An Act To Permit a Limited Local Option Sales Tax
Maine Legislature, Session 121, LD 1313
Committee: Taxation
Sponsors: MILLS, DAMON, BLANCHETTE, CUMMINGS, DUDLEY, KOFFMAN, LEMOINE, SUSLOVIC, BRENNAN, SAWYER
Amends: 36 MRSA §1507

Legislative Document 
No. 1313 
H.P.967 
House of Representatives, March 11,2003 
An Act To Permit a Limited Local Option Sales Tax 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative MILLS of Cornville. 
Cosponsored by Senator DAMON of Hancock and 
71/~ 
'frl. 7JldL:~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BLANCHETTE of Bangor, CUMMINGS of Portland, DUDLEY of Portland, 
KOFFMAN of Bar Harbor, LEMOINE of Old Orchard Beach, SUSLOVIC of Portland, 
Senators: BRENNAN of Cumberland, SAWYER of Penobscot. 
Printed on recyclc:d pa~r 
I 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 20·A MRSA §I, sub·§37.A, as enacted by PL 1985, c. 
650, §l, is amended to read: 
37-A. 
State valuation. "State valuation" means the value 
certified to the Secretary of State as provided in Title 36, 
section 305, subsection 1 as adjusted under Title 36, sections 
1491-A, 1507 and 1876. 
Sec. 2. 30·A MRSA §706, first" as enacted by PL 1987, c. 737, 
Pt. A, §2 and Pt. C, §106 and amended by PL 1989, c. 6, c. 9, §2 
and c. 104, Pt. C, §§8 and 10, is further amended to read: 
When a county tax is authorized, the county commissioners, 
within 30 days of that authorization, shall apportion it upon the 
municipalities and other places according to the last state 
valuation as adjusted under Title 36, sections 1491-A, 1507 and 
1876 and fix the date for the payment of the tax. 
This date may 
not be earlier than the first day of the following September. 
They may add that sum above the sum so authorized, not exceeding 
2% 
of 
that 
sum, 
as 
a 
fractional 
division necessitates 
and 
demonstrate that necessity in the record of that apportionment, 
and 
issue their warrant to 
the assessors 
requiring 
them 
to 
immediately assess the sum apportioned to their municipality or 
place, 
and 
to 
commit 
their 
assessment 
to 
the 
constable 
or 
collector for collection. 
The county treasurer shall immediately 
certify the millage rate to the State Tax Assessor. 
The State 
Tax Assessor shall separately assess this millage rate upon the 
real and personal property in the unorganized territory within 
the appropriate county. 
Sec. 3. 30·A MRSA §5681, sub·§2, ,B, as enacted by PL 1987, c. 
737, Pt. A, §2 and Pt. C, §106 and amended by PL 1989, c. 6, c. 
9, §2 and c. 104, Pt. C, §§8 and 10, is further amended to read: 
B. 
"Property tax burden" means the total real and personal 
property taxes 
assessed in the 
most 
recently 
completed 
municipal fiscal year, except the taxes assessed on captured 
value within a tax increment financing district, divided by 
the latest state valuation certified to the Secretary of 
State as adjusted under Title 36, sections l491-A, 1507 and 
1876. 
Sec. 4. 36 MRS A §1491·A is enacted to read: 
§1491-A. 
Adjustment of state valuation 
For each municipality collecting a tax under this chapter, 
.. 
the 
State 
Tax 
Assessor 
shall 
compute 
a 
property 
tax 
base 
equivalent. 
The property tax base equivalent is computed by 
dividing the revenue collected by the municipality under this 
chapter by the full value mill rate for the municipality. 
The 
property tax base equivalent must be added to the state valuation 
for the municipality when making the distributions required under 
Title 20-A, Part 7 and Title 30-A, section 5681. 
Sec. 5. 36 MRSA §1507 is enacted to read: 
§1507. 
Adjustment of state valuation 
For each municipality collecting a tax under this chapter, 
the 
State 
Tax 
Assessor 
shall 
compute 
a 
property 
tax 
base 
equivalent. 
The property tax base equivalent is computed by 
dividing the revenue collected by the municipality under this 
chapter by the full value mill rate for the municipality. 
The 
property tax base equivalent must be added to the state valuation 
for the municipality when making the distributions required under 
Title 20-A, Part 7 and Title 30-A, section 5681. 
Sec. 6. 36 MRSA c. 216 is enacted to read: 
CHAPTER 216 
LIMITED LOCAL OPTION SALES TAX 
§187l. 
Local option sales tax authority 
1. 
Authority. 
Beginning January 1. 2004, the legislative 
body of 
a municipality, 
subject to the requirements of this 
chapter, may elect to adopt within the municipality a limited 
sales tax of 1% or 2% of the value of prepared food and lodging 
sold in the municipality. 
2. 
Definitions. 
As 
used in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"Lodging" means the rental of living quarters in any 
hotel, rooming house or tourist or trailer camp. 
B. 
"Prepared food" has the same meaning as in section 1752, 
subsection 8-A. 
§1872. 
Referendum required 
1. 
Adoption. 
The adoption of a limited sales tax in a 
municipality 
must 
be 
approved 
by 
the 
legal 
voters 
of 
a 
municipality that seeks to adopt the tax. 
The petition process 
and the voting at elections held in towns and plantations must be 
held and conducted in accordance with Title 30-A, sections 2528, 
2529 and 2532 even if the town or plantation has not accepted the 
provisions of Title 30-A, section 2528. 
The voting at elections 
held in municipalities must be held and conducted in accordance 
with Title 
2l-A, 
and 
the 
referendum 
must 
take 
place 
at 
a 
municipal general election with a turnout equal to or greater 
than 30% of the votes cast in the municipality in the last 
gubernatorial election or at the last general election. 
The 
municipal clerk shall make a return of the results, certify the 
results and send them to the Secretary of State. 
The Secretary 
of State shall forward the results to the State Tax Assessor. 
The municipal clerk shall prepare the required ballots, which 
must contain the following question: 
"Do you favor a 
[insert l'l-o or 2%) 
sales tax to be imposed 
on the sale of prepared food and lodging in [insert name of 
municipality)? " 
2. 
Repeal. 
A limited sales tax adopted under this chapter 
may be repealed in the same manner as provided for adoption of 
the tax in subsection 1. 
The ballot question must read: 
"Do you f avo r re pe ali ng 
t"'h'-"e"---------1[-"i"-'n""'s"-'e""-"-r-"'t'------"1'-'%"------'o"'-r~_"'2~%'_.J)"____'s"'_a"'_"'1_"'e""s'__'t"'a""x~yo-"'n 
the sale of prepared food and lodging in [insert name of 
municipality]?" 
§1873. 
Rate; collection 
1. 
Rate. 
A limited sales tax adopted under this chapter is 
equal to 1% or 2% of the value of prepared food and lodging sold 
at retail in the municipality adopting the tax and subject to tax 
under chapter 213. 
2. 
Collection. 
A limited sales tax 
adQ1Lted 
under this 
chapter must be added· to the tax imposed under chapter 213 and 
must be collected and administered in the same manner as taxes 
imposed under that chapter. 
§1874. 
Implementation of tax 
1. 
Effective date. 
The imposition or repeal of a limited 
tax under section 1872 takes effect on the first day of the next 
succeeding calendar quarter that begins more than 90 days after 
the date of the election at which the tax '"as 
approved or 
repealed by the voters. 
The municipality adopting or repealing 
the tax shall notify the State Tax Assessor at least 90 days 
before 
the 
tax 
or 
repeal is effective 
and shall state the 
effective date of the tax. 
• 
2. 
Distribution of the tax. 
The proceeds of a limited 
sales tax imposed under this chapter must, on or about the 20th 
day of each month, be remitted to the State and distributed as 
follows: 
A. 
Two percent of the amount remitted to the State must be 
retained by the State to defray its costs of administration; 
B. 
Five and two-tenths percent of the amount remitted to 
the 
State 
must 
be 
paid 
to 
the 
Local 
Government 
Fund 
established in Title 30 A, section 5681; and 
c. 
Ninety-two 
and 
eight-tenths 
percent 
of 
the 
amount 
remi t ted to the State must be paid to the municipality that 
adopted the tax. 
§1875. 
Multimunicipal limited sales tax district authorized 
Two 
or 
more 
municipalities 
may 
Jo~n 
together 
for 
the 
purpose 
of 
creating 
a 
mul timunicipal 
limited 
sales 
tax 
district. 
Before the municipal officers prepare the warrant for 
any referendum vote authorizing the adoption of a multimunicipal 
limited sales tax, the participating municipalities must execute 
an interlocal agreement pursuant to Title 30 A, chapter 115 that 
details 
the 
financial 
rights 
and 
responsibilities 
of 
each 
participating municipality with respect to the limited sales tax 
and the procedures for the referendum. The interlocal agreement 
must detail the respective municipal financial obligations in the 
circumstance 
of 
any 
participating 
municipality 
voting 
at 
referendum to adopt or repeal the tax and in the circumstance of 
any participating municipality voting at referendum not to adopt 
or repeal the tax. 
For the purposes of complying with Title 
30-A, 
section 2205, 
an interlocal agreement executed for the 
purpose of this chapter must be submitted to the Director of the 
State 
Planning 
Office 
within 
the 
Executive 
Department 
for 
approval. 
§1876. 
Adjustment of state valuation 
For each municipality imposing a tax under this chapter, the 
State Tax Assessor shall compute a property tax base equivalent. 
The property tax base equivalent is computed by dividing the 
revenue distributed to the municipality under this chapter by the 
full value mill rate for the municipality. 
The property tax base 
equivalent 
must 
be 
added 
to 
the 
state 
valuation 
for 
the 
municipality when making the distributions required under Title 
20-A, Part 7 and Title 30 A, section 5681 and the apportionments 
of county taxes under Title 30 A, section 706. 
SUMMARY 
This bill permits municipalities to adopt by referendum a 1% 
or 2% local sales tax on prepared food and lodging. 
The property 
tax base of a municipality collecting the local option sales tax 
would 
be 
adjusted 
for 
purposes 
of 
state 
distributions 
for 
education and revenue sharing and apportionment of county taxes 
to 
reflect 
a 
property 
tax 
equivalent 
for 
the 
additional 
revenues. 
The bill requires 
a 
similar adjustment 
for 
motor 
vehicle and watercraft excise taxes. 
These adjustments provide a 
fair recognition of a municipality's additional tax wealth for 
purposes of these distributions.