An Act to Provide Property Tax Relief for Maine Residents and Businesses and Implement Comprehensive Tax Reform LR0392(04)
Maine Legislature, Session 121, LD 1141
Committee Amendment CA_A_H901 (House)
Amends: 5 MRSA §1513, 5 MRSA §1514-A, 5 MRSA §1521, 5 MRSA §1710-A, 30-A MRSA §2523, 30-A MRSA §5731, 36 MRSA §507, 36 MRSA §508, 36 MRSA §655, 36 MRSA §683, 36 MRSA §6201

12lST LEGISLATURE 
COMMITTEE AMENDMENT .~t to H.P. 844, L.D. 
Act 
To 
Provide Property Tax 
Relief for 
Maine 
Businesses and Implement Comprehensive Tax Reform" 
1141, Bill, 
Residents 
"An 
and 
Amend the bill by striking out everything after the enacting 
clause and before the summary and inserting in its place the 
following: 
· Sec. 1. 5 MRSA §1513, sub-§I, as amended by PL 2003, c. 451, 
Pt. X, §2, is further amended to read: 
1. 
Maine Budget Stabilization Fund. 
As the first priority 
before any other transfer, the State Controller shall at the 
close of each fiscal year transfer ~a% ~ 
of the unappropriated 
surplus of the General Fund to the Maine Budget Stabilization 
Fund at the beginning of the next fiscal year. 
The fund may not 
exceed 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 10% limit. 
The limit at the close of a fiscal 
year is based on the total General Fund revenues received in the 
fiscal year being closed. 
Sec. 2. 5 MRSA §1514-A is enacted to read: 
§l5l4-A. 
Income Tax Rate Management Fund 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ~" to H.P. 844, L.D. 1141 
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 only to alleviate 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 reseryed. 
Beginning with fiscal year 2005-06, 
and notwitbstanding section 1513, if the tax revenues generated 
by the individual income tax for any fiscal year, as determined 
by the State Controller Qt the close of the fiscQl year, exceed 
those of the previous fiscal year by more than the maximum tax 
growth tuget QS described in section Ina-A, subsection 4, the 
State Controller Ghall at the close of each fiscal year reserve 
from the una,ppropriQted surpluG of the Genenl Fund Qn amount 
egual to the identified exceGs individual income tax revenues and 
trQnGfer that amount to the fund. 
3. 
Changes to rate Gtructure. 
The State Tax Assessor shall 
Qdopt 
by 
rule 
chQngeG 
to 
the 
income 
tax rate Gtructure in 
Qccordance with this section QPd within the finQnc.j.al limitG of 
the money availQble in the fund. 
Specifically, the assessor 
shall reduce the individuQI income tQx rates for the highest 
income brQcket to the neQrest I/l0th of 1~ without exceeding the 
amount of money available in the fund. 
Rules adopted under this 
Gection are routine technical rules 
as defined in Title 5, 
chapter 375, subchQpter 2-A. 
4. 
Trusfer to General Fund. 
The StQte Controller shQll 
transfer from the fund to the General Fund Qn amount certified by 
the State Tax AsseGGor QS the adjuGtment necesGary to offset any 
individual 
income 
tax 
revenue 
reduction 
implemented 
by 
the 
assesGor purGuant 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," iG established to be used solely for meeting the State's 
shQre of the cost of funding public education from kindergarten 
to grade 12. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,4 .. to H.P. 844, L.D. 1141 
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 l5671-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 2004-05, 
shall reserye from the ungppropriated surplus of the General Fund 
an amount equal to 16" of the excess of total General Fund 
reyenues receiyed oyer accepted estimates in that fiscal year and 
transfer that amount to the fund at the beginning of the next 
fiscal year. 
Accepted reyenue estimates may not be increased 
after adjournment of any first regular session of the Legislature 
except as 
proyided. 
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 reyenue estimates may be increased for 
other fiscal periQds Qnly if an amount not to exceed 25\ Qf the 
increase iii transferred by the State Controller to the fund at 
the 
sarne 
time 
the 
reyenue 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 purpQse Qf meeting the State's share of the cQst of 
funding public education from kindergarten to grade 12 and only 
upon a 2/3 yote of all the members elected tQ each House of the 
Legislature. 
5. 
Nonlgpsing 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 
inyested ali proyided by law with the earnings credited to the 
f..u.nd.... 
Sec. 4. 5 MRSA §1710-A, sub-§§2 and 3, as amended by PL 1997, 
c. 643, Pt. W, §1, 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 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,~, to H.P. 844, L.D. 1141 
related to revenue forecasting for the next fiscal biennium. 
The 
report must identify the actual growth in total annual personal 
income for the 2 years preceding the current fiscal year and 
include 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 o{ 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 than February 
1st and November 1st annually 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 commission's findings and recommendations for 
adjustments to the economic assumptions for the current fiscal 
biennium. including any agjustments to the actual growth in total 
annual personal income for the 
fiscal years preceging the 
current fiscal year. ang 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 tax 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 enged 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 MRS A §15617, sub-§l, 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; aBa 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ~" to H.P. 844, L.D. 1141 
Sec. 7. 20·A MRS A §15617, sub.§l, 1JC, 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 
State ... "~ 
Sec. 8. 20·A MRS A §15617, sub·§l, 1[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 within the mqnicipalities that are part of the 
lillit.... 
Sec. 9. 20·A MRSA §15671, sub·§7, 1JA, as enacted by PL 2003, 
c. 504, Pt. A, §5, is repealed and the following enacted in its 
place: 
A. 
The 
annual 
target 
for 
the 
essential 
progrMls 
and 
services 
transition 
percentage. 
excluding 
program 
cost 
allocation. 
debt 
service 
allocation 
and 
adjustments. 
beginning in fiscal year 2005-06 is 100~. 
Sec. 10. 20·A MRSA §15671, sub·§7, 1JB, as enacted by PL 2003, 
c. 504, Pt. A, §5, is amended to read: 
B. 
The annual targets for the state share percentage are as 
follows. 
(1) 
For fiscal year 2005-06, the target is 49% 48~. 
(2) 
For fiscal year 2006-07, 
the target is 49 ... a§% 
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(3) 
For fiscal year 2007-08 and succeeding years, the 
target is 49 ... §9% ~. 
t§}--~~~-~-~~-yea~-a9Q9-1Q-a£~-~~-yea~&r-~Re 
~a!'~e~-is-§9% ... 
Sec. II. 20·A MRSA §15671·A is enacted to read: 
§15671-A. 
Property tax contribution to public education 
1. Definitions. 
For the purposes of this section. unless 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT '~' to H.P. 844. L.D. 1141 
the context otherwise indicates, the following terms have the 
following meanings. 
A. 
"Funding public education from kindergarten to grade 12" 
means the cost of funding essential programs and services as 
described in this chapter plus the total allocations for 
program cost. debt service costs and adjustments. 
a. 
"Local cost share expectation" means the maximum amount 
of money needed for the purpose of funding public education 
from kindergarten to grade 12 that may be derived from 
property tax. 
2. Local cost share e~ctatioD established. 
The local cost 
share expectation is established as follows. 
A. 
This 
paragraph 
applies 
to 
the 
local 
cost 
share 
expectation. 
Notwithstanding an,y other provision of law. 
with respect to the assessment of an,y property taxes for 
property tax years beginning on or after April I. 2005, this 
subsection, establishes the local cost share expectation that 
may be assessed on the value of property for the purpose of 
funding public education from kindergarten to grade 12. 
The 
commissioner shall annually by February 1st notify each 
school 
administrative 
unit 
of 
its 
local 
cost 
share 
expectation. 
A superintendent of a 
school administrative 
unit 
shall 
report 
to 
the 
municipal 
officers 
of 
the 
municipalities 
within 
the 
school 
administrative 
unit 
Genever the school administrative unit is notified of the 
local cost share expectation or a change is made in the 
local cost share expectation resulting from an adjustment. 
a. 
This 
paragraph 
applies 
to 
the 
calculation of 
the 
full-value education mill rate. 
For property tax years 
begin,ning on or after April I. 2005, the commission,er shall 
calculate 
the 
full-value 
education, 
mill 
rate 
that 
is 
reguired 
to 
raise 
the 
total 
of 
the 
local 
cost 
share 
expectation for funding public education, from kindergarten 
to grade 12. 
The full-value education, mill rate is derived 
by 
dividing the 
applicable 
tax year percentage of 
the 
projected cost of funding public education from kindergarten 
to grade 12 by the certified total state valuation for the 
year prior to 
the 
most 
recently certified total state 
valuation for all municipalities. 
The full-value education 
mill 
rate 
must 
decline 
over 
the 
period 
described 
in 
subparagraphs 
(1) 
to (3). 
The full-value education mill 
rate must be applied according to section 15688, subsection 
3, 
paragraph A to determine 
a municipality's local cost 
share expectation. 
Full-value education mill rates must be 
derived according to the following schedule: 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT 'A" to H.P. 844, L.D. 1141 
11} 
For the 2005 property tax year, the full-value 
education mill rate is the amount necessary to result 
in a 
52~ local share in fiscal year 2005-06; 
(2) 
For the 2006 property tax year, the full-value 
education mill rate is the amount necessary to result 
in a 48.5\ local share in fiscal year 2006-07: and 
(3) 
For the 2007 property tax year. the full-value 
education mill rate is the amount necessary to result 
in a 45~ local share in fiscal year 2007-08. 
3. 
Exceeding maximum local cost share e~ctation: separate 
article. 
Beginning 
with 
the 
2007-2008 
school 
budget. 
the 
legislative 
body of 
a 
school 
administrative unit may 
adopt 
property tax rates that exceed the local cost share expectation 
if that action is approved in a separate article by a vote of the 
school administrative unit' § legislative body through the same 
process 
thot the 
school 
budget is 
approved in that school 
administrative unit. 
Sec. 12. 20·A MRSA §15684, sub·§3 is enacted to read: 
3. 
Repeal. 
This section is repealed July I. 2005. 
Sec. 13. 20·A MRSA §15686, as enacted by PL 2003, c. 504, Pt. 
A, §6, is amended to read: 
§15686. Transition adjustment 
For each of the fiscal years described in section 15671, 
subsection 7, 
the 
commissioner 
shall establish 
a 
transition 
adjustment calculated to 
m~n~m~ze the 
adverse 
fiscal 
impact 
ei~eet~y---~elatee---te 
that 
may 
be 
experienced 
by 
some 
municipalities as a result of the phase-in of this Act. 
The 
transition adjustment for a municipality must be directly related 
to the phase-in of e§sential programs and services and the local 
cost 
shore 
expectation 
method 
of 
determining 
the 
local 
contribution to 
the cost of 
funding essential 
programs 
and 
services. 
The 
amount 
of this 
adjustment is established at 
$lO,OOO.OOO for fiscal year 2005-06 and must decline with each 
successive fiscal yearT--and--the. 
The adjustments must end no 
later than fiscal year 6GG9-1G 2007-08. 
Sec. 14. 20·A MRSA §15688 is enacted to read: 
§l5688. 
School administrative unit contribution to total cost of 
funding public education from kindergarten to grade 12 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,~, to H.P. 844, L.n. 1141 
1. School administrative unit: total cost. 
For each school 
administrative unit. the commissioner shall annually determine 
the school administrative unit's total cost of education. 
A 
school administrative unit's total cost of education must include: 
A. 
The school administrative unit's total cost of funding 
essential programs and services subject to the transition 
percentages 
described 
in 
section 
15671. 
subsection 
7. 
paragraph A: 
B. 
The program cost allocation as used in chapter 606: and 
C. The debt service allocation as used in chapter 606. 
2. Member municipalities in school administrative districts 
or 
community 
school 
districts: 
total 
costs. 
For 
each 
municipality that is a member of a school administrative district 
or community school district. the commissioner shall annually 
determine 
each 
municipality's 
total 
cost 
of 
education. 
A 
municipality's 
total 
cost 
of 
education 
is 
the 
school 
administrative district's or COmmunity school district's total 
cost 
of 
funding 
multiplied 
by 
the 
percentage 
that 
the 
municipality's most recent calendar year average pupil count is 
to 
the 
school 
administrative district's or 
community 
school 
district's most recent calendar year average pupil count. 
3. 
School 
administrative unit: 
contribution. 
For 
each 
school 
administrative 
unit, 
the 
commissioner 
shall 
annually 
determine 
the 
school 
administrative 
unit's 
contribution 
in 
accordance with the following. 
A. 
The school administrative unit's contribution to the 
total cost of education is the lesser of: 
(1) 
The total cost for each municipality as described 
in sub§ection 1 or 2: and 
(2) 
The total of the full-value education mill rate 
derived in section l5671-A, subsection 2 multiplied by 
the certified state valuation for the year prior to the 
most 
recently 
certified 
state 
valuation 
for 
each 
munigipality in the school administrative unit. 
B. 
The sghool administrative unit's state contribution to 
the total cost of education is the total cost of education 
calculated 
pursuant 
to 
subsection 
less 
the 
school 
administrative unit's contribution calculated pursuant to 
paragraph A. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT .. 4' to H.P. 844, L.D. 1141 
4. Effective date. 
This section takes effect July 1, 2005. 
Sec. 15. 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. 16. 30-A MRSA §5731 is enacted to read: 
§S731. 
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. 17. 36 MRSA §507, as amended by PL 1997, c. 643, Pte 
HHH, §2 and affected by' §10, is further amended to read: 
§S07. 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-~-~~~~-f9~--~A&-~~-~~~~--h9mes~eaQ 
pF9peF~y-~aH-eHempe~eR and state aid for education. 
~ae-p~epeFty 
taH-~~~~-mQst-~~-a-~~-~--~A&-a6sesse~-yalQe-~--a 
hemesteadT-~~~~-aiteF-~~~~~~-9i-~~~-FesideRt 
hemesteaQ-p~epe~ey-~a£-~~~~-~~~~~~-tae-eHemptieR 
applieQ-~~~-aemesteaQT 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 by a municipality shall !lll.l.6..t 
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. 18. 36 MRSA §508 is enacted to read: 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,A .. to H.P. 844, L.D. 1141 
§508. Exceeding education mill rate limits; referendum process 
The legislative body of a school administrative unit, as 
defined in Title 20-11., 
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 require the 
application 
of 
property 
tax 
rates 
that 
exceed 
the 
limit 
established 
by 
Title 
20-11., 
section 
15671-11., 
subsection 
2, 
paragraph B if that action is approved by the voters of the 
school 
admipistrative 
unit 
by 
referendum 
or 
the 
referendum 
validation proce§s authorized by Title 20-11., section§ l305-B and 
170l-B and the voters are properly notified a§ required by Title 
A, 
section 15617 or Title 30 A, 
section 2523 or 2551. 
as 
applicable. 
Sec. 19. 36 MRSA §655, 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 eamp camper trailers as defined in 
section 1481 not subject to an excise tax; aBa 
Sec. 20. 36 MRSA §655, sub-§I, ,S, as enacted by PL 1983, c. 
555, §l, is amended to read: 
s. 
Mining property as provided in section 2854T~ 
Sec. 21. 36 MRSA §655, sub-§I, ff is enacted to read: 
T. 
All personal property not otherwise exempt under this 
section except vehicles and camper trailers as defined in 
§ection 1481 not subject to an excise tax. 
Sec. 20. 36 MRSA §683, sub-§I, as repealed and replaced by PL 
2003, c. 20, Pt. BB, §l and affected by §3, is amended to read: 
1. 
Exemption amount; 2003 and 2004. 
Except for assessments 
for special benefits, the following values of the homestead of a 
permanent resident of this State who has owned a homestead in 
this State for the preceding 12 months are exempt from taxation 
for the property tax years beginning on April L 
2003 and April 
L 
2004: 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,~ to H.P. 844, L.D. 1141 
A. 
The estate up to the just value of $7,000 for homesteads 
with a just value of less than $125,000: 
B. 
The estate up to the just value of $5,000 for homesteads 
with 
a 
just value of at least $125,000 but less 
than 
$250,000: and 
C. 
The estate up to the just value of $2,500 for homesteads 
with a just value of $250,000 or greater. 
Sec. 23. 36 MRSA §683, sub-§l-A, as enacted by PL 2003, c. 20, 
Pt. BB, §2 and affected by §3, is amended to read: 
I-A. 
Local assessed value of the exemption. 
In determining 
the 
local 
assessed value 
of the 
exemption for 
purposes 
of 
subsection 1, 
the assessor shall multiply the amount of the 
exemption by the ratio of current just value upon which the 
assessment is based as furnished in the assessor's annual return 
pursuant to section 383. 
In determining the amount of just value 
exemption applicable to each estate for purposes of subsection 1, 
the assessor shall divide the local assessed value of each estate 
by the ratio of current just value upon which the assessment is 
based. 
If the title to a homestead is held by the applicant 
jointly or in common with others, the exemption may not exceed 
$+TOOO-~-~-}~S~-~~~~~-~ae-~~~~~-a-~~~-~~-e~ 
*ess-~haa-~~~-~-~~~-e~-~he-~~~~~~~-&h&-aeffieS~eaQ 
wi~a-a-~Q6~-¥a~Q€-~-~-~~~~~-~-&&a&-$bSQrQQQr-e~ 
$6TeOO-~--~-3~6t-~~~~-the-~~~~~-a-~~~~-e~ 
$6iOTQQQ-e~-~~eate~ the exemption amounts specified in subsection 
1, l-B, l-C or 1-0, but may be apportioned among the owners who 
reside 
on 
the 
property 
to 
the 
extent 
of 
their 
respective 
interests. 
A municipality 
responsible 
for 
administering 
the 
homestead exemption has no obligation to create separate accounts 
for each partial interest in a homestead owned jointly or in 
common. 
Sec. 24. 36 MRSA §683, sub-§§l-B to I-D are enacted to read: 
I-B. 
Ezemption amount: 2005. 
Except for assessments for 
special benefits, the following values of the homestead of a 
permanent resident of this State who has owned a homestead in 
this State for the preceding 12 months are exempt from taxation 
for the property tax year beginning on April 1, 2005: 
A. 
The estate UP to the just value of $5,000 for homesteads 
with a just value of less than $125,000; 
B. 
The estate up to the just value of $3,000 for homesteads 
with 
a 
just value of at least $125,000 but less 
than 
$250,000; and 
Page ll-LR0392(4) 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT t4h. to H.P. 844, L.D. 1141 
C. 
The estate up to the just value of $1,700 for homesteads 
with a just value of $250,000 or greater. 
I-C. 
Exemption amount: 2006. 
Except for assessments for 
special benefits, the following values of the homestead of a 
permanent resident of this State who has owned a homestead in 
this State for the preceding 12 months are exempt from taxation 
for the property tax year beginning on April 1, 2006; 
A. 
The estate up to the just value of $2,500 for homesteads 
with a just value of less than $125,000; 
B. 
The estAte up to the just value of $1,500 for homesteads 
with 
a 
just value of at least $125,000 but less than 
$250,000; ang 
C. 
The estate up tp the just value of $800 for homesteads 
with a just value of $250,000 or greater. 
D. 
Exemption amount: 2007 and after. 
For property tax 
years beginning on or after April 1, 2007, the exempt value of a 
homesteag of a permanent resident of this State who has owned a 
homestead in this State for the preceging 12 months is $0. 
Sec. 25. 36 MRSA §6201, sub-§ll-A, as amended by PL 1999, c. 
401, Pt. R, §1 and affected by §2, is further amended to read; 
II-A. 
Rent 
constituting' 
property 
tazes 
accrued 
for 
nonelderly household. 
"Rent constituting property taxes accrued 
for 
nonelderly household" 
means 
J.8% 
25% 
of 
the gross 
rent 
actually paid in cash or its 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 
constitutes the basis, in the succeeding calendar year, of a 
claim for relief under this chapter by the claimant. 
Sec. 26. Legislation. 
During the First Regular Session of the 
122nd 
Legislature, 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction 
over 
taxation 
matters 
shall 
report out revenue-neutral legislation designed to generate the 
additional revenue necessary to implement the provisions of this 
Act. 
This committee shall consider increasing the sales tax 
rate, expanding the sales tax base or some combination of these 
options. 
Sec. 27. 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 
beginning with state fiscal year 2004-05. 
COMMITTEE AMENDMENT 
~, 
~}~ 
II 
COMMITTEE AMENDMENT ~" to H.P. 844, L.D. 1141 
Sec. 
28. 
Appropriations 
and 
allocations. 
appropriations and allocations are made. 
ADMINISTRATIVE AND FINANCIAL SERVICES, 
DEPARTMENT OF 
Education Funding Stabilization Fund 
The 
following 
Ini tiative: 
Provides for a base allocation for the Education 
Funding Stabilization Fund beginning in fiscal year 2004-05. 
Other Special Revenue Funds 
All Other 
Other Special Revenue Funds Total 
Maine Residents Property Tax Program 
0648 
2003-04 
$0 
$0 
2004-05 
$500 
$500 
Initiative: 
Provides additional funds for the Maine Residents 
Property Tax Program. 
General Fund 
All Other 
General Fund Total 
ADMINISTRATIVE AND FINANCIAL SERVICES, 
DEPARTMENT OF 
DEPARTMENT TOTALS 
GENERAL FUND 
OTHER SPECIAL REVENUE FUNDS 
DEPARTMENT TOTAL -
ALL FUNDS 
SUMMARY 
2003-04 
$0 
$0 
2003-04 
$0 
o 
$0 
2004-05 
$5,755,517 
$5,755,517 
2004-05 
$5,755,517 
$5,756,017' 
This 
amendment 
institutes 
comprehensive 
tax 
reform 
by 
reducing the burden on the property tax by shifting a greater 
portion of the responsibility for funding public education from 
municipalities to State Government and by providing other changes 
to state tax 
laws 
to 
provide 
a 
more 
balanced tax 
system, 
Specifically, the amendment contains the following provisions. 
1. 
The 
amendment 
provides 
for 
the 
transition 
to 
the 
essential programs and services model of funding public education 
from kindergarten to grade 12 by increasing the State's share of 
funding from 48% of the full costs in fiscal year 2005-06 to 55% 
of 
the 
full 
costs 
in 
fiscal 
year 
2007-08. 
The 
amendment 
Page l3-LR0392(4) 
COMMITTEE AMENDMENT 
~. 
~ 
~. 
COMMITTEE AMENDMENT ,y!(., to H.P. 844, L.D. 1141 
establishes an Education Funding Stabilization Fund funded each 
year by a portion of unappropriated surplus revenues. 
The fund 
may be used only to meet the State's share of education funding 
and only by a 2/3 vote of each House of the Legislature. 
2. 
The amendment phases out the homestead tax exemption 
over 3 years as the increased state share of education funding is 
phased in. 
3. 
The 
amendment 
exempts 
all 
industrial, 
commercial, 
individually owned and other personal property from property 
tax. 
Municipalities would be reimbursed under existing law for 
50' of the revenue loss from newly exempt property. 
4. 
The 
amendment provides that income tax revenue that 
exceeds the level of growth in total annual personal income must 
be set aside in the Income Tax Rate Management Fund and used to 
flatten the income tax structure by reducing the tax rate on the 
highest income bracket. 
5. 
The amendment provides property tax relief for renters 
by increasing the factor for rent constituting property taxes for 
nonelderly households 
under 
the Maine Residents Property Tax 
Program from 18' of rent to 25' of rent. 
6. 
The amendment· requires the joint standing committee of 
the Legislature having jurisdiction over taxation matters of the 
revenue-neutral legislation to increase the sales tax rate or 
expand the base or 
some 
combination of those 
options to 
generate revenue necessary to implement the Act. 
-
~AL 
NOTE REQUIRED 
($ee .. aUached) 
~--....~ ... 
COMMITTEE AMENDMENT 
Net Cost (Savings) 
General Fund 
Appropriationsl Allocations 
General Fund 
Other Special Revenue Funds 
Fiscal Detail and Notes 
General Fund Summary 
Approved: 04/08/04 frae 
Office of Fiscal and Program Review 
LD 1141 
An Act to Provide Property Tax Relief for Maine Residents and 
Businesses and Implement Comprehensive Tax Reform 
LR0392(04) 
Fiscal Note for Bill as Amended by Committee Amendment'" " 
Committee: Taxation 
Fiscal Note Required: Yes 
Minority Report 
Fiscal Note 
2003-04 
2004-05 
Projections 
2005-06 
Projections 
2006-07 
$0 
$ 
5,755,'517 
$ 89,001,988 
$ 149,880,942 
$0 $ 
$0 $ 
2003-04 
5,755,517 
$ 89,001,988 
$ 149,880,942 
$ 
$ 
2004-05 
2005-06 
2006-07 
Additional approp needed to fund EPS in bill 
Maine Revenue Services 
$ 
$ 
$ 
$ 82,173,651 
$ 115,881,956 
$ 
5,755,517 
$ 
6,828,337 $ 
33,998,986 
Net General Fund Cost (Savings) 
$ 
$ 
5,755,517 
$ 89,001,988 
$ 149,880,942 
This bill includes the Essential Programs and Services model approved in Public Law 2003, c. 504, as the basis for 
determining the total cost of K-12 public education. However, this bill differs from PL 2003, c. 504 in that it requires 
the State to fund 48% of the 100% of the total state and local operating cost allocation based on essential programs and 
services in fiscal year 2005-06 with the State's share increasing to 55% ofthe full cost by fiscal year 2007-08 versus 
the 50% currently required. This bill also provides for the calculation of a full-value education mill rate that is 
required to raise the total maximum local share of the cost of funding K-12 education and requires that this rate decline 
over the 2005 through 2007 property tax years. The Department of Education estimates the mill rate expectation to be 
9.98 mills in fiscal year 2005-06. 
This bill also provides for a transition adjustment through fiscal year 2007-08 for municipalities that experience an 
adverse fiscal impact as a result of the phase-in of the essential programs and services model and the maximum local 
LR0392( 4) - Fiscal Note - Page 1 of 3 
share mill rate expectation method of determining the local contribution of funding K -12 education. This bill proposes 
a transitiqn adjustment amount of $10,000,000 in fiscal year 2005-06 with the amount declining in each successive 
year through fiscal year 2007-08. Since this legislation does not specify the transition amounts for fiscal year 2006-07 
and fiscal year 2007-08, this fiscal note assumes that the transition adjustment declines evenly over the 3-year period. 
This fiscal note also assumes that the transition adjustment amounts are included in the estimated General Fund 
appropriation amounts needed to fund K-12 education based on the Essential Programs and Services model in this 
measure, thereby affecting the distribution among individual school units. The impact to each local school unit can not 
be determined at this time. 
This bill establishes an Education Funding Stabilization Fund as a nonlapsing fund within the Department of 
Administrative and Financial Services to be used to meet the State's share of the cost of funding K-12 public education. 
This legislation requires the Fund to receive 16% of the unappropriated surplus of the General Fund in each fiscal year 
beginning in fiscal year 2004-05. The amount of funds to be transferred to the Education Funding Stabilization Fund 
in each fiscal year can not be determined at this time and will depend on the amount that actual General Fund revenues 
exceed projected levels in each fiscal year. This bill includes a $500 Other Special Revenue Funds allocation in fiscal 
year 2004-05 to establish a base allocation for the fund. 
The following table provides estimates for the total State and Local Operating Cost of funding education based on the 
Essential Programs and Services model and provides a comparison of the General Fund appropriations that are 
estimated to be needed to fund the state's share of the cost of funding K-12 education based on the State's contribution 
reaching 50% in fiscal year 2009-10, as approved in Public Law 2003, c. 504, versus the 55% State contribution by 
fiscal year 2007-08 proposed in this legislation. 
State and Local Cost to Fund K-12 Public Education 
Utilizing the Essential Programs and Services Model 
Comparison of 50 % State Contribution vs. 55 % by FY 2007-08 
Total State & Local Operating 
Cost allocation based on EPS 
model (100%) 
EPS Transition Percentage 
Adjusted Total Operating 
Allocation based on EPS model 
approved in P.L. 2003, c. 504 
Total State & Local cost based 
on EPS funding model (100%) 
(includes program costs, debt 
service and adjustments) based 
onLD 1141 
Base Year 
2003-04* 
2004-05* 
Projections 
2005-06 
Projections 
2006-07 
1,256,951,694 
1,260,260,954 
1,270,125,664 
1,285,714,652 
80.82% 
82.00% 
84.00% 
88.00% 
1,015,819,375 
1,033,413,982 
1,066,905,558 
1,131,428,894 
1,708,540,751 
1,745,020,078 
1,740,420,076 
1,773,165,347 
LR0392(4) - Fiscal Note - Page 2 of 3 
Total State & Local cost based 
on EPS funding model approved 
in P.L. 2003, c. 504 (includes 
program costs, debt service and 
adjustments) 
1,467,408,432 
1,518,173,106 
1,537,199,970 
1,618,879,589 
State Share Targets to fund K-12 
education based on EPS model 
approved in P.L. 2003, c. 504 
State Share Targets to fund K-12 
education based on EPS model in 
LD 1141 
Estimated General Fund 
appropriation needed to fund K-
education based on EPS 
model approved in P.L. 2003, c. 
Estimated General Fund 
appropriation needed to fund K-
education based on LD 1141 
Additional General Fund 
Appropriation required to fund 
EPS model in LD 1141 vs. P.L. 
2003,c.504 
49.89% 
49.89% 
* No adjustment in fiscal year 2003-04 and fiscal year 2004-05 
47.81% 
47.81% 
49.00% 
49.25% 
48.00% 
51.50% 
753,227,985 
797,298,197 
835,401,636 
913,180,154 
82,173,651 
115,881,956 
This bill increases the Maine Residents Property Tax Reimbursement program and phases out the homestead 
exemption over time. The net increase in the General Fund cost due to these changes is estimated to be $5,760,000 in 
fiscal year 2004-05. It also requires certain changes to the income tax structure and the sales tax rate or sales tax base. 
The impact of those provisions can not be estimated at this time. The state will also have to reimburse municipalities 
for 50% of the revenue loss due to the personal property tax exemption beginning in fiscal year 2006-07. Maine 
Revenue Services will also begin to experience business equipment tax reimbursement (BETR) program savings in the 
same fiscal year. The net General Fund cost of those two changes is estimated to be $27,000,000 in fiscal year 2006-
07. The state will also be required to reimburse 90% of the local costs attributable to the change in the homestead 
exemption. These costs, and other related administrative costs, are expected to be in excess of $150,000 per year in 
fiscal year 2005-06 and 2006-07. 
LR0392(4) - Fiscal Note - Page 3 of 3