An Act To Provide Property Tax Relief for Maine Residents and Businesses and Implement Comprehensive Tax Reform
Maine Legislature, Session 121, LD 1141
Committee: Taxation
Sponsors: McGOWAN
Amends: 5 MRSA §1513, 5 MRSA §1514-A, 5 MRSA §1521, 5 MRSA §1710-A, 20-A MRSA §15617, 20-A MRSA §15658-A, 30-A MRSA §5731, 36 MRSA §383, 36 MRSA §507, 36 MRSA §6, 36 MRSA §709-A, 36 MRSA §6201

12lst MAINE LEGISLATURE 
Legislative Document 
No. 1141 
H.P.844 
House of Representatives, March 4, 2003 
An Act To Provide Property Tax Relief for Maine Residents and 
Businesses and Implement Comprehensive Tax Reform 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative McGOWAN of Pittsfield. 
11l~ 
/J7.11/dC~ 
MILLICENT M. MacFARLAND 
Clerk 
Under suspension of the rules, cosponsored by Senator STANLEY of Penobscot and 
Representatives: BLANCHETTE of Bangor, BROWNE of Vassalboro, CANAVAN of 
Waterville, CHURCHILL of Orland, CLARK of Millinocket, DUGAY of Cherryfield, 
DUNLAP of Old Town, FISCHER of Presque Isle, FLETCHER of Winslow, GERZOFSKY of 
Brunswick, GOODWIN of Pembroke, HATCH of Skowhegan, JACKSON of Fort Kent, 
LA VERRIERE-BOUCHER of Biddeford, MARRACHE of Waterville, McCORMICK of 
West Gardiner, MOODY of Manchester, O'BRIEN of Lewiston, PARADIS of Frenchville, 
PELLON of Machias, PERRY of Bangor, RICHARDSON of Skowhegan, SHERMAN of 
Hodgdon, SUSLOVIC of Portland, TARDY of Newport, THOMAS of Orono, TOBIN of 
Dexter, TREADWELL of Carmel, WHEELER of Kittery, Senators: BRYANT of Oxford, 
GAGNON of Kennebec, HATCH of Somerset, LEMONT of York, MARTIN of Aroostook, 
MITCHELL of Penobscot, STRIMLING of Cumberland. 
Printed on "",ycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 5 MRSA §1513, sub-§I, 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 11-6 25% of 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 6% 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 6% limit. 
Sec. 2. 5 MRSA §1514-A is enacted to read: 
§15l4-A. 
Income Tax Rate Management Fund 
1. 
Fund established. 
For the purposes of reducing the 
volatility of state tax revenues, improving the predictability of 
state 
and 
local 
budgeting efforts 
and 
managing 
the State's 
overall tax burden, 
there is established the Income Tax Rate 
Management Fund, referred to in this section as "the fund." 
The 
fund may be used to alleviate only the characteristics of the 
State's income tax rate structure that concentrate the individual 
income tax rates within a narrow range of taxable incomes and 
apply the highest marginal rate to a relatively low level of 
taxable income. 
Money in the fund does not lapse, but is carried 
forward for the purposes of this section. 
2. 
Revenues reserved. 
Beginning with fiscal year 2004-05, 
and notwithstanding section 1513, if the tax revenues generated 
by the individual income tax for any fiscal year, as determined 
by the State Controller at the close of the fiscal year, exceed 
those of the previous fiscal year by more than the maximum tax 
growth target as described in section 1710 A, subsection 4, the 
State Controller shall at the close of each fiscal year reserve 
from the unappropriated surplus of the General Fund an amount 
equal to the identified excess individual income tax revenues and 
transfer that amount to the fund. 
3. 
Changes to rate structure. 
The State Tax Assessor shall 
adopt 
by 
rule 
changes 
to the 
income 
tax rate structure in 
accordance with this section and within the financial limits of 
the money available in the fund. 
Specifically, 
the assessor 
shall 
proportionately reduce the individual income tax rates to 
the nearest 1/10th of 
1°,,<> without exceeding the amount of money 
available in the fund. 
Rules adopted under this section are 
routine technical rules as defined in Title 5, 
chapter 375, 
subchapter 2-A. 
4. 
Transfer to General Fund. 
The State Controller shall 
transfer from the fund to the General Fund an amount certified by 
the State Tax Assessor as the adjustment necessary to offset any 
individual 
income 
tax 
revenue 
reduction 
implemented 
by 
the 
assessor pursuant to subsection 3. 
Sec. 3. 5 MRSA §1521 is enacted to read: 
§1521. Education Funding Stabilization Fund 
1. 
Education Funding Stabilization Fund. 
The 
Education 
Funding Stabilization Fund, referred to in this section as "the 
fund," is established to be used solely for meeting the State's 
share of the cost of funding public education from kindergarten 
to grade 12. 
2. 
Definition. 
For the purposes of this section, unless 
the context otherwise indicates, "funding public education from 
kindergarten to grade 12" has the same meaning as provided in 
Title 20-A, section 15658-A. 
3. 
Transfers to the fund. 
As an equal priority with the 
transfer required under section 1513, the State Controller at the 
close of each fiscal year, beginning with fiscal year 2003-04, 
shall reserve from the unappropriated surplus of the General Fund 
an amount equal to 
25% 
of the excess of total General 
Fund 
revenues received over accepted estimates in that fiscal year and 
transfer that amount to the fund at the beginning of the next 
fiscal year. 
Accepted revenue estimates may not be increased 
after adjournment of any First Regular Session of the Legislature 
except 
as 
provided. 
For 
the first year of the legislative 
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 25 qb of 
the 
increase is transferred by 
the State Controller to 
the 
Education Funding Stabilization Fund at the same time the revenue 
estimates are increased from the unappropriated surplus of the 
General Fund. 
4. 
Transfers from fund. 
Money in the fund may-be allocated 
only for the purpose of meeting the State's share of the cost of 
funding public education from kindergarten to grade 12 and only 
upon a 2/3 vote of all the members elected to each House of the 
Legislature. 
5. 
Nonlapsing fund. 
Any unexpended balance in the fund may 
not lapse. but must be carried forward. 
6. 
Investment of fund. 
The 
money in the 
fund 
may 
be 
invested as provided by law with the earnings credited to the 
fund. 
Sec. 4. 5 MRS A §1710-A, sub-§§2 and 3, as amended by PL 1997, 
c. 643, Pt. W, §l, are further amended to read: 
2. 
Biennial economic assumptions. 
The 
commission shall 
submit recommendations for state economic assumptions for the 
next fiscal biennium and analyze economic assumptions for the 
current fiscal biennium, which must be approved by a majority of 
the 
commission members. 
No 
later than November 1st of each 
even-numbered year, the commission shall submit to the Governor, 
the Legislative Council, the Revenue Forecasting Committee, the 
State Tax Assessor. the Commissioner of Education and the joint 
standing committee of the Legislature having jurisdiction over 
appropriations and financial affairs a report that presents the 
analyses, findings and recommendations for economic assumptions 
related to revenue forecasting for the next fiscal biennium. 
The 
report must identify the actual growth 
~L r_otal annual personal 
income for the 2 years preceding the current fiscal year, and an 
estimate of the projected growth in total annual personal income 
for the current fiscal year and for each fiscal year of the next 
biennium. 
For 
purposes 
of 
this 
subsection, 
"total 
annual 
personal income" means the total personal income of the State' s 
residents 
as 
reported 
by 
the 
United 
States 
Department 
of 
Commerce, Bureau of Economic Analysis for the fiscal year that 
coincides with the State's fiscal year. 
In its report, 
the 
commission 
shall 
fully 
describe 
the 
methodology 
employed 
in 
reaching its recommendations. 
3. 
Current biennium adjustments. 
No later 
1st and November 1st annually the commission shall 
Governor, 
the 
Legislative 
Council, 
the 
Revenue 
than February 
submit to the 
Forecasting 
Committee, the State Tax Assessor, the COmmissioner of Education 
and 
the 
joint standing 
committee 
of 
the 
Legislature having 
jurisdiction over appropriations and financial affairs a report 
that presents the commission's findings and recommendations for· 
adjustments to the economic assumptions for the current fiscal 
biennium, including any adjustments to the actual growth in total 
annual personal 
income for the 
fiscal years preceding the 
current fiscal year, and the projected growth in total annual 
personal 
income 
for 
each fiscal year of 
the biennium. 
For 
purposes of this subsection, "total annual personal income" means 
the total personal income of the State's residents as reported by 
the United States Department of Commerce, 
Bureau of Economic 
Analysis for the fiscal year that coincides with the State's 
fiscal year. 
In each report the commission shall fully describe 
the methodology employed in reaching its recommendations. 
Sec. 5. 5 MRSA §1710-A, sub-§4 is enacted to read: 
4. 
Maximum 
ta:l!t 
growth target. 
The 
maximum 
tax growth 
target for a state fiscal year is the growth in total annual 
personal income, measured as the percent of change between the 
actual total annual personal 
income for 
consecutive fiscal 
years, the last of which ended on June 30th of the year preceding 
the calendar year, 
as 
that information is presented in the 
commission's 
report 
no 
later 
than 
February 1st pursuant 
to 
subsection 3. 
Sec. 6. 20-A MRSA § 15617, sub-§ 1, ,B, as amended by PL 1993, 
c. 435, §6, is further amended to read: 
B. 
A summary of anticipated revenues and estimated school 
expenditures for the fiscal year; aRa 
Sec. 7. 20-A MRSA §15617. sub-§I, ,C, as enacted by PL 1993, 
c. 435, §7, is amended to read: 
C. 
The following statement, including the estimated dollar 
amount of state retirement payments: 
"This budget does not 
include the estimated amount of $ •••..•• in employer share 
of teacher retirement costs that is paid directly by the 
StateT"; and 
Sec. 8. 20-A MRSA §15617. sub-§I"D is enacted to read: 
D. 
A statement indicating the estimated impact of 
the 
budget document, if approved, on property tax mill rates for 
education 
for 
all 
classes 
of 
property 
within 
the 
municipalities that are part of the unit. 
Sec. 9. 20-A MRSA §15658-A is enacted to read: 
§15658-A. 
Funding public education from kindergarten to grade 12 
"Funding public education from kindergarten to grade 12" has 
the following meanings under the following circumstances. 
1. 
Before implementation of essential programS and services 
model. 
In fiscal year 2004-05, and in any succeeding year before 
an essential programs and services model pursuant to section 
15671 is in effect, "funding public education from kindergarten 
to grade 12" means the sum of: 
A. 
The total allocation amount for that year, as defined in 
section 15603, subsection 28, as adjusted by section 15658; 
B. 
All adjustments for that year listed in sections 15612 
and 15613; and 
C. 
The additional local appropriation amount for the prior 
year. 
2. 
At implementation of essential programs and services 
model. 
Beginning 
in 
the 
first year 
in which 
an essential 
programs 
and services model pursuant to section 15671 is in 
effect, "funding public education from kindergarten to grade 12" 
means 
funding the total costs of the essential programs 
and 
services components that must be funded that year pursuant to the 
transition plan that is in effect for that year plus the state 
and local share amounts for any nonredundant components of the 
School Finance Act of 1985 and the School Finance Act of 1995 
that remain in effect for that year. 
3. 
Municipalities that are part of a school administrative 
district or CODlllunity school district. 
For a municipality that 
is a member of a school administrative district or a community 
school 
district 
as 
defined 
in 
section 
L 
"funding 
public 
education from kindergarten to grade 12" means funding the amount 
that is calculated under subsection 1 or subsection 2 for the 
school administrative district or the 
community school district 
of which the municipality is a member. 
For a municipality that 
is a member of a community school district and that also operates 
a municipal school unit as defined in subsection L 
"funding 
public education from kindergarten to grade 12" means funding the 
Sum 
of 
amounts 
that 
are 
calculated 
under 
subsection 
or 
subsection 2 for the community school district and the municipal 
school unit. 
Sec. 10. 30·A MRSA §2523, sub.§6 is enacted to read: 
• 
6. 
Budgetaa articles. 
With respect to any town meeting 
warrant that contains one or more budgetary articles that. if 
enacted, 
would have 
an impact 
on municipal expenditures 
for 
public education from kindergarten to grade 12, a statement must 
be printed on the article indicating the estimated impact of the 
budget document. if approved, 
on property tax mill rates for 
education for all classes of property within the municipality. 
Sec. 11. 30-A MRSA §5731 is enacted to read: 
§573l. 
Budget statement 
A 
statement 
must 
be 
printed at 
the 
beginning 
of 
the 
municipal budget document that is prepared for public hearing 
indicating the 
estimated 
impact 
of 
the 
budget 
document, 
if 
approved, 
on property tax mill rates for education for all 
classes of property within the municipalities that are part of 
the unit. 
Sec. 12. 36 MRS A §383, sub-§4, "A and B,. as enacted by PL 
2001, c. 32, §l, are amended to read: 
A. 
Maine Tree Growth Tax Law, section 578; ~ 
B. 
Veterans' property tax exemptions, section 653t-aBa~ 
Sec. 13. 36 MRSA §383, sub-§4"C. as enacted by PL 2001, c. 
32, §l, is repealed. 
Sec. 14. 36 MRSA §507, as amended by PL 1997, c. 643, Pt. 
HHH, §2 and affected by §10, is further amended to read: 
§507. Taxpayer information 
When 
a 
municipality issues 
a 
property tax bill to each 
taxpayer, each bill must contain a statement or calculation that 
demonstrates the amount or percentage by which the taxpayer's tax 
has been reduced by the distribution of state-municipal revenue 
sharingT-~~~-~~~~--feF--~h~-~~-~~~~--heffie6~eaa 
pFepeF~y-~aH-eKemp~ieB and state aid for education. 
~he-pFepeF~Y 
~aH--b-i:-1-1--mQ6~--G<Hl-t-a-in--a-~~~-~--&~ assessed--.... al~~--o-f--a 
hemes~eaaT-~~~~-af~eF-~~~~~~-ef-~~bG&-FesiaeB~ 
hemes~eaa-~£e~e£~y-~a~-~~~~-~~~~~~-~he-eHemp~ieB 
appliea-~~~~-h9mes~eaaT The State Tax Assessor shall annually 
provide each municipality with the 
amount 
of state-municipal 
revenue 
sharing 
and 
state 
aid 
for 
education 
subject 
to 
identification under this section. 
Each property tax bill issued with respect to a property tax 
year beginning on or after April L 
2004 must also contain the 
following statement, including the appropriate values, accurately 
calculated: 
"In 2003, 
the Legislature 
and 
the voters established a 
maximum 
egualized 
property 
tax 
rate 
of 
mills 
for 
secondary residential property and 4 mills for all other 
property for the purpose of financing public e?ucation from 
kindergarten to grade 
12, 
beginning in 2005. 
A school 
administrative unit may adopt a budget that results in mill 
rates 
higher 
than 
mills 
(egualized) 
for 
primary 
residential 
property. 
Before 
these 
changes 
went 
into 
effect, 
the property tax rate for education purposes in 
(name of municipality) was 
( 
) mills (egualized) and the 
property tax rate for municipal and county purposes was ( ) 
mills 
(egualized). 
The 
property tax rate for 
education 
reflected in this bill for property subject to the 4 mill 
(egualized) 
limitation is 
( 
) 
mills 
and 
for municipal, 
county and all other purposes is ( ) mills (egualized). " 
Each property tax bill issued by a municipality sHall must 
clearly state the amount of the tax bill that is attributable to 
the cost of education, the amount attributable to county taxes, 
the amount attributable to the remainder of the municipal budget 
~ 
the date interest will begin to accrue on delinquent taxes. 
Sec. 15. 36 MRSA c.l05, sub-c. I-A is enacted to read: 
SUBCHAPTER I-A 
PROPERTY TAX CONTRIBUTION TO PUBLIC EDUCATION 
§SZl. 
Definitions 
For the purposes of this subchapter, 
unless the context 
indicates 
otherwise, 
the 
following 
terms 
have 
the 
following 
meanings. 
1. 
Funding public education from kindergarten to grade 12. 
"Funding public education from kindergarten to grade 12" has the 
Same meaning as in Title 20-A, section 15658-A. 
Z. 
Permanent residence. 
"Permanent residence" means the 
place where an individual has a true, fixed and permanent home 
and principal establishment to which the individual, 
whenever 
absent. has the intention of returning. 
An individual may have 
only one 
permanent 
residence at 
a 
time 
and, 
once 
permanent 
residence is established, that residence is presumed to continue 
until circumstances indicate otherwise. 
• 
... 
3. 
Primary 
residential 
property. 
"Primary 
residential 
property" means any residential property in this State assessed 
as real property owned by a resident of the property or held in a 
revocable living trust for the benefit of a resident and occupied 
by that resident as the resident's permanent residence. 
"Primary 
residential property" does not include any real property used 
solely for commercial, agricultural or industrial purposes. 
4. 
Secondary residential property. 
"Secondary residential 
property" means noncommercial residential property that is not a 
permanent residence. 
§522. Maximum mill rates established 
With respect to the assessment of any property taxes for a 
property tax year beginning on or after April 1, 
2004, 
the 
maximum property tax rate that may be applied to the value of the 
following classes of property for the purpose of funding public 
education from kindergarten to grade 12 is provided in this 
section. 
For 
a 
municipality 
that 
assesses 
property 
at 
a 
percentage other than 100% of just value, the maximum mill rates 
established by this section must be adjusted, in the process of 
assessment 
and prior 
to 
commitment, 
to 
the mill 
rate 
that 
generates the eguivalent revenue that would be collected if the 
municipality were assessing property at 100% of just value. 
1. 
Class A property. 
For secondary residential property, 
which may be referred to as "Class A property," the maximum mill 
rate is 12 mills. 
Mill rates applied under this subsection to 
Class A property may not exceed the mill rate applied to Class B 
property unless the mill rate applied to Class B property has 
reached the maximum permitted for that class. 
2. 
Class B property. 
For property other than that listed 
in subsection L 
which may be referred to as "Class B property," 
the maximum mill rate is 4 mills. 
§523. Exceeding mill rate limits; referendum process 
The legislative body of a school administrative unit, as 
defined in Title 20-A, 
section 1, 
subsection 26, 
may act by 
voting to adopt a school budget, undertake a school construction 
project or otherwise obligate itself to educational expenditures 
in such a manner and to such a degree so as to reguire the 
application 
of 
property 
tax 
rates 
that 
exceed 
the 
limits 
established by section 522 if that action is approved by the 
voters of the school administrative unit by referendum or the 
referendum validation process authorized by Title 20 A, sections 
1305-B 
and 
1701-B, 
and 
the voters 
are properly notified as 
reguired by Title 20-A, 
section 15617 or Title 30-A, 
section 
2523, or 2551, as applicable. 
Sec. 16. 36 MRSA §6SS, sub-§I, ,p~ as amended by PL 1997, c. 
24, Pt. U, §l, is further amended to read: 
P. 
All items of individually owned personal property with a 
just value of less than $1,000, except: 
(1) 
Items used for industrial or commercial purposes; 
and 
(2) 
Vehicles and camp trailers as defined in section 
1481 not subject to an excise tax; aRe 
Sec. 17. 36 MRSA §6SS, sub-§I, ,S, as enacted by PL 1983, c. 
555, §1, is amended to read: 
s. 
Mining property as provided in section 2854T~ 
Sec. 18. 36 MRSA §6SS, sub-§I, fI' is enacted to read: 
T. 
All property described in section 6651, 
subsection 
that would first be subject to taxation under this chapter 
after April 1, 2004. 
Sec. 19. 36 MRS A c.l0S, sub-c. 4-B, as amended, is repealed. 
Sec. 20. 36 MRS A §709, as amended by PL 1975, c. 651, §7, is 
further amended to read: 
§709. Assessment and commitment 
The 
assessors 
shall 
assess 
upon 
the 
estates 
in 
their 
municipality all taxes for public education from kindergarten to 
grade 12 in accordance with subchapter I-A and all municipal 
taxes and their due proportion of any state or county tax payable 
during the municipal year for which municipal taxes are being 
raised, 
make perfect lists thereof and commit the same, 
when 
completed and signed by a majority of them, to the tax collector 
of their municipality, if any, otherwise to the sheriff of the 
county or sis the sheriff's deputy, with a warrant under their 
hands, in the form prescribed by section 753. 
Sec. 21. 36 MRSA §709-A. first" 
as amended by PL 1973, c. 
788, §184, is further amended to read: 
The municipal officers after receipt of the valuation lists 
from the primary assessing areas shall assess upon the estates in 
their 
municipality 
all 
taxes 
for 
public 
education 
from 
kindergarten to grade 12 in accordance with subchapter I-A and 
.. 
all municipal taxes and their due proportion of any state or 
county tax, make perfect lists thereof and commit the same, when 
completed and signed by a majority of them, to the tax collector 
of their municipality, if any, otherwise to the sheriff of the 
county or ais the sheriff I s deputy, with a warrant under their 
hands in the form prescribed by section 753. 
Sec. 22. 36 MRSA §6201, 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 
18% 
~ of 
the 
gross 
rent 
actually paid in cash or its equivalent in any tax year by a 
claimant and the claimant I 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. 23. Legislative duties. 
During the Second Regular Session 
of the l2lst Legislature and as directed by the voters pursuant 
to 
the 
referendum 
required by this Act, 
the Joint 
Standing 
Committee 
on 
Taxation 
shall 
report 
out 
revenue-neutral 
legislation designed to generate the additional revenue necessary 
to 
provide 
adequate 
funding 
for 
public 
education 
from 
kindergarten to grade 12 pursuant to the Maine Revised Statutes, 
Ti tle 
20-A, 
section 
15658-A 
and 
may 
include 
any 
further 
legislation necessary to implement the provisions of this Act. 
The 
legislation must 
include 
the 
changes 
to 
the 
sales 
tax 
receiving the higher number of votes at the referendum required 
by this Act. 
Sec. 24. Statutory referendum procedure; submission at statewide 
election; form of question; effective date. 
This Act takes effect when 
approved only for the purpose of permitting its submission to the 
legal voters of the State at a statewide election held on the 
Tuesday following the first Monday of November following passage 
of this Act. 
The municipal officers of this State shall notify 
the inhabitants of their respective cities, towns and plantations 
to meet, in the manner prescribed by law for holding a statewide 
election, to vote on the acceptance or rejection of this Act by 
voting on the following question: 
"If an amendment to the Constitution of Maine is approved 
permitting the Legislature to establish different maximum 
property tax rates for different classes of property and the 
Legislature 
has 
enacted 
legislation 
that 
provisionally 
provides 
property 
tax 
relief 
by establishing 
a 
maximum 
property tax rate of 
mills for 
secondary residential 
property 
and 
mills for 
all other property, 
based on 
equalized state valuation, 
for the purpose of supporting 
public education from kindergarten to grade 
and that 
directs the Legislature to enact comprehensive tax reform 
subject to voter approval, would you prefer to provide the 
increased 
level 
of 
state 
financial 
support 
for 
public 
education by increasing the sales tax rates in Maine by 2 
percentage points or, in the al ternati ve, by removing some 
of the exemptions from the sales tax and restricting any 
sales tax rate increase to no more than 1%? 
Question #1: 
Do you favor paying for the plan by raising 
the sales tax rates by 2%? 
Question #2: 
Do you favor paying for the plan by removing 
some sales tax exemptions and increasing sales tax rates by 
no more than 1°'!>?" 
The legal voters of each city, town and plantation shall 
vote by ballot on this question and designate their choice by a 
cross or check mark placed within a corresponding square below 
the word "Yes" or "No." 
The ballots must be received, sorted, 
counted and declared in open ward, town and plantation meetings 
and returns made to the Secretary of State in the same manner as 
votes for members of the Legislature. 
The Governor shall review 
the returns and, if it appears that a majority of the legal votes 
are cast in favor of the Act, the Governor shall proclaim that 
fact without delay, and the Act takes effect 30 days after the 
date of the proclamation. 
The Secretary of State shall prepare and furnish to each 
city, town and plantation all ballots, returns and copies of this 
Act necessary to carry out the purposes of this referendum. 
Sec. 25. Application. 
That section of this Act that amends 
the 
Maine 
Revised Statutes, Title 
5, 
section 
1513 
and that 
section of this Act that enacts Title 5, section 1521 apply to 
fiscal years beginning with fiscal year 2003-04. 
SUMMARY 
This bill provides for a statutory referendum designed to 
achieve tax relief for residents and businesses in the State and 
implement comprehensive tax and education funding reform. 
The 
bill provides property tax relief by establishing a cap on local 
property taxes of 12 mills on secondary residential property and 
mills on all other property for the purpose of funding public 
education. 
Additional money for public education could be raised 
from the property tax only if approved by the voters at 
a 
... 
• 
referendum. 
The 
bill also 
provides 
property 
tax 
relief 
by 
expanding the tax and rent refund program, phasing out the tax on 
certain personal property and gradually eliminating the need for 
the 
business 
equipment 
tax 
reimbursement 
program. 
Education 
funding 
would 
be 
stabilized 
by 
setting aside 
a 
portion of 
unappropriated surplus 
for 
an Education Funding Stabilization 
Fund. 
Income tax relief would be provided by setting aside a 
portion of revenues in excess of estimates to be used to reduce 
income tax rates. 
The bill directs the Joint Standing Committee 
on Taxation to report legislation to the Second Regular Session 
to raise revenue necessary to meet the State's education funding 
obligation. 
The 
referendum 
questions 
require 
the 
voters 
to 
indicate whether they prefer raising the sales tax rate by 2 
percentage 
points 
or 
by 
removing 
sales 
tax 
exemptions 
and 
increasing the rate by no more than one percentage point. 
The 
bill takes effect only if a majority of the voters approve at 
least 
one 
of 
the 
revenue 
options 
and 
if 
a 
constitutional 
amendment is also approved to permit different property tax rates 
for secondary residential property .