An Act for Comprehensive Reform of Maine's Tax Structure
Maine Legislature, Session 121, LD 1395
Committee: Taxation
Sponsors: MILLS, KOFFMAN, McLAUGHLIN
Amends: Title 26, Section 5002, 36 MRSA §620, 36 MRSA §6207, 36 MRSA §1491, 36 MRSA §1507, 30-A MRSA §5681, 36 MRSA §5111, 36 MRSA §5126, 36 MRSA §5403, 36 MRSA §5219-S, 28-A MRSA §1652, 28-A MRSA §1703, 36 MRSA §662, 36 MRSA §6651, 36 MRSA §66, 36 MRSA §1752, 36 MRSA §1760, 36 MRSA §652-A, 36 MRSA §709-C

12lst MAINE LEGISLATURE 
Legislative Document 
No. 1395 
H.P.1021 
House of Representatives, March 19,2003 
An Act for Comprehensive Reform of Maine's Tax Structure 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative MILLS of Cornville. 
/Jf~ 
/J7.1llD£~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representative KOFFMAN of Bar Harbor and 
Representative: McLAUGHLIN of Cape Elizabeth. 
Printed on recycled pa~r 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 36 MRSA c. 105, sub-c. 4-B, as enacted by PL 1997, c. 
643, Pt. HHH, §3 and affected by §10, is repealed. 
Sec. A-2. 36 MRSA §620l, sub-§ll-A, as amended by PL 1999, c. 
401, Pt. R, §l and affected by §2, is further amended to read: 
II-A. 
Rent 
constituting 
property 
taxes 
accrued 
for 
nonelderly household. 
"Rent constituting property taxes accrued 
for 
nonelderly household" 
means 
±8% 
20% 
of 
the 
gross 
rent 
actually paid in cash or :"ts equivalent in any tax year by a 
claimant and the claimant's household solely for the right of 
occupancy of their Maine homestead in the tax year and which rent 
consti tutes the basis, in the succeeding calendar year, of a 
claim for relief under this chapter by the claimant. 
Sec. A-3. 36 MRSA §6207, as amended by PL 1999, c. 494, §l, 
is further amended to read: 
§6207. 
Benefits for nonelderly households 
A claimant representing a nonelderly household qualifies for 
the 
following 
benefits 
subject 
to 
the 
following 
income 
limitations. 
1. 
Benefit 
calculation. 
For 
claimants 
representing 
a 
nonelderly household, the benefit is calculated as follows: 
A-I. 
~Hty Eighty percent of that portion of the benefit 
base that exceeds 4% 
BQt-~-~-~~eeee-~%-~--~~-pIQ6 
±QQ%-e.f--t-ha-t--po-t'-t:-ion-~:E--tae-BeBe.f·H:--bas€---t-hat-~~&-8% of 
income to a maximum payment of $±TQQQ $3,000. 
~T---~--eli~ihilitYT---~~~--~~--wita 
a9Q6ea9±e-~~~~-eHeess-e.f-~~~-aaG-a9Q6ea91a6-~-t~~-9F 
m9Fe-memBe£6-wJ~h-~-~~~~~-~~~:E--~r~~~-aFe-B9t 
e±i~iB±e-f9F-a-BeBefitT 
3. 
Subsidized housing; special needs payment. 
A claim may 
not be granted under this section to claimants: 
A. 
Whose housing costs for the year for which relief is 
requested were subsidized by government programs that limit 
housing costs to a percentage of household income, except 
that the exclusion provided by this paragraph does not apply 
Page l-LR0824(1) 
to 
persons 
receiving 
social 
security 
disability 
supplemental security income disability benefits. 
or 
4. Minimum benefit. 
A claim of less than $10 may not be 
granted. 
PARTB 
Sec. B-1. 20-A MRS A §1, 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. B·2. 30·A MRSA §5681, sub·§2, fB, 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 l49l-A, 1507 and 
1876. 
Sec. B·3. 36 MRSA §1491·A is enacted to read: 
§149l-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 for the municipality must be added 
to its state valuation for purposes of distributing state school 
aid under Title 20-A, Part 7, for state-municipal revenue sharing 
under Title 3D-A, section 5681 and for assessment of county taxes 
under Title 30-A, chapter 3. 
Sec. B·4. 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 for the municipality must be added 
to its state valuation for purposes of distributing state school 
aid under Title 20-A, Part 7, for state-municipal revenue sharing 
under Title 30-A, section 5681 and for assessment of county taxes 
under Title 30-A, chapter 3. 
Sec. B-S. 36 MRSA c. 216 is enacted to read: 
CHAPTER 216 
LIMITED LOCAL OPTION SALES TAX 
§1871. 
Local option sales tax authority 
1. 
Authority. 
Beginning January L 
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 3D-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 1% 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 favor repealing the 
[insert 1% or 2%] 
sales tax on 
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 adopted 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 guarter that begins more than 90 days after 
the date of the election at which the tax was 
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 
~ercent of 
the 
amount 
remitted to the State must be ~aid to the munici~ality that 
ado~ted the tax. 
§1815. 
Multimunicipal limited sales tax district authorized 
Two 
or 
more 
munici~alities may 
J01n 
together 
for 
the 
~ur~ose 
of 
creating 
a 
multimunicipal 
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 inter local agreement ~ursuant to Title 30-A, 
cha~ter 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 inter local agreement 
must detail the respective municipal financial obligations in the 
circumstance 
of 
any 
participating 
municipality 
voting 
at 
referendum to ado~t 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 
Executiye 
De~artment 
for 
approval. 
§1816. 
Adjustment of state valuation 
For each municipality imposing a tax under this chapter, the 
State Tax Assessor shall compute a property tax base eguivalent. 
The property tax base eguivalent is computed by dividing the 
revenue distributed to the munici~ality under this chapter by the 
full value mill rate for the municipality. 
The property tax base 
eguiyalent for 
the municipality must 
be 
added to its state 
valuation for purposes of distributing state school aid under 
Title 20-A, Part 7 < 
for state-municipal revenue sharing under 
Title 30-A, section 5681 and for assessment of county taxes under 
Title 30-A, chapter 3. 
PARTC 
Sec. C-l. 30-A MRSA §5681, sub-§2, "C and D, as enacted by PL 
1999, c. 731, Pt. U, §l, are repealed. 
Sec. C-2. 30-A MRSA §5681, sub-§2, ,E, as enacted by PL 1999, 
c. 731, Pt. U, §l, is amended to read: 
E. 
"Disproportionate 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 and reduced by T91 ~. 
Sec. C-3. 30-A MRSA §S681, sub-§S, as amended by PL 2001, c. 
559, Pt. G, §l and c. 714, Pt. Y, §l, is repealed. 
Sec. C-4. 30-A MRSA §S681, sub-§S-B is enacted to read: 
5-B. 
Transfers to funds. 
On the last day of each month, 
the Treasurer of State shall make the following transfers from 
the receipts from the taxes imposed under Title 36, Parts 3 and 8 
and credited to the General Fund: 
2004. 
A. 
To the Local Government Fund, 2.6% of receipts; and 
B. 
To 
the 
Disproportionate 
Tax 
Burden 
Fund, 
2.6% 
of 
receipts. 
Sec. C-S. Effective date. 
This Part takes effect January 1, 
PARTD 
Sec. D-l. 36 MRSA §Slll, sub-§l-B, as enacted by PL 1999, c. 
731, Pt. T, §3, is amended to read: 
I-B. 
Single individuals and married persons filing separate 
returns; 2002 tax year. 
For tax years beginning ali--{)-{'--afteF 
JaliaaF-y-IT in 2002, for single individuals and married persons 
filing separate returns: 
If Maine ~aHaa±e taxable income is: 
Less than $4,200 
At least $4,200 but 
less than $8,350 
At least $8,350 but 
less than $16,700 
$16,700 or more 
The tax is: 
2% of the Maine 
taxable income 
$84 plus 4.5% of 
the excess over 
$4,200 
$271 plus 7% of 
the excess over 
$8,350 
$856 plus 8.5°-0 
of the excess 
over $16,700 
Sec. D-2. 36 MRSA §5111, sub-§l-C is enacted to read: 
I-C. 
Single individuals and married persons filing separate 
returns: tax years beginning 2003. 
For tax years beginning on or 
after January 1, 2003, for single individuals and married persons 
filing separate returns: 
If Maine taxable income is: 
Less than $5,000 
At least $5,000 but 
less than $20,000 
$20,000 or more 
The tax is: 
2% of the Maine 
taxable income 
$100 plus 5% of 
the excess over 
$5,000 
$850 plus 8°-(, 
of the excess 
over $20,000 
Sec. D-3. 36 MRSA §5111, sub-§2-B, as enacted by PL 1999, c. 
731, Pt. T, §5, is amended to read: 
2-B. 
Heads of households; 2002 tax year. 
For tax years 
beginning 
eB--~--~~~--~aaary--1T in 
2002, 
for 
unmarried 
individuals or legally separated individuals who qualify as heads 
of households: 
If Maine ~aHaBle taxable income is: 
Less than $6,300 
At least $6,300 but 
less than $12,500 
At least $12,500 but 
less than $25,050 
$25,050 or more 
The tax is: 
2% of the Maine 
taxable income 
$126 plus 4.5°-(, 
of the excess 
over $6,300 
$405 plus 7°-(, of 
the excess over 
$12,500 
$1,284 plus 8.5% 
of the excess 
over $25,050 
Sec. D-4. 36 MRSA §5111, sub-§2-C is enacted to read: 
Z C. 
Beads of households; tu years beginning Z003. 
For 
tax years beginning on or after January 1. 2003, for unmarried 
individuals or legally separated individuals who qualify as heads 
of households: 
If Maine taxable income is: 
Less than $7,500 
At least $7,500 but 
less than $30,000 
$30,000 or more 
The tax is: 
2'1& of the Maine 
taxable income 
$150 plus 5'1& 
of the excess 
over $7,500 
$1.275 plus 8°-& 
of the excess 
over $30,000 
Sec. D-5. 36 MRSA §5111, sub-§3-B, as enacted by PL 1999, c. 
731, Pt. T, §7, is amended to read: 
3-B. 
Individuals filing married joint return or surviving 
spouses; 2002 tax year. 
For tax years beginning 
eR--4H"--aft;e~ 
JaR~aFy-1T in 2002, for individuals filing married joint returns 
or surviving spouses permitted to file a joint return: 
If Maine ~aHaale taxable income is: 
Less than $8,400 
At least $8,400 but 
less than $16,700 
At least $16,700 but 
less than $33,400 
$33,400 or more 
The tax is: 
2°-& of the Maine 
taxable income 
$168 plus 4.5'l-0 
of the excess 
over $8,400 
$542 plus 7°-& of 
the excess over 
$16,700 
$1,711 plus 8.5% 
of the excess 
over $33,400 
Sec. D-6. 36 MRSA §5111, sub-§3-C is enacted to read: 
3-C. 
Individuals filing married joint return or surv~v~ng 
spouses: tax years beginning 2003. 
For tax years beginning on or 
after January 1, 
2003, 
for 
individuals filing married joint 
returns or surviving spouses permitted to file a joint return: 
If Maine taxable income is: 
Less than $10,000 
At least $10,000 but 
less than $40,000 
$40,000 or more 
The tax is: 
2% of the Maine 
taxable income 
$200 plus 5°", 
of the excess 
over $10,000 
$1, 700 plus 8'l-0 
of the excess 
over $40,000 
Sec. D-7. 36 MRSA §5126, as amended by PL 2001, c. 583, §16, 
is repealed and the following enacted in its place: 
§5126. 
Personal exemptions 
For tax years beginning on or after January 1, 
2003 
a 
resident individual is allowed an amount for each exemption that 
is egua1 to the amount allowed for an exemption under the Code. 
Sec. D-8. 36 MRSA §5403, as repealed and replaced by PL 1999, 
c. 731, Pt. T, §10 and affected by §11, is amended to read: 
§5403. Annual adjustments for inflation 
Beginning in 6996 2..Q.Q..3., 
and each subsequent calendar year 
thereafter, on or about September 15th, the State Tax Assessor 
shall multiply the cost-of-living adjustment for taxable years 
beginning in the succeeding calendar year by the dollar amounts 
of the tax rate tables specified in section 5111, subsections 
1-gr-6-g-aBa-d-B 1-C, 2-C and 3-C. 
If the dollar amounts of each 
rate bracket, 
adjusted by application of 
the 
cost-of-living 
adjustment, 
are not multiples of 
$50, 
any increase must 
be 
rounded 
to 
the 
next 
lowest 
multiple 
of 
$50. 
If 
the 
cost-of-living adjustment for any taxable year is 1.000 or less, 
no adjustment may be made for that taxable year in the dollar 
bracket amounts of the tax rate tables. 
The assessor shall 
incorporate such changes into the income tax forms, instructions 
and withholding tables for the taxable year. 
Sec. D-9. 
Application. 
This 
Part 
applies 
to 
tax 
years 
beginning on or after January 1, 2003. 
PARTE 
Sec. E-l. 36 MRSA §5219-S, as enacted by PL 1999, c. 731, Pt. 
V, §1 and affected by §2, is amended to read: 
§5219-S. 
Earned income credit 
A taxpayer is allowed a refundable credit against the taxes 
otherwise due under this Part equal to 
5% 
20% of the federal 
earned income credit for the same taxable year. 
~Re-~~-Hlay 
Be~-~eaQee-~Re-6~a~e-iBeeHle-~aH-~e-le66-~RaB-Be~eT 
PARTF 
Sec. F-l. 28-A MRSA §1652, sub-§l, as repealed and replaced by 
PL 1987, c. 342, §116, is amended to read: 
1. 
Excise tax on malt liquor and wine. An excise tax is 
imposed 
on 
the privilege of manufacturing 
and 
selling malt 
liquor, wine and low-alcohol spirits products in the State. The 
Maine manufacturer or importing wholesale licensee shall pay an 
excise tax of 69~-~e£-~allen-~-~~-~~-~~-~~-~&-&be-S~a~e 
l¢ for each lath of an ounce of 100% alcohol sold in the State in 
malt beverages, hard cider, wine, sparkling wine, fortified wine 
and low-alcohol spirits products. 
Sec. F-2. 28-A MRSA §1652, sub-§2, as amended by PL 1997, c. 
767, §4, is repealed. 
Sec. F-3. 28-A MRSA §1703, sub-§3, as amended by PL 1997, c. 
767, §6, is further amended to read: 
3. 
Amount of premium. 
The premium imposed by subsections 1 
and 2 is: 
AT---~-€en~£--~~-~~~-eB-~~~-mal~--~~~~&-~-Ra~a 
eiae~-6ela-iB-~Re-S~a~et 
A-I. 
Two tenths of one cent for each 10th of an ounce of 
100% alcohol sold in the State in malt beverages, 
hard 
cider, wine, sparkling wine, fortified wine and low alcohol 
spirits products; and 
8T---~Hi£~y--€en~£--~--~I~~-~-~~~--W~&&r--e&ae~--~RaB 
6~a~kliB~-wiBeT-6ela-iB-~Re-S~a~et 
GT--~~~~~-~~-~e~-~~~~-all-~~~~~~-~~-aBa 
all-~~~-~-~-wiRe-~~-~n--&ae-~~~-a&Q-~~--lew-aleeRel 
sp~~~~s-~eQ~€~£-~~~-a-pe~seB-~4€e££eQ-~~~~~-w~~-~eF 
eeBsamp~~eB-eB-e~-e~~-~he-p~em~seSf-aBe 
D. 
One dollar and twenty-five cents per proof gallon as the 
term proof gallon is defined in the United States Code, 
Title 26, Section 5002, on all spirits sold in the State. 
PARTG 
Sec. G-l. 36 MRSA §662 is enacted to read: 
§662. 
Certain business personal property 
1. 
Exemption. 
An exemption is provided under this Part for 
70°'b of the just value of property described in section 6651, 
subsection 3 that is first placed in service in the State after 
April L 
2003. 
2. 
Reimbursement 
to 
municipalities. 
The 
State 
shall 
reimburse municipalities for 50% of the property tax revenue loss 
suffered 
as 
a 
result 
of 
this 
section 
using 
the 
procedure 
specified 
in 
section 
661. 
The 
State 
may 
not 
reimburse 
municipalities to the extent that the property taxes paid after 
March 31. 2002 are returned to a taxpayer by a municipality due 
to 
the 
taxpayer's 
participation 
in 
a 
municipal 
development 
district pursuant to Title 3D-A. 
Sec. G-2. 36 MRSA §6651, sub-§l, as amended by PL 2001, c. 
396, §43, is further amended to read: 
1. 
Eligible property. 
"Eligible property" means qualified 
business property first placed in service in the State, 
or 
constituting construction in progress commenced in the State, 
after April 1, 1995 and on or before April 1. 2003. 
"Eligible 
property" includes, without limitation, repair parts, replacement 
parts, additions, accessions and accessories to other qualified 
business property placed in service on or before April 1, 1995 if 
the part, addition, accession or accessory is first placed in 
service, or constitutes construction in progress, in the State 
after April 1, 1995 and on or before April 1. 2003. 
"Eligible 
property" also includes inventory parts. 
Sec. G-3. 36 MRSA §6651, sub-§2, as enacted by PL 1995, c. 
368, Pt. FFF, §2, is amended to read: 
2. 
Inventory parts. 
"Inventory parts" 
includes 
repair 
parts, 
replacement 
parts, 
replacement 
equipment, 
additions, 
accessions and accessories on hand but not in service and stocks 
or inventories of repair parts, replacement parts, replacement 
Page ll-LR0824(I) 
equipment, additions, accessions and accessories on hand but not 
in service if acquired after April 1, 1995 and on or before April 
1, 2003, regardless of when placed in service. 
Sec. G-4. 36 MRSA §66S2, sub-§l-D is enacted to read: 
D. 
Limitation on certain property. 
Reimbursement may not 
be made pursuant to this chapter to the extent that the property 
taxes paid after March 31. 2002 are returned to a taxpayer by a 
municipality due to the taxpayer's participation in a municipal 
development district pursuant to Title 30-A. 
PARTH 
Sec. H-l. 5 MRSA §lS13, sub-§l, as corrected by RR 1999, c. 2, 
§1, is amended to read: 
1. 
Maine Rainy Day Fund. 
As the first priority before any 
other transfer, the State Controller shall at the close of each 
fiscal 
year 
reserve 
from 
the 
unappropriated 
surplus 
of 
the 
General Fund an amount equal to 1/2 the excess of total General 
Fund revenues received over accepted estimates in that fiscal 
year and transfer that amount to the Maine Rainy Day Fund at the 
beginning of the next fiscal year. 
Accepted revenue estimates 
may not be increased after adjournment of each First Regular 
Session of the Legislature except as provided. 
For the first 
year of the biennium, revenue estimates for the 2nd year of the 
biennium may be adjusted once during the Second Regular Session 
of the Legislature. 
Accepted revenue estimates may be increased 
for other fiscal periods only if an amount not to exceed 1/2 of 
the increase is transferred by the State Controller to the Rainy 
Day Fund at the same time from the unappropriated surplus of the 
General 
Fund. 
The 
fund may not exceed 
9% 
10% of the total 
General 
Fund 
revenues 
received 
in the 
immediately 
preceding 
fiscal year 
and may not lapse, 
but remains in a 
continuing 
carrying account to carry out the purposes of this section. 
A 
reduction in the fund is not necessary in the event the total 
General 
Fund 
revenues 
received 
in the 
immediately preceding 
fiscal 
year 
are 
less 
than 
the 
total 
General 
Fund 
revenues 
received in the fiscal year 2 years previous and if the fund is 
at its 9% 10% limit. 
Sec. H-2. 5 MRSA §lS19, sub-§2, as enacted by PL 1999, c. 731, 
Pt. DD, §1 and affected by §2, is amended to read: 
2. 
Funding. 
At the close of each fiscal year, the State 
Controller shall transfer from the unappropriated surplus of the 
General Fund to the Retiree Health Insurance Internal Service 
Fund an amount equal to the balance remaining of the excess of 
total General Fund revenues received over accepted estimates in 
that fiscal year that would have been transferred to the Maine 
Rainy Day Fund had the Maine Rainy Day Fund not been at its 
statutory limit of ~% 10~ of total General Fund revenues received 
in the immediately preceding fiscal year. 
Funds may also include 
appropriations 
and allocations of the Legislature 
and direct 
billing rates charged to state departments and agencies and other 
participating jurisdictions. 
PART I 
Sec. 1-1. 36 MRSA §1752, sub-§II, 1(A, as enacted by PL 1989, c. 
871, §5, is amended to read: 
A. 
"Retail sale" includes: 
(1) Conditional sales, installment lease sales and any 
other transfer of tangible personal property when the 
title is retained as security for the payment of the 
purchase price and is intended to be transferred later; 
aBa 
(2) Sale of products for internal human consumption to 
a 
person 
for 
resale 
through 
coin-operated 
vending 
machines when sold to a retailer whose gross receipts 
from 
the retail sale of tangible personal property 
derived through sales from vending machines are more 
than 
50~ of the retailer I s gross receipts. 
The tax 
must be paid by the retailer to the StateT; and 
(3) 
The value of any taxable service defined under 
subsection 17 -A to the extent the taxable service is 
provided in this State and only if the relationship 
between the provider and the recipient of the taxable 
service is not an employment relationship with respect 
to the provision of the service. 
Sec. 1-2. 36 MRSA §1752, sub-§14, 1(A, as enacted by PL 1987, c. 
497, §24, is amended to read: 
A. 
"Sale price" includes: 
(1) 
Services wsies that are a part of a retail sale; 
and 
(2) 
All receipts, cash, 
kind or nature and any 
allowed by the seller to 
credi ts and property of 
amount for which credit 
the purchaser, without 
any 
is 
any 
871, 
deduction on account of the cost of the property sold, 
the cost of the materials used, labor or service cost, 
interest paid, losses or any other expenses. 
When 
a 
taxable service is provided for 
a 
fee 
that is 
contingent 
on 
an 
ultimate 
award, 
settlement or 
similar 
financial result and the fee is a certain percentage of that 
ultimate award or settlement, is deemed to include both the 
sale price and the applicable tax. 
Sec. 1·3. 36 MRSA §1752, sub.§14, 1IB, as amended by PL 1989, c. 
§6, is further amended to read: 
B. 
"Sale price" does not include: 
(1) 
Discounts allowed and taken on sales; 
(2) 
Allowances in cash or by credit made upon the 
return of merchandise or with respect to fabrication 
services pursuant to warranty; 
(3) 
The 
price of property returned or fabrication 
services rejected by customers, when the full price is 
refunded either in cash or by credit; 
(4) 
The pr ice received for labor or services used in 
installing or applying or repairing the property sold 
or fabricated, if separately charged or stated; 
(5) 
Any 
amount charged or collected, in lieu of a 
gratuity or 
tip, 
as 
a 
specifically stated service 
charge, when that amount is to be disbursed by a hotel, 
motel, restaurant or other eating establishment to its 
employees as wages; 
(6) 
The amount of any tax imposed by the United States 
on or with respect to retail sales, whether imposed 
upon 
the 
retailer 
or 
the 
consumer, 
except 
any 
manufacturers', importers', alcohol or tobacco excise 
tax; 
(7) 
The cost of transportation from the retailer's 
place of business or other point from which shipment is 
made directly to the purchaser, provided that those 
charges are separately stated and the transportation 
occurs by means of common carrier, contract carrier or 
the United States mail; 
(8) 
The 
fee 
imposed 
by 
Title 
10, 
section 
1169, 
subsection 11; 
Page l4-LR0824(1) 
(9) 
The fee imposed by section 4832, subsection 1; e~ 
(10) 
The lead-acid battery deposit imposed by Title 
38, section 1604, subsection 2-BT~ 
(11) 
With respect to any fee for a taxable service, 
any 
portion 
of 
that 
fee 
representing 
direct 
reimbursement charged to the recipient of the taxable 
service for commodities or services previously paid by 
the person providing the service, as long as any tax on 
those commodities or services, if any tax applies, has 
been previously paid. 
Sec. 1-4. 36 MRSA §1752, sub-§17-A, ,J, as enacted by PL 1999, 
c. 790, Pt. A, §46, is amended to read: 
J. 
Prepaid calling arrangements; aBa 
Sec. 1-5. 36 MRSA §1752, sub-§17-A, 11K, as amended by PL 2001, 
c. 396, §22, is further amended to read: 
read: 
K. 
Rental of furniture, 
audio tapes and audio equipment 
pursuant to a rental-purchase agreement as defined in Title 
9-A, section 11-105T~ 
Sec. 1-6. 36 MRSA §1752, sub-§17-A, "L and M are enacted to 
L. 
Amusement 
and 
recreation 
services. 
All 
services 
provided as retail sale in this State to the public or 
through private clubs that include exchanging a membership 
or 
right 
of 
access 
to 
an 
amusement, 
recreational, 
exhibitive, cultural or athletic activity for a fee or other 
remuneration; all rentals of personal property for amusement 
or recreation: and all purchases of memberships in social 
organizations. 
Donations 
to 
charity 
and 
dues 
to 
labor 
unions are not taxable. 
M. 
Personal 
services. 
The 
following 
personal 
services 
provided at retail sale in this State are subject to sales 
.t2x.t 
(1) 
Personal 
care 
services, 
provided 
by 
barbers, 
beauticians, 
manicurists, 
tattoo 
artists, 
body 
piercers, massage therapists, reflexologists, 
tanning 
salons and exercise or fitness centers: 
(2) 
Laundering and dry cleaning: 
Page l5-LR0824(1) 
(3) 
Painting, papering and interior decorating: 
(4) 
Cleaning, 
repair, 
storage, 
maintenance 
and 
improvement of personal property including, 
but not 
limited 
to, 
motorized 
vehicles 
of 
all 
types, 
watercraft, 
snowmobiles, 
bicycles, 
jewelry, 
cameras, 
timepieces, 
firearms, 
musical instruments, electronic 
and electrical goods, furniture, rugs, upholstery and 
antigues: 
(5) 
Rental of personal property: 
(6) 
Pet grooming and kennel services: 
(7) 
Swimming pool installation, repair, cleaning and 
maintenance: 
(8) 
Locksmith, alarm and security services: 
(9) 
Disinfection and pest extermination or control: 
(10) 
Printing, imprinting, painting or lettering: 
(11) 
Fabrication, printing or production of tangible 
personal property that is not intended for resale; 
(12) 
Dance instruction and dance studio services; 
(13) 
Dating, escort and personal introduction services: 
(14) 
Flower or balloon delivery and similar services 
performed as a demonstration of personal appreciation; 
(15) 
Taxidermy; 
(16) 
Flight and driving instruction; 
(17) 
Auctioning and dealing in antigues and art; and 
(18) 
Moving and storage of personal property. 
"Personal services" does not include construction services. 
Sec. 1-7. 36 MRS A §1752, sub-§18-D, 1[1[A and B, as amended by PL 
2001, c. 584, §8 and affected by §10, are further amended to read: 
A. 
"Telecommunications services" includes: 
(1) 
The provision of 2-way interactive communications 
through 
the 
use 
of 
telecommunications 
equipment, 
exclusive of mobile telecommunications services; 
(2) 
The 
installation, 
maintenance 
or 
repair 
of 
telecommunications equipment; aas 
(3) 
Two-way 
interacti ve 
mobile 
telecommunications 
services provided by 
a 
home 
service provider 
to 
a 
customer whose place of primary use is within this 
State, to the extent those services are associated with 
transmissions that originate and terminate within this 
State or within any other state. 
For purposes of this 
paragraph, the term "state" includes the District of 
Columbia and any territory or possession of the United 
States ... ; and 
(4) 
Except as otherwise provided by this subsection, 
telecommunications services originating or terminating 
outside this State. 
B. 
"Telecommunications services" does not include: 
~l+--~-a&-~~~~~~~~-ay-~~~-6~a6ee~ieaT 
6e~viee-e~i~iaa~ia~-e~-~e~miaa~ia~-e~~6ise-~Ri6-S~a~et 
(2) 
Access services; 
(3) 
Directory advertising services; 
(4) The sale of unbundled network elements for use in 
the provision of telecommunications services; 
(5 ) 
For leases entered into on or after October 1, 
1996, the lease of telecommunications equipment; 
(6) 
A prepaid calling arrangement; or 
(7) 
Mobile telecommunications 
home service provider to 
a 
primary use is not within this 
services 
customer 
State. 
Sec.I-S. 36 MRSA §1760, sub-§14 is repealed. 
provided by a 
whose place of 
Sec. 1-9. 36 MRSA §1760, sub-§16, as amended by PL 1999, c. 
708, §25, is further amended to read: 
16. 
Hospitals 
and 
nonprofit 
educational 
broadcast 
corporations and literacy organizations. 
Sales to incorporated 
hospitals, incorporated nonprofit nursing homes licensed by the 
Page l7-LR0824(1) 
Department of Human Services, incorporated nonprofit residential 
care facilities licensed by the Department of Human Services, 
incorporated nonprofit home health agencies certified under the 
United States Social Security Act of 1965, 
Title XVIII, 
as 
amended, 
incorporated nonprofit rural community health centers 
engaged 
in, 
or 
providing 
facilities 
for, 
the 
delivery 
of 
comprehensive primary health care, incorporated nonprofit dental 
heal th 
centers, 
insti tutions 
incorporated 
as 
nonprofit 
corporations for the sole purpose of eeRQQe~4R~-~~~-F&&ea~eR 
e~-~~--~-~Q~~e6e-~--e&&a&li&hi~-a~-~int~~~-laaeFaEe~ies 
fe~-se4eR~ifie-6~~4y-~~~~~~~~~~-~~~~~-&i91~y-e~ 
eeeJe~y--e~ operating educational television or radio stationsT 
seReelsT 
and 
incorporated 
nonprofit 
organizations 
or 
their 
affiliates whose purpose is to provide literacy assistance or 
free clinical assistance to children with dyslexia aRQ-~e~QlaFly 
e~~aRiBeQ--ehaFeh9&-~F-~-~--~~~~~--W9~6h4~7--eHeepEiR~ 
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eBEe~pFises. 
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iRsEiEQEieRsT---iRelQQiR~---iRsEiEQEieRs---effipeweFeQ---Ee---eeRfeF 
eQaeaEieBalT-~~~~~~-eF-~~-Qe~FeesT-~~--Rave-~-~e~ala~ 
faeal~YT-~~~~~~~~-e~~aBiBeQ-~-~~-papils-~-~~~-iB 
a~EeBQaBee-~~~-~he-~~-6€h~--y&aF-~-&ha&-~~-aBQ 
fa~BisR-~e-~~~~-9&heF&-~e€e~Q6-~~~~~~~&eG-feF 
eB~~aBee-~e-6€h~6-~-~~,-~~~iat~~F~FaGaa&e-FaBkr-Be 
pa~E-~-~~-ReE-~~~-~~-wRieR-~~~-~~-ERe-~~~-~~-aBy 
iBQiviQaalT 
Sec. 1-10. 36 MRSA §1760, sub-§17 is repealed. 
Sec. I-II. 36 MRSA §1760, sub-§24 is repealed. 
Sec. 1-12. 36 MRSA §1760, sub-§34, as repealed and replaced by 
PL 1981, c. 163, §4, is repealed. 
Sec. 1-13. 36 MRSA §1760, sub-§49, as repealed and replaced by 
PL 1999, c. 499, §1, is repealed. 
Sec. 1-14. 36 MRSA §1760, sub-§65, as amended by PL 1993, c. 
670, §6, is repealed. 
Sec. I-IS. 36 MRSA §1760, sub-§71, as enacted by PL 1989, c. 
533, §8, is repealed. 
Sec. 1-16. 36 MRSA §1760, sub-§75, as enacted by PL 1989, c. 
871, §15, is repealed. 
PARTJ 
Sec. J-l. 36 MRS A §652, as amended by PL 2001, c. 596, Pt. B, 
§§23 and 24 and affected by §25, is further amended to read: 
§652. 
Property of institutions and organizations 
The-~~~~~~~~1r-9f-4B6£4£~£4eB6-~~~&~~&~-is 
eHemp~-EFem-~aHa~i9B+ 
1. 
Property 
of 
following property of 
from taxation: 
institutions 
and 
organizations. 
The 
institutions and organizations is exempt 
A. 
The real estate and personal property owned and occupied 
or used solely for their own purposes by benevolent and 
charitable institutions incorporated by this State. 
Such an 
institution may not be deprived of the right of exemption by 
reason of the source from which its funds are derived 9F-by 
Feas9B-~-14m4£a£4eB--~-~~€--G~a&~&-~--peFs9Bs-~~--whese 
beBeEi~-s~eh-E~Bas-aFe-app±iea. 
For 
the 
purposes 
of 
this 
paragraph, 
"benevolent 
and 
charitable institution" means an institution that advances a 
charitable 
purpose, 
donates 
or 
renders 
gratuitously 
a 
substantial portion of its services, benefits a substantial 
and indefinite class of persons who are legitimate subjects 
of charity, relieves the government of some of its burden 
and 
operates entirely free 
from 
private profit motive. 
"Benevolent and charitable institutions" may include, but 
aFe ~ not limited to, nonprofit nursing homes and nonprofit 
boarding homes and boarding care facilities licensed by the 
Department of Human Services pursuant to Title 22, chapter 
1664 or its successor, 
nonprofit community mental health 
service 
facilities 
licensed 
by 
the 
Commissioner 
of 
Behavioral 
and 
Developmental 
Services 
pursuant 
to Title 
34-B, 
chapter 
and 
nonprofit 
child 
care 
centers 
incorporated by this State as 
benevolent 
and charitable 
institutions. 
For 
the 
purposes 
of 
this 
paragraph, 
"nonprofit" means 
a 
facility exempt 
from 
taxation under 
Section 501(c)(3) of the Code; 
B. 
The real estate and personal property owned and occupied 
or 
used solely for 
their 
own 
purposes 
by literary and 
scientific institutions. 
If 
any building or part of 
a 
building 
is 
used 
primarily 
for 
employee 
housing, 
that 
building, or that part of the building used for employee 
housing, shall ~ not be exempt from taxationTL 
C. 
Further conditions to the right of exemption 
under 
paragraphs A and B are that: 
(1) 
Any corporation claiming exemption under paragraph 
A 
must 
be 
organized 
and 
conducted exclusively 
for 
benevolent and charitable purposes; 
(2) 
A director, trustee, officer or employee of an 
organization 
claiming 
exemption 
is 
not entitled 
to 
receive directly or indirectly any pecuniary profit 
from 
the 
operation of 
that organization, 
excepting 
reasonable compensation for services in effecting its 
purposes or as 
a 
proper beneficiary of its strictly 
benevolent or charitable purposes; 
(3) 
All profits derived 
from 
the operation of 
an 
organization claiming exemption and the proceeds from 
the sale of its property are devoted exclusively to the 
purposes for which it is organized; 
(4) 
The 
institution, 
organization 
or 
corporation 
claiming exemption under this subsection shall 
file 
with the tax assessors upon their request a report for 
its preceding fiscal year in such detail as the tax 
assessors may reasonably require; 
(5) 
An exemption is not allowed under this subsection 
in favor of an agricultural fair association holding 
pari-mutuel racing meets unless it has qualified the 
next preceding year as 
a 
recipient of the "Stipend 
Fund" provided in Title 7, section 62; 
(6) 
An exemption allowed under paragraph A or B for 
real or personal property owned and occupied or used to 
provide federally subsidized residential rental housing 
is 
limited 
as 
follows: 
Federally 
subsidized 
residential rental housing placed in service prior to 
September 1, 
1993 by other than a nonprofit housing 
corporation that is acquired on or after September 1, 
1993 
by 
a 
nonprofit 
housing 
corporation 
and 
the 
operation 
of 
which 
is 
not 
an 
unrelated 
trade 
or 
business 
to 
that 
nonprofit 
housing 
corporation 
is 
eligible 
for 
an 
exemption 
limited 
to 
50% 
of 
the 
municipal assessed value of that property. 
An exemption granted under this subparagraph must be 
revoked for any year in which the owner of the property 
is no longer a nonprofit housing corporation or the 
operation of 
the 
residential 
rental 
housing 
is 
an 
unrelated trade or business to that nonprofit housing 
corporation. 
(a) 
For the purposes of this subparagraph, the 
following terms have the following meanings. 
(i) 
"Federally subsidized residential rental 
housing" 
means 
residential 
rental 
housing 
that 
is 
subsidized 
through 
project-based 
rental 
assistance, 
operating assistance 
or 
interest rate subsidies paid or provided by 
or on behalf of an agency or department of 
the Federal Government. 
(ii) 
"Nonprofit housing corporation" means a 
nonprof i t 
corporation organized in the State 
that 
is 
exempt 
from 
tax 
under 
Section 
50l(c)(3) 
of 
the 
Code 
and 
has 
among 
its 
corporate purposes the provision of services 
to people of low income or the construction, 
rehabili tation, 
ownership 
or 
operation 
of 
housing. 
(iii) 
"Residential rental housing" means one 
or 
more 
buildings, 
together 
with 
any 
facilities 
functionally 
related 
and 
subordinate 
to 
the 
building 
or 
buildings, 
located on one parcel of land and held in 
common ownership prior to the conversion to 
nonprofit status and containing 
or 
more 
similarly 
constructed 
residential 
units 
offered for rental to the general public for 
use on other than a transient basis, 
which 
contains 
separate 
and 
facilities 
for 
living, 
sleeping, 
cooking and sanitation. 
each of 
complete 
eating, 
(iv) 
"Unrelated trade or business" means any 
trade 
or 
business 
whose 
conduct 
is 
not 
substantially 
related 
to 
the 
exercise 
or 
performance by a nonprofit corporation of the 
purposes or functions constituting the basis 
for exemption under Section 50l(c)(3) of the 
Code. 
(b) 
Eligibility 
exemption is not 
this subparagraph: 
of the following 
affected by the 
property for 
provisions of 
(i) 
Property used as 
a 
nonprofit nursing 
home, 
residential care facility licensed by 
the Department of Human Services pursuant to 
Title 22, chapter 1663 or a community living 
arrangement as defined in Title 30-A, section 
4357-A or any property owned by a nonprofit 
organization 
licensed 
or 
funded 
by 
the 
Department 
of 
Behavioral 
and 
Development 
Services to provide services to or for the 
benefit of persons with mental illness or 
mental retardation; 
(ii) 
Property used for student housing; 
(iii) 
Property used for parsonages; 
(iv) 
used 
that 
A or 
Property that was owned and occupied or 
to provide residential rental housing 
qualified for exemption under paragraph 
B prior to September 1, 1993; or 
(v) 
Property 
exempt 
from 
taxation 
under 
other provisions of law; and 
(7) 
In addition to the requirements of subparagraphs 
(1) to (4), an exemption is not allowed under paragraph 
A or B for real or personal property owned and occupied 
or used to provide residential rental housing that is 
transferred or placed in service on or after September 
1, 1993, unless the property is owned by a nonprofit 
housing 
corporation 
and 
the 
operation 
of 
the 
residential rental housing is not an unrelated trade or 
business to the nonprofit housing corporation. 
For the purposes of this subparagraph, the following 
terms have the following meanings. 
(a) 
"Nonprofi t 
housing 
corporation" 
means 
a 
nonprofit corporation organized in the State that 
is exempt from tax under Section 50l(c)(3) of the 
Code 
and has 
among its corporate purposes 
the 
provision of services to people of low income or 
the 
construction, 
rehabilitation, 
ownership 
or 
operation of housing. 
(b) 
"Residential rental housing" 
means 
one or 
more 
buildings, 
together 
with 
any 
facilities 
functionally 
related 
and 
subordinate 
to 
the 
building or 
buildings, 
containing 
one 
or 
more 
similarly constructed residential units 
offered 
for rental to the general public for use on other 
than a 
transient basis, 
each of which contains 
separate 
and 
complete 
facilities 
for 
living, 
sleeping, eating, cooking and sanitation. 
(c) 
"Unrelated trade or business" means any trade 
or business whose 
conduct is not substantially 
related 
to 
the 
exercise 
or 
performance 
by 
a 
nonprofit 
organization 
of 
the 
purposes 
constituting the basis for exemption under Section 
501(c)(3) of the CodeTL 
E. 
The real estate and personal property owned and occupied 
by posts of the American Legion, Veterans of Foreign Wars, 
American Veterans 
of 
World 
War 
II, 
Grand 
Army 
of 
the 
Republic, Spanish War Veterans, Disabled American Veterans 
and Navy Clubs of the U.S.A., which shall-Be are used solely 
by 
those 
organizations 
for 
meetings, 
ceremonials 
or 
instruction, including all facilities appurtenant to such 
use and used in connection therewith. If any building shall 
is not Be used in its entirety for those purposes, but shall 
Be is used in part for those purposes and in part for any 
other purpose, exemption shall is only Be of the part used 
for those purposes. 
Further conditions to the right of exemption are that: 
(1) 
No director, trustee, officer or employee of any 
organization 
claiming 
exemption 
shall 
may 
receive 
directly or indirectly any pecuniary profit from the 
operation thereof, 
excepting 
reasonable 
compensation 
for services in effecting its purposes or as a proper 
beneficiary of its purposes; 
(2) 
All profits derived from the operation thereof and 
the proceeds from the sale of its property are devoted 
exclusively to the purposes for which it is organized; 
and 
(3) 
The 
institution, 
organization 
or 
corporation 
claiming exemption under this subsection shall file 
with the tax assessors upon their request a report for 
its preceding fiscal year in such detail as the tax 
assessors may reasonably requireTL 
F. 
The real estate and personal property owned and occupied 
or 
used 
solely for 
their 
own 
purposes 
by 
chambers 
of 
commerce or boards of trade in this State. 
Further conditions to the right of exemption are that: 
(1) 
No director, trustee, officer or employee of any 
organization 
claiming 
exemption 
sha±± 
may 
receive 
directly or indirectly any pecuniary profit from the 
operation 
thereof, 
excepting 
reasonable 
compensation 
for services in effecting its purposes or as a proper 
beneficiary of its purposes; 
(2) 
All profits derived from the operation thereof and 
the proceeds from the sale of its property are devoted 
exclusively to the purposes for which it is organized; 
and 
(3) 
The 
institution, 
organization 
or 
corporation 
claiming exemption under this subsection shall file 
with the tax assessors upon their request a report for 
its preceding fiscal year in such detail as the tax 
assessors may reasonably requireTL 
G. 
Houses of religious worship, including vestries, and the 
pews 
and furni ture wi thin the same; 
tombs 
and rights of 
burial; and property owned and used by a religious society 
as 
a 
parsonage 
to 
the 
value 
of 
$20,000, 
and 
personal 
property not exceeding $6,000 in value, but so much of any 
parsonage as is rented is liable to taxation. For purposes 
of the tax exemption provided by this paragraph a parsonage 
shall--meaB 
is 
the 
principal 
residence 
provided 
by 
a 
religious society for its clergyman whether or not located 
within the 
same 
municipality or place 
as 
the 
house 
of 
religious worship where 
the 
clergyman regularly conducts 
religious servicesTL 
H. 
Real estate and personal property owned by or held in 
trust 
for 
fraternal 
organizations, 
except 
college 
fraternities, operating under the lodge system whiea--6b.all 
that must be 
used solely by fraternal organizations for 
meetings, ceremonials, religious or moralistic instruction, 
including all facilities appurtenant to such use and used in 
connection therewith. If any building sha±± is not be used 
in its entirety for such purposes, but shall-be is used in 
part for 
s~eh those purposes and in part for 
any other 
purpose, exemption shall-be II of the part used for slieh 
those purposes. 
Further conditions to the right of exemption are that: 
(1) 
No director, trustee, officer or employee of any 
organization 
claiming 
exemption 
sha±± 
may 
receive 
directly or indirectly any pecuniary profit from the 
operation 
thereof, 
excepting 
reasonable 
compensation 
for services in effecting its purposes or as a proper 
beneficiary of its purposes; 
(2) 
All profits derived from the operation thereof and 
the proceeds from the sale of its property are devoted 
exclusively to the purposes for which it is organized; 
and 
(3) 
The 
institution, 
organization 
or 
corporation 
claiming exemption under this subsection shall file 
with the tax assessors upon their request a report for 
its preceding fiscal year in such detail as the tax 
assessors may reasonably requireTL 
J. 
The real and personal property owned by one or more of 
the 
EeFe~eiB~ organizations listed in paragraphs A to I and 
occupied or used solely for their own purposes by one or 
more other such organizationsTL 
K. 
The real and personal property leased by and occupied or 
used 
solely 
for 
its 
own 
purposes 
by 
an 
incorporated 
benevolent and charitable organization wbieb that is exempt 
from taxation under 
see~ieB Section 501 of the Internal 
Revenue Code of 1954, as amended, and the primary purpose of 
which 
is 
the 
operation 
of 
a 
hospital 
licensed 
by 
the 
Department 
of 
Human 
Services, 
heal th 
maintenance 
organization or blood bankT; and 
L. 
Service charges. 
(1) 
The 
owners 
of 
certain 
institutional 
and 
organizational real 
and personal property, 
which is 
otherwise exempt from state or municipal taxation under 
this 
section, 
except 
those 
properties 
described 
in 
paragraph G, ffiay-ee are subject to service charges wbeB 
~bese--ebaF~es that are calculated according to 
the 
actual cost of providing municipal services to that 
real 
property 
and 
to 
the 
persons 
who 
use 
that 
property. 
Service charges must also be applied to any 
improved property owned by the State that is exem-l?_t 
from taxation under section 651. 
These services sball 
include, without limitation: 
(a) 
Fire protection; 
(b) 
Police protection; 
(c) 
Road maintenance 
and construction, 
traffic 
control, snow and ice removal; 
(d) 
Water 
and 
sewer 
service 
provided 
to 
the 
tax-exempt 
entity 
and 
not 
otherwise 
recovered 
through user fees or other charges: 
(e) 
Sanitation 
services 
~p~r~o~v~i~d~e~d~ __ ~t~o~ __ ~t~h=e 
tax-exempt 
entity 
and 
not 
otherwise 
recovered 
through user fees or other charges: and 
(f) 
Any services other than education and welfare 
provided 
to 
the 
tax-exempt 
entity 
and 
not 
otherwise 
recovered through user fees or other 
charges. 
+6+---~he--~~~~--~--~~~-~~&--i&--Be~ 
maBaa~e~YT--&~~--~~a&~--~-~--~~-QJ£€~~J~£--e~--~Be 
m~Bieipa~i~y-~~-wbieb-~~~~~-p£epe£~y--~-~eea~eaT 
~Be-~~~~-~~£~~J¥e--eeay-~~~-~~~~-~Bese 
iBs~it~~ieBS-aRe-~~~~~~~~-&~F~i~~-eBa~~eS 
a~e-te-ae-~e¥JeQ--by-~-9"i-ng--t~-~~i-ae&--{)n--aJl.y-eI'-a~~ 
eE--~-~~~~-ng--€Ja££i~i€a~ieR£--ef-~~-~~--~ea~ 
p~epe~ty ... 
+a+---~~~~~--p~epe~~ies--~~~~~--teta~~y 
eHempt-~£em-~~~~-~~~~-~-~&&G-~e-p~eviae 
~eB~a~--~~---~ai&--€Ja££i~i€a~ieR--~~~--Bet 
iBe~~ae-st~aeBt-Be~siB~-e~-pa~seBa~esT 
*E-a-~~~~~~-~i&&-&eI'~iee-ehaE~e6-~~~~f-tBe 
e~assiEiea~ieBs-e~-~~~~~~r-~aa~-m~Bieipa~ity 
sBa~~--~-~he6e-~~~iG&-€~~--~-~~--iBsti~~tieBs 
aBa----e~~aBiBa~ieBs----ewBiB~----p~epe~ty----iB----tBa~ 
e~assiEiea~ieBT 
(3) 
With 
respect 
to 
the 
determination of 
service 
charges, appeals 
sBa~~ must be made in accordance with 
an appeals process to be provided for by municipal 
ordinance. 
Appeals concerning the assessed value of 
any property against which a service charge is levied 
must be undertaken in accordance with subchapter 8. 
(4) 
The collection of unpaid 
must be carried out in the same 
Title 38, section 1208. 
service 
manner 
charges 
SBa~~ 
as provided in 
(5) 
Municipalities shall use the revenues accrued from 
service charges to E~BaT-a£-~~~~~r-~be-ees~s 
eE----t-ho-se---se~viees 
reduce 
the 
municipality's 
tax 
commitment as provided in section 709-C. 
(6) 
The total service charges levied by a municipality 
on aay-~~~~~~~~-9F~aaiBa~i9a-~-~~~-seetiea 
sBall-ae~-e~€eeQ-~~~-~~~~~~-~~&a&&-9~-tBe 
eF~aaiBatieaT--~~-~~~~--~eF--~~~---~~it~~--tBe 
iastit~~iea--~---eF~aaiBatiea--~~---~ile--~~~--tBe 
m~aieipality--~--~~---ef---~h9--~~--~---tBe 
eF~aaiBatiea-feF-~he-~~-~~~~1r~~~~-~-~h9-yeaF 
wBieB--tBe--seFyiee--eBaF~e--is--leyieeT--~Be--m~aieipal 
effieeFs-~h~~~-~~-~he-seFyiee-€h~~~e-~-~ha~-is 
iR--eHee6~--~--~~-~--~~-~~--a&&~ab--Feyea~es g 
tax-exempt entity under this section may not exceed the 
lesser 
of 
1.5% 
of 
the 
tax-exempt 
entity's 
annual 
receipts and 20% of the amount that would have been 
assessed as taxes on the property concerned if it were 
not 
exempt 
from 
taxation. 
To 
gualify 
for 
this 
limitation, the tax-exempt entity must file with the 
municipality a report of the annual receipts of the 
entity for the year immediately prior to the year for 
which the 
service charge is levied. 
The municipal 
officers shall abate the service charge amount that is 
in 
excess 
of 
the 
applicable 
limitation. 
For 
the 
purposes of this subparagraph, "annual receipts" means 
all streams 
of 
income 
received in the 
most 
recent 
fiscal year by the tax-exempt entity from any source, 
including receipts of goods and services provided at 
the 
exempt 
property. 
"Annual 
receipts" 
does 
not 
include amounts received by a tax-exempt entity in the 
form 
of 
governmental 
or 
corporate 
grants, 
private 
charitable donations, or trust or endowment earnings to 
the 
extent 
that 
receipts 
in 
those 
categories 
are 
actually spent to provide tangible and direct services 
to people benefiting from the services provided by the 
organization. 
(6-A) 
A municipality may establish a payment schedule 
that is annual, semi-annual or guarterly. 
(7) 
Municipalities 
shall 
adopt 
any 
necessary 
of 
this 
ordinances 
to 
carry 
out 
the 
provisions 
paragraph regarding service Charges. 
Service charges levied pursuant to this paragraph may be 
applied only to improved tax-exempt property, which is any 
parcel of land containing a building or other principal use 
structure that is exempt 
from taxation pursuant to this 
section. 
Aa--eF~aRi~a~ieR--~--~~~~~~~-~~-~&~~&--~e--see~Fe 
eHemptiea-~--~h~&-6ee~ieR-~~~-mak9-w~J~~eR-~~~~-aaa 
~ile--w~J~~eR--~~--~~--eR~i~bemeR~--fe£--~-~~~--~--ae 
eeRsiae~ea-~-&F-~~€--~-f~~6~-~-e~-~~~--1a-~~e-~--iR 
waiea-~~e-~~~~~-~1F&~-~e~Hestea-wJ~~-~~ assess~~-&~-tae 
mHRieipality-~~-waiea-~~-p~epe~ty-~l~-etae~wise-~-taHasleT 
±f-~~aR~ea7-~~e-~~J~~~~~~~~~-~a~1~-~ae-asse66e~6 
eete~miRe--~aa~--~a&-~r~~~-~--~~~~~~~-J£--Re--±eB~e~ 
~Hali~ieaT--P~eef-~-~~~~~-~-~1Gat~-~-&pee1~ie-sasis 
HpeR-waiea-eHemptieR-is-elaimeaT 
Sec. J-2. 36 MRSA §652-A is enacted to read: 
§652-A. 
Application schedules 
An 
organization or institution claiming 
exemption 
under 
section 652 must file a written application containing proof of 
entitlement 
to 
the 
exemption 
for 
each parcel 
claimed. 
The 
application must be filed on or before April 1st in the year for 
which the exemption is first claimed. 
If granted, the exemption 
continues in effect until the basis for entitlement changes. 
The 
organization or institution holding the exemption must report any 
change in status that would materially affect its continuing 
enti tlement to the exemption. 
Assessors may reg:uire submission 
of a new application as often as every 3 years or whenever it 
comes to their attention that the basis for the entitlement may 
have changed. 
Sec. J-3. 36 MRSA §709-C is enacted to read: 
§709-C. 
Service charges 
The assessors shall deduct from the total amount reg:uired to 
be assessed under this subchapter an amount eg:ual to the amount 
of 
service 
charges 
to 
be 
levied under 
section 
for 
the 
municipal fiscal year. 
SUMMARY 
This bill provides for comprehensive reform of the State's 
tax structure. 
Part A repeals the homestead property tax exemption and 
provides 
property 
tax 
relief 
for 
the 
homestead 
property 
of 
persons with a high property tax burden by expanding the Maine 
Residents Property Tax Program to provide benefits equal to 80'1-0 
of the property taxes for 
a homestead that exceed 
4'l-o 
of the 
taxpayer's 
income. 
The 
amount of rent constituting property 
taxes accrued for a nonelderly household is increased from 18% to 
20% 
of gross 
rent. 
The 
income eligibility requirements 
are 
repealed. 
Part B 
permits municipalities to approve by referendum a 
local option sales tax of either 1"1:. or 2"1:. on prepared food and 
lodging to be collected by the State in conjunction with the 
existing tax on these products and services. 
The added revenue 
will be counted as though it were derived from an increase in the 
municipality's property valuation. 
The effect of this adjustment 
is to diminish slightly the municipality's revenue sharing and 
school funding and increase its proportion of county taxes. 
Two 
percent of the added revenue is kept by the State to offset its 
costs of collection and 5.2% is allocated to municipal revenue 
sharing. 
Part B also converts excise taxes on 
watercraft to 
an equivalent of 
the local 
resulting adjustments to 
revenue sharing, 
county taxes in the fashion outlined above. 
motor vehicles and 
property tax with 
school 
funding 
and 
Part C divides state-municipal revenue sharing funds equally 
between the Local Government Fund and the Disproportionate Tax 
Burden Fund and changes the threshold for receipt of funds from 
the Disproportionate Tax Burden Fund from 10 mills to 15 mills. 
Part D replaces the current income tax brackets with 
brackets. 
For persons filing as 
single individuals, 
the 
2% 
bracket would cover income from $0 to $4,999; the 
5'1-0 bracket 
would cover income from $5,000 to $19,999; and the 8% bracket 
would cover income of $20,000 and above. 
The income amounts for 
heads 
of 
households 
are 
1.5 
times 
the 
amounts 
for 
single 
individuals and the amounts for joint returns are 2 times the 
amounts 
for 
single 
individuals. 
Part 
D also 
increases 
the 
personal exemption to equal the federal personal exemption. 
Part E increases the earned income tax credit from 5% to 20% 
of the federal credit and makes it refundable. 
Current taxes on beer and wine are imposed in 2 components, 
an excise tax and a premium tax. 
The excise tax goes to the 
General Fund; the premium tax, added in 1981, supports a fund for 
the prevention of alcoholism. 
Part F imposes a tax on beer and wine at the uniform rate of 
12¢ per ounce of the pure alcohol that each contains. 
The tax is 
broken down as 10¢ for the excise tax to the General Fund and 2¢ 
as the premium tax for the alcoholism prevention fund. 
This will 
roughly double the revenue to the General Fund and produce a 
slight increase for the prevention fund. 
Overall, 
tax on wine, 
about 50%. 
this Part doubles the tax on beer and triples the 
while the tax on sparkling wine is increased by 
Taxes 
on distilled spirits are unaffected by this Part. 
Taxes on the alcohol in distilled spirits are higher than those 
on the alcohol in beer and wine and would remain so despite the 
increases for beer and wine proposed in this Part. 
Part G creates a property tax exemption for 70% of the just 
value of certain business property placed in service in the State 
after April 1, 2003 and eliminates eligibility of that property 
for 
tax 
reimbursement 
under 
the 
business 
equipment 
tax 
reimbursement program. 
The State will reimburse municipalities 
for 50% of the revenue lost as a result of the exemption. 
Part H increases the ceiling on the Maine Rainy Day Fund 
from 6% to 10% of total General Fund Revenues. 
Part 
sales tax 
I 
broadens 
exemptions 
consumer services. 
the 
and 
sales tax base by 
by expanding the 
repealing 
number of 
certain 
taxable 
Part J allows 
institutions 
and 
property taxes. 
a municipality to 
organizations 
that 
impose service charges on 
are 
exempt 
from 
paying