An Act To Modernize the State's Tax System
Maine Legislature, Session 121, LD 1394
House Amendment HA_A_H959 (House)
Amends: 36 MRSA §620, 36 MRSA §6207, 36 MRSA §6209, 36 MRSA §6210, 36 MRSA §621, 36 MRSA §6219, 36 MRSA §6220, 36 MRSA §683, 20-A MRSA §15671, 36 MRSA §1811, 36 MRSA §5122, 36 MRSA §5218, 36 MRSA §5219, 36 MRSA §4062, 36 MRSA §4063, 36 MRSA §4064

HOUSE AMENDMENT ,4" to H.P. 1020, L.D. 1394, Bill, "An Act 
To Modernize the State's Tax System" 
Amend the bill by striking out everything after the enacting 
clause and before the summary and inserting in its place the 
following: 
'PART A 
Sec. A-I. 36 MRSA c. 907, as amended, is further amended by 
repealing the chapter headnote and enacting in its place the 
following: 
CHAPTER 901 
HOMESTEAD TAX CAP PROGRAM 
Sec. A-2. 36 MRSA §620I-A, as enacted by PL 1989, c. 534, 
Pt. A, §4, is amended to read: 
§6201-A. 
Short title 
This chapter saaJJ--ae is known and may be cited as the 
"Maine-Resiaen~s-Pl'epel'~y-';raK Homestead Tax Cap Program." 
Sec. 3. 36 MRSA §6207, as amended by PL 1999, c. 494, §l, is 
further amended to read: 
§6207. 
Calculation of benefits for nonelderly households 
A claimant representing a nonelderly household qualifies for 
the 
following 
benefits 
s~a~ee~---&&--~~--~e~~ewJ£~---ineeme 
;iimi~a~iens. 
HOUSE AMENDMENT 
HOUSE AMENDMENT .. If .. to H.P. 1020, L.D. 1394 
1. 
Benefit calculation. 
For 
claimants 
representing 
a 
nonelderly household, the benefit is calculated as follows: 
A-I. 
Fifty percent of that portion of the benefit base that 
exceeds 4% but does not exceed 8% of income plus 100% of 
that portion of the benefit base that exceeds 8% of income 
to a maximum payment of $lT999 $3,000. 
~y---~--eli~ihili~yY---~~~--~~--with 
heHsehels-~~~-~-eHeess-e~-~~-aaG-aeHseheJs6-~~~~-eF 
meFe-memseFs-wi~a-~~~-~-~~HG&&&~~-$4@r@@@-aFe-Bet 
eli~isle-feF-a-seBefitT 
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 
to 
persons 
rece~v~ng 
social 
security 
disability 
or 
supplemental security income disability benefits. 
4. Minimum benefit. 
A claim of less than $10 may not be 
granted. 
Sec. A-4. 36 MRSA §6209, sub-§l, as amended by PL 1989, c. 
508, §25, is further amended to read: 
§6209. 
Annual adjustment 
1. 
Household 
income 
adjustment; 
elderly 
households. 
Beginning March 1, 1989, and annually thereafter, the State Tax 
Assessor 
shall 
determine 
the 
household 
income 
eligibility 
adjustment factor. That factor shaH.--se II multiplied by the 
income limitations in section 6206, applicable for the year prior 
to that for which relief is requested. The result saal-l--se is 
rounded to the nearest $100 and shall-a}?}?ly applies to the year 
for which relief is requested corresponding to the year on which 
the annualized cost of living adjustments were based. 
8e~iBBiB~ 
2 
Ma F ea - J ... - J.-9-9J.., - -t4le- -&ame- -PHWed-l.H--e--sha-l-l- -be- --effi~l-G-ye-G - t-e--as j H S 1; - the 
iBeeme-limitatieB-iB-seetieB-969+ T -sHsseetieB-6T 
Sec. A-S. 36 MRSA §6210, as amended by PL 1997, c. 557, Pt. 
A, §4 and affected by Pt. G, §1, is further amended to read: 
§62l0. 
Administration 
HOUSE AMENDMENT 
HOUSE AMENDM;N;~ff" to H.P. 1020, L.D. 1394 
The State Tax Assessor shall make available suitable forms 
wi th ins tructions for claimants. The claim shall !!.!l.lll be in the 
form the State Tax Assessor R1aY--p£-El£€Eiae prescribes and shall 
must be signed by the claimant. 
The State Tax Assessor shall include a checkoff to request 
an application for the Mai~e-ResiQe~~S-PF9p9F~y-~aH Homestead Tax 
~ Program on the individual income tax form. 
The assessor 
shall also provide for the option of filing an application for 
the Mai~e-~~~~~~~-~aH Homestead Tax Cap Program using 
the telefile system established by the assessor. 
Sec. A-6. 36 MRSA §621S, as enacted by PL 1989, c. 534, Pt. 
A, §10, is amended to read: 
§6218. 
Readability; application; instructions 
The application form and instructions used by applicants for 
assistance under the 
MaiBe-~--e£..,i-dent.£-..p..~F-t-y--~aH Homestead Tax 
~ Program 
and its 
successor, 
if any, 
shall 
must 
have 
a 
readability score, as determined by a recognized instrument for 
measuring adult literacy levels, equivalent to no higher than a 
6th grade reading level. 
Sec. A·7. 36 MRSA §6219, as amended by PL 1997, c. 526, §14, 
is further amended to read: 
§6219. 
Outreach plan required 
The Bureau of Revenue Services shall develop and implement a 
plan of outreach to ensure that all eligible households are made 
aware of assistance available under the MaiBe-ResiQe~ts-PE9pe*'ty 
~aH Homestead Tax Cap Program and its successor, if any. 
Sec. A-S. 36 MRSA §6220, as amended to PL 1997, c. 668, §40, 
is further amended to read: 
§6220. 
Coordination required 
The bureau shall seek the advice and cooperation of the 
Bureau 
of 
Elder 
and 
Adult 
Services; 
the 
Bureau 
of 
Family 
Independence; the Bureau of Child and Family Services; advocates 
for elderly and 
low-income individuals; 
and other interested 
agencies and organizations in developing the application form and 
instruction 
booklet 
for 
the 
MaiBe---Re-s-:i-dent.-6--..p..~r-t-y---'±'aH 
Homestead Tax 
Cap 
Program and the outreach plan required by 
section 6219. 
and 
Sec. A-9. Revision of account. 
The Department of Administrative 
is 
directed 
to 
change 
Financial 
Services 
HOUSE AMENDMENT 
.0.:,-
~~ 
HOUSE AMENDMENT "A" to H.P. 1020, L.D. 1394 
references 
to 
accounts 
named 
"Maine 
Residents 
Property 
Tax 
Program" to "Homestead Tax Cap Program." 
Sec. A·IO. Application. 
This Part applies to applications for 
benefits on or after August 1, 2004. 
Sec. A·II. 
Appropriations and 
allocations. 
appropriations and allocations are made. 
ADMINISTRATIVE AND FINANCIAL SERVICES, 
DEPAR"l'MENT OF 
Homestead Tax Cap Program 
(0648) 
The 
following 
Initiative: 
Property Tax 
Program. 
Provides 
funds 
to 
expand 
the 
Maine 
Residents 
Program to create the Homestead Property Tax Cap 
General Fund 
2003-04 
2004-05 
All Other 
$0 
$41,370,326 
General Fund Total 
$0 
$41,370,326 
Maine Revenue Services 
(0002) 
Initiative: 
Provides funds for one Tax Examiner position and 
other administrative costs associated with the establishment of 
the Homestead Property Tax Cap Program. 
General Fund 
positions - Legislative Count 
Personal Services 
All Other 
General Fund Total 
ADMINISTRATIVE AND FINANCIAL SERVICES, 
DEPARTMENT OF 
DEPARTMENT TOTALS 
GENERAL FUND 
DEPARTMENT TOTAL -
ALL FUNDS 
PARTB 
2003-04 
(0.000) 
$0 
$0 
$0 
2003-04 
$0 
$0 
2004-05 
(1.000) 
$53,037 
$100,654 
$153,691 
2004-05 
$41,524,017 
$41,524,017 
Sec. B·l. 30·A MRSA §5681, sub·§5, "A and B, as amended by PL 
2003, c. 20, Pt. W, §1, are further amended to read: 
HOUSE AMENDMENT 
HOUSE AMENDMENT ,A .. to H.P. 1020, L.D. 1394 
A. For months beginning before July 1, 6QQa 2004, 5.1%; and 
B. For months beginning on or after July 1, 6QQar-aT6% ~ 
5.4%. 
UHC 
Sec. C-l. 36 MRSA §683, sub-§l, as repealed and replaced by PL 
2003, c. 20, Pt. BB, §1 and affected by §3, is repealed. 
Sec. C-2. 36 MRSA §683, sub-§l-A, as enacted by PL 2003, c. 
20, Pt. BB, §2 and affected by §3, is repealed. 
Sec. C-3. 36 MRSA §683, sub-§l-B is enacted to read: 
I-B. 
Exemption amount. 
The estate up to the just value of 
$7,000 of the homestead of a permanent resident of this State who 
has owned a homestead in this State for the preceding 12 months 
is 
exempt 
from 
taxation except 
for 
assessments 
for 
special 
benefits. 
In 
determining 
the 
local 
assessed 
value 
of 
the 
exemption, 
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. 
If the title to a homestead is held by 
the applicant jointly or in common with others, the exemption may 
not exceed $7,000 of the just ya1ue of the homestead 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. C-4. Application. 
This Part applies 
to property tax 
valuations based on the status of property on or after April 1, 
2004. 
Sec. 
C-S. 
Appropriations 
and 
allocations. 
appropriations and allocations are made. 
The 
following 
ADMINISTRATIVE AND FINANCIAL SERVICES, 
DEPARTMENT OF 
Homestead Property Tax Exemption Reimbursement 
(0886) 
Initiative: 
Provides funds to restore the homestead exemption to 
$7,000. 
General Fund 
All Other 
HOUSE 
2003-04 
$0 
2004-05 
$5,131,486 
AMENDMENT 
HOUSE AMENDMENT .. ;1 .. to H.P. 1020, L.D. 1394 
General Fund Total 
$0 
$5,131,486 
Homestead Property Tax Exemption -
Mandate Reimbursement 
(0887) 
Initiative: 
Provides funds to reimburse municipalities for the 
local cost associated with changes to the homestead exemption. 
General Fund 
All Other 
General Fund Total 
2003-04 
$0 
$0 
2004-05 
$33,500 
$33,500 
ADMINISTRATIVE AND FINANCIAL SERVICES, 
DEPAR"l'MENT OF 
DEPAR"l'MENT TOTALS 
2003-04 
2004-05 
GENERAL FUND 
$0 
$5,164,986 
DEPAR"l'MENT TOTAL -
ALL FUNDS 
$0 
$5,164,986 
PART D 
Sec. D-l. 20-A MRSA §15671, sub-§7, 1I'B, 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% ~. 
(2) 
For fiscal year 
2006-07, 
the target is 
49T6§% 
~. 
(3) For fiscal year 2007-08, the target is 49TSQ% 53%. 
(4) For fiscal year 2008-09, the target is 49T1§% 54%. 
(5) For fiscal year 2009-10 and succeeding years, the 
target is 5Q% 55%. 
Sec. 
D-2. 
Appropriations 
and 
allocations. 
appropriations and allocations are made. 
EDUCATION, DEPARTMENT OF 
General Purpose Aid for Local Schools 
(0308) 
The 
following 
Initiative: 
Provides additional funds for the General Purpose 
Aid for Local Schools program. 
HOUSE AMENDMENT 
HOUSE lIMENDMENT 4" to H.P. 1020, L.D. 1394 
General Fund 
All Other 
General Fund Total 
PARTE 
2003-04 
$0 
$0 
2004-05 
$26,858,031 
$26,858,031 
Sec. E·l. 36 MRSA §1811, as repealed and replaced by PL 2003, 
c. 510, Pt. C, §12 and affected by §13, is amended to read: 
A tax is imposed on the value of all tangible personal 
property and taxable services sold at retail in this State. 
The 
rate of tax is 
7% 
on the value of liquor sold in licensed 
establishments as defined in Title 28-11., 
section 2, subsection 
15, in accordance with Title 28-11., chapter 43; 7% on the value of 
rental of living quarters in any hotel, rooming house or tourist 
or trailer camp; 10% on the value of rental for a period of less 
than one year of an automobile; 7% on the value of prepared food; 
and 5% 6% on the value of all other tangible personal property 
and taxable services. 
Value is measured by the sale price, 
except as otherwise provided. 
The tax imposed upon the sale and distribution of gas, water 
or electricity, or telecommunications services, 
by any pUblic 
utility, 
the 
rates 
for 
which 
sale 
and 
distribution 
are 
established by the Public Utilities Commission, must be added to 
the rates so established. 
Ne A tax may not be imposed upon the 
sale or use of electrical energy, or water stored for the purpose 
of generating electricity, when the sale is to or by a wholly 
owned subsidiary by or to its parent corporation, except for 
electr ical energy or water purchased for resale to or by such 
wholly owned subsidiary. 
Rental or lease of an automobile for one year or more must 
be taxed at the time of the lease or rental transaction at 5% 6% 
of the following: 
the total monthly lease payment multiplied by 
the number of payments in the lease or rental, the amount of 
equity involved in any trade-in and the value of any cash down 
payment. 
Collection 
and 
remittance 
of 
the 
tax 
is 
the 
responsibility 
of 
the 
person 
that 
negotiates 
the 
lease 
transaction with the lessee. 
HOUSE AMENDMENT 
HOUSE AMENDMENT A 
.. to H.P. 1020, L.D. 1394 
Sec. E-2. Legislative intent; use of revenue. 
The Legislature 
intends that any additional revenue raised by increasing the 
sales tax rate to 6% pursuant to the Maine Revised Statutes, 
Title 
36, 
section 
1811 
be 
used 
to fulfill 
commitments 
for 
property tax relief enacted by this Act, including the increase 
in 
transfers 
to 
the 
Disproportionate 
Tax 
Burden 
Fund, 
the 
Homestead Tax 
Cap 
Program and the additional 
school 
funding 
necessary to implement Essential Programs and Services pursuant 
to the schedules found in Title 20-A, section 15671, subsection 
7, paragraph B. 
Sec. E-3. Legislative intent; rollback of sales tax increase. 
The 
Legislature intends that, if General Fund revenue in any fiscal 
year exceeds General Fund revenue for the previous year by 8% or 
more, 
on a base-to-base comparison excluding one-time revenue 
gains 
and losses, 
the tax on the sale of tangible personal 
property and taxable services at a rate of 6% on the effective 
date of this Act must be reduced to 5%. 
Sec. E-4. Effective date. 
This Part takes effect October 1, 
2004. 
PARTF 
Sec. F-l. 36 MRSA §5122, sub-§l, 1fV, as enacted by PL 2003, c. 
451, Pt. II, §2, is amended to read: 
v. 
For tax years beginning on or after January 1, 2003 and 
before January 1, 6999 2004, the amount claimed as a federal 
income adjustment for student loan interest under the Code, 
Section 62 
(a) (17), but only for interest paid after 60 
months from the start of the loan repayment period. 
Sec. F-2. 36 MRSA §5218, sub-§l, as amended by PL 2003, c. 20, 
Pt. FF, §1, is further amended to read: 
1. 
Resident taxpayer. 
A resident individual is allowed a 
credit against the tax otherwise due under this Part in the 
amount of 25% of the federal tax credit allowable for child and 
dependent care expenses in the same tax year, except that for tax 
years beginning in 2003T-6994-aRQ-~9geT the applicable percentage 
is 21.5% instead of 25%. 
Sec. F-3. 36 MRSA §5218, sub-§2, as amended by PL 2003, c. 
391, §10, is further amended to read: 
2. 
Nonresident 
nonresident 
individual 
HOUSE 
or 
is 
part-year 
allowed 
a 
resident 
taxpayer. 
credit against 
the 
AMENDMENT 
A 
tax 
HOUSE AMENDMENT '~' to H.P. 1020, L.D. 1394 
otherwise due under this Part in the amount of 25~ of the federal 
tax 
credit allowable 
for 
child 
and 
dependent 
care 
expenses 
multiplied by the ratio of the individual's Maine adjusted gross 
income, as defined in section 5102, subsection l-C, paragraph B, 
to the individual's entire federal adjusted gross income, 
as 
modified by section 5122, except that for tax years beginning in 
2003 T--2004--and--aQQlh the applicable percentage is 21. 5~ instead 
of 25~. 
Sec. F·4. 36 MRSA §5219.S, as amended by PL 2003, c. 20, Pt. 
GG, §1, is further amended to read: 
§5219-S. 
Earned income credit 
A taxpayer is allowed a credit against the taxes otherwise 
due under this Part equal to 
5~ of the federal earned income 
credit for the same taxable year, except that for tax years 
beginning in 2003 T--2-OM--aBd--;;!QQ9T the applicable percentage is 
4.92% instead of 
5~. 
The credit may not reduce the state income 
tax to less than zero. 
PART G 
Sec. G-l. 36 MRSA §4062, sub-§l-A, 'A-l, is enacted to read: 
A-I. 
For the estates of decedents dying on or after January 
1. 2005, "federal credit" means the maximum credit for state 
death taxes determined under the Code, Section 2011 as of 
December 31, 2002 exclusive of: the reduction of the maximum 
credit contained in the Code, Section 2011(b)(2)i the period 
of limitations under the Code, 
Section 2011(c)i 
and the 
termination 
provision 
contained 
in 
the 
Code, 
Section 
2011( f). 
The adjusted taxable estate is to be determined 
using the applicable section of the Code as of the date of 
the 
decedent's 
death, 
except that 
the state death 
tax 
deduction contained in the Code, 
Section 2058 is to be 
disregarded. 
The unified credit is the applicable credit 
amount 
determined 
under 
the 
Code, 
Section 
2010, 
as 
of 
December 31, 2003. 
Sec. G·2. 36 MRSA §4063, sub-§2, as amended by PL 2003, c. 20, 
Pt. JJ, §2, is further amended to read:. 
2. 
Values. 
All 
property 
values 
under 
subsection 
1, 
paragraphs A and B are as finally determined for federal estate 
tax purposes, except that for estates of decedents dying after 
December 31, 2002 aBa-~~€-~~-~r-aQQ9 that do not incur a 
federal estate tax, 
all property values 
under 
subsection 1, 
paragraphs A and B are as finally determined by the assessor in 
HOUSE AMENDMENT 
1,£; .. 
~ t{\ 
~". 
H~USE AMENDMENT -,A .. to H.P. 1020, L.D. 1394 
accordance with the Code as if the estate had incurred a federal 
estate tax. 
Sec. G-3. 36 MRSA §4064, first 1/', as amended by PL 2003, c. 20, 
Pt. JJ, §3, is further amended to read: 
A tax is imposed upon the transfer of real property and 
tangible personal property situated in this State and held by an 
individual who dies prior to January 1, 2002 or after December 
31, 2002 and who at the time of death was not a resident of this 
State. 
When 
real 
or 
tangible 
personal 
property 
has 
been 
transferred into a trust, the tax imposed by this section applies 
as if the trust did not exist and the property was personally 
owned by the decedent. 
Maine property is subject to the tax 
imposed by this section to the extent that such property is 
included in the decedent's gross estate as finally determined for 
federal estate tax purposes. 
The amount of this tax is a 
sum 
equal to that proportion of the federal credit that the value of 
Maine real and tangible personal property taxed in this State 
that qualifies 
for 
the 
credit bears 
to 
the 
value 
of 
the 
decedent's total federal gross estate. All property values under 
this section are as finally determined for federal estate tax 
purposes, 
except 
that 
for 
estates of 
decedents 
dying after 
December 31, 2002 aRQ-~~~~1r-~r-agg§ that do not incur a 
federal estate tax, all property values are as finally determined 
by the assessor in accordance with the Code as if the estate had 
incurred a federal estate tax. 
The share of the federal credit 
used to determine the amount of a nonresident individual's estate 
tax under this section is computed without regard to whether the 
specific real or tangible personal property located in the State 
is marital deduction property. ' 
SUMMARY 
This amendment replaces the bill. 
The amendment represents 
a collaborative proposal for tax reform and property tax relief. 
The proposal contains the following elements. 
Part A transforms the Maine Residents Property Tax Program 
into a true homestead property tax cap program that will provide 
a benefit to all Maine residents whose property taxes exceed 4% 
of 
their 
income. 
Income 
eligibility 
requirements 
are 
eliminated. 
The effect of these changes is to establish a cap on 
property taxes 
exceeding 
6% 
of 
income 
for 
nearly all Maine 
residents. 
The maximum rebate is $3,000. 
Part B increases the portion of sales and income tax revenue 
set aside for state-municipal revenue sharing from 5.1% to 5.4% 
beginning July 2004. 
HOUSE AMENDMENT 
HOUSE AMENDMENT .. k- to H.P. 1020, L.D. 1394 
Part C restores the homestead property tax exemption to the 
original $7,000 for all homesteads. 
Part D appropriates an additional $27 million for general 
purpose 
aid 
for 
local 
schools 
in fiscal 
year 
2004-05 
and 
increases the state share of the cost of public kindergarten to 
grade 12 public education funding to 55% of the cost of essential 
programs and services by fiscal year 2009-10. 
Part E increases the sales tax to 6% beginning October 1, 
2004. 
Revenue projections indicate that raising the sales tax 
rate to 6% will raise an additional $144,000,000 in fiscal year 
2005-06 and $151,000,000 in fiscal year 2006...,07. 
This Part also 
expresses legislative intent that the additional revenue be used 
to fund Revenue Sharing II, the homestead tax cap program and the 
additional education funding envisioned in this Act and that the 
sales tax should be rolled back to 5% if General Fund revenue 
increases by more than 8% in a future year. 
Part F restores conformity with the federal Internal Revenue 
Code 
with regard to the 
deduction for certain student loan 
interest, the child and dependent care credit and the earned 
income tax credit. 
Part G amends the estate tax to conform to recent increases 
in the threshold for application of the tax while maintaining the 
federal calculation of the state share of the tax that existed as 
of December 31, 2002. 
SPONSORED BY: 
(Representative 
TOWN: 
Cornville 
FISCAL ;\ 0 n: \{ E Q lll{l~ U 
(See attached) 
Page ll-LRI697(4) 
HOUSE AMENDMENT 
Net Cost (Savings) 
General Fund 
Appropriations/Allocations 
General Fund 
Revenue 
General Fund 
Other Special Revenue Funds 
Fiscal Detail and Notes 
Approved: 04/02/04 ,;:.'b?ae 
l2lst Maine Legislature 
Office of Fiscal and Program Review 
LD 1394 
An Act to Modernize the. State's Tax System 
LR 1697(04) 
Fiscal Note for House Amendment" " 
Sponsor: Rep. Mills 
Fiscal Note Required: Yes 
Fiscal Note 
2003-04 
2004-05 
Projections 
2005-06 
Projections 
2006-07 
$0 
($12,287,145) 
($47,645,213) 
($52,490,4f r \ 
$0 
$0 
$0 
$73,547,034 
$85,834,179 
$11,963,926 
$103,797,692 
$151,442,905 
$12,447,448 
$106,725,307 
$159,215,772 
$13,075,068 
This estimate describes the total impact of the bill as amended by this amendment and not just the incremental change. 
This bill includes General Fund appropriations totalling $46,689,003 to expand the Maine Resident's Property Tax 
program to create the Homestead Tax Cap Program and to restore the Homestead Exemption to $7,000. It also 
increases the sales tax by 1 cent effective October 1,2004 which will increase General Fund Revenue by $93,170,660 
in fiscal year 2004-05. 
Increasing the amount transferred for state-municipal revenue sharing will decrease General Fund revenue by 
$6,682,828 in fiscal year 2004-05. The total increase to the Other Special Revenue funds Disproportionate Tax Burden 
Fund as a result of changes contained in this bill is estimated to be $11,963,926 in fiscal year 2004-05. 
LR1697(4) - Fiscal Note - Page 1 of3 
This bill also makes changes to income and estate tax provisions to conform with certain provisions of the federal 
Internal Revenue Code. The revenue impact of these and other changes is detailed in the table below. 
Projections 
Projections 
General Fund Detail 
2003-04 
2004-0S 
200S-06 
2006-07 
Revenue 
Sales tax to 6% 
$0 
$93,170,660 
$136,945,798 
$143,453,332 
Change in state-municipal revenue sharing 
$0 
($6,682,828) 
($4,649,868) 
($4,868,040) 
Estate Tax conformity 
$0 
$0 
$19,490,728 
$20,308,840 
Student loan interest deduction conformity 
$0 
($296,443) 
($202,799) 
$0 
Dependent care credit conformity 
$0 
($587,088) 
($404,888) 
$0 
Earned income tax credit conformity 
$0 
($21,758) 
($19,866) 
$0 
Individual income tax - property tax reimb. 
$0 
$251,636 
$283,800 
$321,640 
$0 
$85,834,179 
$151,442,905 
$159,215,772 
Appropriations 
Restore homestead exemption to $7,000 
$0 
$5,131,486 
$5,259,475 
$5,264,520 
Homestead Property Tax Cap Program 
$0 
$41,370,326 
$43,063,771 
$47,088,940 
General Purpose Aid to Local Schools 
$0 
$26,858,031 
$55,339,199 
$54,232,466 
Administrative and Mandate costs 
$0 
$187,191 
$135,247 
$139,381 
$0 
$73,547,034 
$103,797,692 
$106,725,307 
State Mandate 
New or Expanded Activity 
Unit Affected 
Costs 
Administrative activities associated with the change in the homestead exemption. 
Municipality 
$33,500 
The bill reimburses municipalities for this mandate. 
This bill also includes the Essential Programs and Services model, as approved by the Legislature 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. 
in that it requires the State's share to increase to 55% by fiscal year 2009-10 versus the 50% requirement in PL 
2003, c. 504. 
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 
proposed in this legislation. 
State and Local Cost to Fund K-12 Public Education 
Utilizing tbe Essential Programs and Services Model 
Comparison of SO% State Contribution vs. SS% by FY 2009-10 
Base Year 
2003-04* 
2004-0S* 
Projections 
200S-06 
Projections 
2006-07 
Total State & Local Operating 
Cost allocation based on EPS 
model (100%) 
1,256,951,694 
1,260,260,954 
1,270,125,664 
1,285,714,652 
EPS Transition Percentage 
80.82% 
82.00% 
84.00% 
88.00% 
LR1697(4) - Fiscal Note - Page 2 of 3 
Adjusted Total Operating 
1,015,819,375 
1,033,413,982 
1,066,905,558 - 1, l31 ,428,894 
Allocation based on EPS model 
Total State & Local cost based 
1,467,408,432 
1,518,173,106 
1,537,199,970 
1,618,879 
on EPS funding model (includes 
program costs, debt service and 
adjustments) 
State Share Targets to fund K-12 
49.89% 
47.81% 
49.00% 
49.25% 
education based on EPS model 
approved in P.L. 2003, c. 504 
State Share Targets to fund K-12 
49.89% 
47.81% 
52.60% 
52.60% 
education based on EPS model 
in LD 1394, as amended 
Estimated General Fund 
738,959,910 
753,227,985 
797,298,197 
appropriation needed to fund K-
education based on EPS 
model approved in P.L. 2003, c. 
(See Note) 
Estimated General Fund 
765,817,941 
808,567,184 
851,530,664 
appropriation needed to fund K-
education based on LD 1394, 
as amended 
Additional General Fund 
26,858,031 
55,339,199 
54,232, 
Appropriation required to fund 
EPS model in LD 1394, as 
amended vs. P.L. 2003, c. 504 
Note: The Governor's proposed 2nd supplemental budget (LD 1919) includes $13,549,334 additional appropriation in 
FY 2004-05 for General Purpose Aid for Local Schools. 
This fiscal estimate is based on current law. LD 1919, the Governor's proposed 2nd supplemental budget, includes 
changes to the estate tax (Part D) and transfers certain items from the sales tax to the service provider tax (Part V). If 
LD 1919 passes without amendment, the revenue increase in this bill will be reduced as indicated below. 
Projections 
Projections 
2003-04 
2004-05 
2005-06 
2006-07 
Revenue in this bill without LD 1919 
° 
85,834,179 
151,442,905 
159,215,772 
Revenue in this bill with LD 1919 
° 
78,889,215 
111,209,564 
1l3,949,964 
Revenue reduction if LD 1919 is enacted 
° 
6,944,964 
40,233,341 
45,265,808 
LR1697(4) - Fiscal Note - Page 3 of 3