “are getting squeezed harder every year by rising property taxes, and it’s time we hit pause and asked, why?”

“We need to dig into the root of this cycle — and break it,” Daughtry said in a statement. “Other states have found solutions that work, and it’s high time Maine did too. Taxpayers deserve both short-term help and a long-term fix.”

Lawmakers repealed in 2023 a popular but increasingly expensive property tax freeze program from Stewart and replaced it by boosting the property tax credit for older Mainers from $1,500 to $2,000 and expanding income and asset limits on a loan program in which the state covers property taxes for older or permanently disabled residents in need of help.

Maine Municipal Association spokesperson Kate Dufour said although the group has not released its position on the new fairness credit bill, it has supported similar ideas in the past and also appreciates a task force including municipal officials as members.

“It is a good way to deliver property tax relief to those who need it the most, and without shifting burdens to other property taxpayers, as exemptions do,” Dufour said.

Members have put forward an array of other property tax relief bills this session, with no major breakthroughs amid lawmakers trying to adjourn by mid-June. One idea from Sen. Joe Baldacci, D-Bangor, who is also cosponsoring the proposed fairness credit increase, is a 2 percent annual cap on property tax assessment increases for residents 65 and older, but that and other proposals to boost the state’s homestead exemption all face uncertainty given the budget constraints.

But lawmakers said the budget should prioritize housing affordability in Maine. Baldacci said Wednesday he has supported or sponsored numerous property tax relief proposals because he has spoken with homeowners, especially older ones, who have “clearly communicated that this is one of the most important issues they face on making ends meet in this economy.”