An Act to Enact the School Finance Act of 2003. PART A Sec. A·l. 30·A MRS A c.112 is enacted to read: CHAPTER 112 MUNICIPAL SERVICE DISTRICTS §2ll0. Pu~se The purpose of this chapter is to enhance the ability of municipalities to cooperate on a basis of mutual advantage in the efficient and effective exercise of municipal obligations and home-rule authority pursuant to this Part through voluntary creation of and delegation to municipal service districts. §21ll. Definitions As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings. 1. Municipality. Municipality" means a municipality, as defined in section 2001, subsection 8, or a plantation. 2. Municipal service district. Municipal service district" means an entity that has been or may be formed to exercise authority delegated by participating municipalities in accordance with this chapter that consists of: A. Five or more contiguous municipalities with a total population of at least 20,000 according to the Federal Decennial Census conducted in 2000 and within which are contained 2 or more school administrative units with a total public school enrollment of at least 3,000 students as recorded by the Department of Education in 2002; or B. Five or more contiguous municipalities with a total land area of 250 or more square miles and within which are contained 2 or more school administrative units with a total public school enrollment of at least 1,000 students as recorded by the Department of Education in 2002. Page l-LR2165(1)
Maine Legislature, Session 121, LD 1629
Committee: Taxation
Sponsors: LEMOINE, STANLEY, CLOUGH, FISCHER, MILLS, SIMPSON, TARDY, NASS
Amends: 30-A MRSA §5686, 36 MRSA §661, 36 MRSA §662, 36 MRSA §5111, 36 MRSA §5402, 36 MRSA §5403, 36 MRSA §5404, 36 MRSA §6207, 36 MRSA §6651

Legislative Document 
No. 1629 
H.P.1209 
House of Representatives, June 4, 2003 
RESOLUTION, Proposing a Competing Measure under the 
Constitution of Maine To Create Municipal Service Districts To 
Reduce the Cost of Local Government, To Provide Property Tax 
Relief and To Increase Economic Competitiveness 
Reference to the Committee on Taxation suggested and ordered printed. 
!r/~ 
1??·7710£~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative LEMOINE of Old Orchard Beach. (GOVERNOR'S BILL) 
Cosponsored by Senator STANLEY of Penobscot and 
Representatives: CLOUGH of Scarborough, FISCHER of Presque Isle, McLAUGHLIN of 
Cape Elizabeth, MILLS of Farmington, MILLS of Cornville, SIMPSON of Auburn, TARDY 
of Newport, Senator: NASS of York. 
Printed on recycled paper 
RESOLVED: 
That, pursuant to the Constitution of Maine, 
Article IV, Part Third, Section 18, subsection 2, the Legislature 
intends that the following be submitted to the electors of the 
State as a competing measure to Initiated Bill 3, Legislative 
Document 1372 of the 121st Legislature, 
"An Act to Enact the 
School Finance Act of 2003." 
PART A 
Sec. A·l. 30·A MRS A c.112 is enacted to read: 
CHAPTER 112 
MUNICIPAL SERVICE DISTRICTS 
§2ll0. 
Pu~se 
The purpose of this chapter is to enhance the ability of 
municipalities to cooperate on a basis of mutual advantage in the 
efficient and effective exercise of municipal obligations and 
home-rule 
authority pursuant 
to this Part 
through voluntary 
creation of and delegation to municipal service districts. 
§21ll. Definitions 
As 
used 
in this chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Municipality. 
"Municipality" means a municipality, as 
defined in section 2001, subsection 8, or a plantation. 
2. 
Municipal 
service 
district. 
"Municipal 
service 
district" means an entity that has been or may be formed to 
exercise authority delegated by participating municipalities in 
accordance with this chapter that consists of: 
A. 
Five or more contiguous municipalities with a 
total 
population of at least 20,000 
according to the Federal 
Decennial Census conducted in 2000 
and within which are 
contained 2 or more school administrative units with a total 
public school enrollment of at least 3,000 students 
as 
recorded by the Department of Education in 2002; or 
B. 
Five or more contiguous municipalities with a total land 
area of 250 or more 
square miles 
and within which are 
contained 2 or more school administrative units with a total 
public school enrollment of at least 1,000 students 
as 
recorded by the Department of Education in 2002. 
Page l-LR2165(1) 
For the purpose of this subsection, "contiguous municipalities" 
includes municipalities that are separated solely by water or by 
unorganized territory. 
3. 
Mullicipal service district officers. 
"Municipal service 
district officers" means the legislative body of the government 
of a municipal service district provided for in its charter in 
accordance with section 2112, subsection 2 to which participating 
municipalities have delegated their municipal authority. 
4. 
Participating 
municipality. 
"Participating 
municipality" means a municipality that has joined, has agreed to 
join or has entered into a process for the purpose of joining a 
municipal service district. 
5. 
School board of directors. 
"School board of directors" 
means the board of directors of a school management unit formed 
and elected pursuant to a municipal service district charter as 
provided for in section 2112, subsection 2. 
6. 
School management unit. 
"School management unit" means 
the school management unit established by a municipal service 
district in accordance with its charter as 
provided for 
in 
section 2112, subsection 2. 
7. 
State board. 
"State board" means the State Board of 
Education. 
, 
§2ll2. 
Adoption of municipal service district charter 
1. 
Charter coumission. 
Any 5 or more municipalities that 
together meet the definition of a municipal service district may 
enter into an inter local agreement to establish a joint charter 
commission for the purpose of proposing a charter for a proposed 
municipal service district. 
The agreement must provide that the 
charter 
commission 
consist 
of 
one 
representative 
from 
each 
participating municipality, appointed by the legislative body of 
the municipality, 
plus 
representatives at-large who 
reside 
within the 
proposed municipal 
service district and 
who 
are 
elected by the qualified voters within the proposed municipal 
service district. 
A person seeking election as 
an at-large 
member of the charter commission shall file with the clerk of 
that person's participating municipality a petition bearing the 
signatures of 25 qualified voters within the proposed municipal 
service district 90 days prior to the election date. 
The clerks 
of 
each 
participating 
municipality 
shall 
cooperate 
in 
the 
validation of signatures. 
Election of at-large members must be 
held within 90 days of the effective date of the inter local 
agreement. 
The 
election must 
be 
held 
by all participating 
municipalities on the Same day. The names of the candidates must 
appear on a common ballot in each participating municipality and 
must be arranged alphabetically by last name. 
2. 
Terms of prQPQsed charter. 
The 
proposed municipal 
service district charter under this section must include: 
A. 
The names of the participating municipalities; 
B. 
The name of the proposed municipal service district. 
which 
must 
be 
distinguishable 
from 
the 
name 
of 
any 
municipali ty in the State other than one or more of the 
participating municipalities, and the proposed location of 
the municipal service district office: 
C. 
The 
property, 
real 
and personal, 
belonging to each 
participating municipality and its fair value and whether 
any such property will be provided to the municipal service 
district for its use, and the terms of that use: 
D. 
The 
indebtedness, 
bonded 
and 
otherwise, 
of 
each 
participating municipality; 
E. Provision for assumption of 50% of the general obligation 
debt of each participating municipality in the municipal 
service district by the State as provided by section 5686: 
F. 
Provision for application or expenditure of cost savings 
realized through formation of the municipal service district 
and funds received from the Municipal Service District Fund 
established in chapter l12-A, as follows: 
(1) 
Fifty percent to fund public education needs, as 
identified in. the budget prepared for the municipal 
service district's school management unit: and 
(2) 
Fifty percent to reduce the property tax burden, 
as defined in section 5681, subsection 2, paragraph B 
in 
the 
municipal 
service 
district's 
participating 
municipalities. 
The municipal service district shall allocate funds or cost 
savings 
under 
this 
paragraph 
proportionally 
among 
its 
participating municipalities, based on their populations as 
determined by the latest Federal Decennial Census or as 
determined 
and 
certified 
by 
the 
Department 
of 
Human 
Services, 
whichever 
is 
later. 
For 
purposes 
of 
this 
paragraph, cost savings 
m~st be calculated in accordance 
with a methodology established by rule by the Department of 
Administrative and Financial Services pursuant to Title 5, 
chapter 375. 
Rules adopted pursuant to this paragraph are 
routine technical rules as defined in Title 5. chapter 375. 
subchapter 2-A. 
G. 
The organization of the government of the municipal 
service district. including but not limited to the form and 
method of representation of an elected legislative body: a 
school department and the form and method of representation 
of the school management unit, including an elected school 
board of directors. which replaces the school administrative 
units within the municipal service district: a clerk of the 
municipal service district having the 
sarne 
duties as 
a 
municipal clerk: and such other personnel. departments and 
procedures, 
not 
inconsistent 
with 
state 
law. 
as 
are 
necessary to carry out the powers and responsibilities of 
the municipal service district: 
H. 
Assignment 
and delegation to 
the 
municipal 
service 
district of all rights and obligations of the municipalities 
within 
the 
municipal 
service 
district 
pursuant 
to 
the 
Constitution of Maine, Article IV, Part Third. Section 23 
and Title 36, section 661: and 
I. 
Any other facts and terms considered necessary by the 
charter commission. 
3. 
Submission of proposed charter to voters: 
adQption. 
After notice and hearing as provided in paragraphs A and B, the 
municipal 
of,ficers 
of 
each municipality within the 
proposed 
municipal service district shall submit the proposed municipal 
service district charter 
to 
the voters 
of their 
respective 
municipalities. 
A. 
A 
public 
hearing 
must 
be 
held 
in 
each 
of 
the 
participating municipalities. 
The public hearing may 
be 
held 
on 
more 
than 
one 
day, 
provided that it adjourns 
permanently at least 10 days before the election. 
B. 
At least 30 days before the election and at least 10 
days before the hearing under paragraph A, 
the municipal 
officers shall notify the 
voters 
of 
each participating 
municipality of the proposed charter and of the time and 
place of the public hearing in the sarne manner that the 
voters of each municipality are notified of ordinances to be 
enacted. 
4. 
Ballot question. 
The 
municipal 
officers 
of 
each 
participating municipality shall. submit the question of adoption 
of the proposed municipal service district charter to the voters 
in substantially the following form: 
"Shall 
the 
(name 
of 
municipality) 
adopt 
the 
proposed 
municipal service district charter and thereby form jointly 
with 
the 
(names 
of municipalities) 
a 
municipal 
service 
district that will exercise and assume, in accordance with 
the 
Maine 
Revised 
Statutes, 
Title 
30-A, 
chapter 
112, 
home-rule 
powers 
and duties 
regarding public 
education, 
taxation, land use regulation and other matters delegated to 
it under the charter?" 
5. 
AdQPtion 
by 
majority 
vote 
in 
each 
participating 
municipality. 
Upon approval of a majority of those voting in 
each of the participating municipalities, 
the charter becomes 
effective and the municipal service district is established. 
§2113. 
Charter revision: procedure 
1. 
Initiation by municipal service district officers. 
The 
municipal service district officers may determine that revision 
of the charter for the municipal service district should be 
considered and by order may provide for the establishment of a 
charter commission to carry out that purpose as provided in this 
chapter. 
The 
membership of 
a 
charter commission established 
pursuant to this subsection must be determined in accordance with 
section 2112, subsection 1. 
2. 
Petition by voters. 
On 
the written petition of 
a 
number of voters equal to at least 20'l-o of the number of votes 
cast in the participating municipalities as a whole at the last 
gubernatorial election, 
but 
in 
no 
case 
less 
than 
200, 
the 
municipal 
service district officers, 
in accordance 
with 
the 
procedure set forth in subsection 3, 
shall provide for 
the 
establishment of a charter commission for the revision of the 
municipal service district charter as provided in this chapter. 
The membership of a charter commission established pursuant to 
this subsection must be determined in accordance with section 
2112, subsection 1. 
3. 
Petition 
procedure: 
petitioner"s 
cODDlittee. 
The 
procedures for a petition by the voters set forth in subsection 2 
to establish 
a 
charter 
commission 
for 
the 
revision of 
the 
municipal 
service district charter 
is 
as 
set 
out 
in 
this 
subsection. 
A. 
Any 
registered voters 
from 
the municipal service 
district may 
file 
an affidavit with 
the 
clerk of 
the 
municipal service district stating: 
(1) 
That these voters' will constitute the petitioners' 
committee: 
(2) 
The names and addresses of these voters; 
(3) 
The address to which all notices to the committee 
are to be sent; and 
(4) 
That these voters will circulate the petition and 
file it in proper form. 
The 
petitioners' 
committee 
may 
designate 
additional 
registered voters of the participating municipalities, who 
are 
not 
members 
of 
the 
committee, 
to 
circulate 
the 
petition. 
Promptly after the affidavit is filed, the clerk 
of 
each participating municipality shall 
issue petition 
blanks to the committee. 
B. 
The 
clerk of 
the municipal 
service district shall 
prepare 
the 
petition 
forms 
under 
paragraph 
A 
at 
the 
municipal service district's expense. 
The petition forms 
must be printed on paper of uniform size and may consist of 
as many individual sheets as are reasonably necessary. 
(1) 
Petition forms must carry the following legend in 
bold lettering at the top of the face of each form: 
"(Name of Municipal Service District)" 
"Each of the 
the, officers 
establish 
a 
revising the 
district) . " 
undersigned voters 
of 
the 
municipal 
charter 
commission 
charter of 
(name 
I 
respectfully requests 
service district to 
for 
the 
purpose 
of 
of municipal service 
(2) 
Each signature to a petition must be in ink or 
other indelible instrument and must be followed by the 
residence of the voter with street and number, if any. 
A petition 
may 
not 
contain 
a 
party or 
political 
designation. 
(3) 
The clerk of the municipal service district shall 
note the date of each petition form issued. 
A petition 
must be filed within 120 days of the date of its issue 
or it is void. 
(4) 
Each petition form must have printed on its back 
an affidavit to be executed by the circulator, stating: 
(a) 
That the circulator personally circulated the 
form; 
(b) 
The number of signatures on the form; 
(c> 
That all the signatures were signed in the 
circulator's presence; 
(d) 
That 
the 
circulator believes 
them 
to 
be 
genuine signatures of the persons whose names they 
purport to be; 
(e) 
That each signer has signed no more than one 
petition; and 
(f) 
That each signer had an opportunity to read 
the petition before signing. 
C. Petition forms under this subsection must be assembled as 
one instrument and filed at one time with the clerk of the 
municipal service district. The clerk shall note the date of 
filing on the forms. 
D. 
Within 20 days after the petition is filed pursuant to 
paragraph C, 
the clerk of the municipal service district 
shall 
complete 
a 
certificate 
as 
to 
its 
sufficiency, 
specifying, if it is insufficient, 
the particulars that 
render it defective. The clerk shall promptly send a copy of 
the certificate to the petitioners' committee by mail and 
shall file 
a 
copy with 
the 
municipal 
service district 
officers. 
The 
clerk 
of 
each participating municipality 
shall cooperate as necessary to assist the clerk of the 
municipal service district in completing the certificate 
required under this subsection. 
E. 
A petition certified insufficient under paragraph D for 
lack of the required number of valid signatures may be 
amended once if the petitioners' committee files a notice of 
intention to 
amend the petition with the clerk of 
the 
municipal service district within 2 days after receiving the 
copy of the clerk's certificate. 
The procedure regarding 
submission and review of 
a 
supplementary petition is as 
follows. 
( 1) 
Within 10 days after the notice of intention is 
filed, the committee may file a supplementary petition 
to correct the 
deficiencies 
in the original. 
This 
supplementary 
petition, 
in 
form 
and 
content, 
must 
comply with the requirements for an original petition 
under paragraphs A to C. 
(2) 
Within 5 days after a supplementary petition is 
filed, the clerk shall complete and file a certificate 
as to its sufficiency in the manner provided for an 
original petition under paragraph D. 
(3) 
When an original or supplementary petition has 
been certified insufficient under 
paragraph 
0, 
the 
committee, within 2 days after receiving the copy of 
the clerk's certificate, may file a request with the 
municipal service district officers for review. 
The 
municipal service district officers shall inspect the 
petitions in substantially the same form, 
manner and 
time as 
a 
recount hearing under section 253l-A and 
shall make 
due certificate of that inspection. 
The 
municipal service district officers shall file a copy 
of that certificate with the clerk and mail a copy to 
the committee. The certificate of the municipal service 
district officers is 
a 
final 
determination of 
the 
sufficiency of the petitions. 
(4) 
Any petition finally determined to be insufficient 
is void. The clerk shall stamp the petition void and 
seal and retain it in the manner required for secret 
ballots. 
4. Election procedure. 
Within 30 days after the adoption of 
an order under subsection 1 or the receipt of a certificate or 
final determination of sufficiency under subsection 3, the clerk 
of the municipal 
service district shall promptly notify the 
municipal 
of~icers of each participating municipality, who shall 
by order submit the question for the establishment of a charter 
commission pursuant to this section to the voters at the next 
regular or special municipal election held at least 90 days after 
the order. 
5. 
Ballot question. 
The question for the establishment of 
a charter commission pursuant to this section to be submitted to 
the 
voters 
in 
each 
participating 
municipality 
must 
be 
in 
substance as follows: 
"Shall a charter commission be established for the purpose 
of revising the municipal service district charter of (name 
of 
municipal 
service 
district), 
in 
which 
(name 
of 
municipality) is a participating municipality?" 
6. 
Adoption by majority vote. 
Upon approval of a majority 
of those voting in the municipal service district, the charter 
revision commission is established. 
7. 
Charter cODlllission o.peration. 
The charter commission 
shall conduct itself in accordance with section 2103, subsections 
2, 3, 5 and 8. 
§2114. 
Charter amendment: procedure 
1. 
Municipal 
service district officers. 
The 
municipal 
service district officers may determine that amendments to the 
municipal service district charter should be considered and, by 
order, provide for notice and hearing on them in the same manner 
as provided in subsection 5, paragraph A. 
Within 7 days after 
the hearing, the municipal service district officers may order 
the proposed amendment to be placed on the ballot at the next 
regular municipal election in each participating municipality 
held at least 30 days after the order is passed; or they may 
order a special election to be held at least 30 days from the 
date of the order for the purpose of voting on the proposed 
amendments. 
A. 
Each amendment must be limited to a single subject, but 
more than one section of the charter may be amended as long 
as it is germane to that subject. 
B. 
Alternative 
statements 
of 
a 
single 
amendment 
are 
prohibited. 
2. 
Petition by voters. 
On the written petition of a number 
of voters equal to at least 20ll(, of the number of votes cast in 
the 
participating 
municipalities 
as 
a 
whole 
at 
the 
last 
gubernatorial 
election, 
but 
in 
no 
case 
less 
than 
200, 
the 
municipal service district officers, by order, shall provide that 
proposed amendments to the municipal service district charter be 
placed on a ballot in accordance with paragraphs A and B. 
A. 
Each amendment must be limited to a single subject, but 
more than one section of the charter may be amended as long 
as it is germane to that subject. 
B. 
Alternative 
statements 
of 
a 
single 
amendment 
are 
prohibited. 
3. 
Petition procedure. 
The petition forms must carry the 
following legend in bold lettering at the top of the face of each 
form. 
"(Name of municipal service district)" 
"Each of the undersigned voters respectfully requests the 
municipal service district officers to provide for the amendment 
of the municipal service district: charter as set out below." 
No more than one subject may be included in a petition. 
In all 
other 
respects, 
the 
form, 
content 
and 
procedures 
governing 
amendment petitions must be the same as provided for charter 
revision petitions 
under 
section 
2113, 
including 
procedures 
relating to filing, sufficiency and amendments, 
4. 
Amendment constituting revision. 
At the request of the 
petitioners' committee, the petition form must also contain the 
following language: 
"Each of the undersigned voters further requests that if the 
municipal service district officers determine that the amendment 
set out below would, if adopted, constitute a revision of the 
charter, then this petition must be treated as a request for a 
charter commission," 
Upon 
receipt 
of 
a 
petition 
containing 
this 
language, 
the 
municipal service district officers, if they determine with the 
advice 
of 
an 
attorney 
that 
the 
proposed 
amendment 
would 
constitute a revision of the charter, shall treat the petition as 
a 
request for 
a 
charter commission and follow the procedures 
applicable to such a request, 
5. 
Action on petition. 
The following procedures must be 
followed upon receipt of a petition certified to be sufficient, 
A. 
Within 10 days after a petition is determined to be 
sufficient, 
the municipal 
service district officers, 
by 
order, shall provide for a public hearing on the proposed 
amendmen.t. At least 7 days before the hearing, they shall 
publish 
a 
notice of the hearing in 
a 
newspaper 
having 
general circulation in each participating municipality. The 
notice must contain the text of the proposed amendment and a 
brief explanation, 
The hearing must be conducted by the 
municipal service district officers or a committee appointed 
by them, 
B. 
Within 7 days after the public hearing, the municipal 
service district officers or the committee appointed by them 
shall file with the municipal service district clerk 
a 
report containing the final draft of the proposed amendment 
and a written opinion by an attorney admitted to the bar of 
this State that the proposed amendment does not contain any 
provision prohibited by the general laws, the United States 
Constitution or the Constitution of Maine. In the case of a 
committee 
report, 
a 
copy 
must 
also 
be 
filed with 
the 
municipal service district officers, 
C. 
On all petitions filed more than 
of 
the 
current 
municipal 
year, 
days before the end 
the 
municipal 
service 
district officers shall order the proposed amendment to be 
submitted to the voters at the next regular or special 
municipal election in each participating municipality held 
within that year after the final report is filed. If no such 
election will be held in a participating municipality before 
the end of the current municipal year, the municipal service 
district officers shall order a special election to be held 
before the end of the current and pertinent municipal year 
for 
the 
purpose 
of 
voting 
on 
the 
proposed 
amendment. 
Unrelated charter amendments must be submitted to the voters 
as separate questions. 
6. 
Summa~ of 
amendment. 
When 
the 
municipal 
service 
district officers determine that it is not practical to print the 
proposed amendment on the ballot and that a 
summary would not 
misrepresent the subject matter of the proposed amendment, 
the 
municipal service district officers shall include in their order 
a 
summary of the proposed amendment, 
prepared subject to the 
requirements of section 2115, subsection 3, and instruction to 
the municipal service district clerk to include the summary on 
the ballot instead of the text of the proposed amendment. 
§2115. 
Submission to voters 
The method of voting at municipal elections, when a question 
relating 
to 
a 
municipal 
service 
district 
charter 
revision, 
charter modification or charter amendment is involved, must be in 
the manner prescribed for municipal elections under sections 2528 
to 2532, even if the municipality has not accepted the provisions 
of section 2528. 
1. 
Charter revision. 
Except as provided in paragraph A, in 
the case of 
a 
charter 
reV1S1on 
or 
a 
charter adoption, 
the 
question to be submitted to the voters must be in substance as 
follows: 
"Shall 
the 
municipality 
approve 
the 
charter 
revision 
recommended by the charter commission?" 
A. 
If the charter commission recommends that the present 
charter continue in force with only minor modifications, 
those modifications may be submitted to the voters in as 
many separate questions as the commission finds practicable. 
The determination to submit the charter revision in separate 
questions under this paragraph and the number and content of 
these questions must be made by a majority of the charter 
commission, 
If the charter commission decides to submit the 
charter revision in separate questions under this paragraph, 
each question to be submitted to the voters must be in 
substance as follows: 
Page ll-LR2l65(1) 
"Shall the municipality approve the charter modification 
recommended 
by 
the 
charter 
commission 
and 
reprinted 
(summarized) below?" 
2. Charter amendment. 
In the case of a charter amendment 
the question to be submitted to the voters must be in substance 
as follows; 
"Shall 
the 
municipality 
approve 
the 
charter 
amendment 
reprinted (summarized) below?" 
3. 
Voter information. 
Reports must be made available and 
summaries prepared and made available in substantially the same 
form, manner and time as provided in section 2105, subsection 3. 
4. 
Effectiye date. 
If a majority of the ballots cast in 
the municipal service district on any question under subsection 1 
or 
favors 
acceptance, 
the 
charter 
rev~s~on, 
charter 
modification or charter amendment becomes effective as provided 
in this subsection, provided the total number of votes cast for 
and against the question equals or exceeds 3Q~ of the total votes 
cast in the participating municipalities as a whole at the last 
gubernatorial election. 
A. 
Except 
as 
provided 
in 
subparagraph 
(I) , 
charter 
revisions or charter modifications adopted by the voters 
take 
effect 
on 
the 
first 
day 
of 
the 
next 
succeeding 
municipa) year. 
(I) 
Charter revisions or charter modifications take 
effect immediately for the purpose of conducting any 
elections required by the new provisions. 
B. 
Charter amendments adopted by the voters take effect on 
the 
date 
determined 
by 
the 
municipal 
service district 
officers, but not later than the first day of the next 
municipal year. 
§2116. 
Recording 
Within 3 days after the results of an election under section 
2115 have been declared, the municipal service district clerk 
shall prepare and sign identical certificates setting forth any 
charter that has been revised and any charter modification or 
amendment approved. 
The clerk shall send one certificate to each 
Qf the following: 
1. 
Secretary of State. 
The office of the Secretary of 
State, to be recorded: 
2. 
Law library. 
The Law and Legislative Reference Library; 
3. 
Clerks' offices. 
The offices of the municipal service 
district and the clerk of each participating municipality in the 
municipal service district. 
§2117. 
Scope of powers and duties 
Except as otherwise provided by this chapter I 
the scope of 
the powers and duties of a municipal service district established 
pursuant 
to 
this 
chapter 
are 
no 
greater 
than 
those 
of 
a 
municipality. 
§2118. 
Powers 
In 
addition 
to 
any 
powers 
expressly 
conferred 
by 
its 
charter I 
a municipal service district created pursuant to this 
chapter has the powers set forth in this section. 
1. 
Co~rate powers. 
A municipal service district may: 
A. 
Contract and be contracted with, sue and be sued and 
institute, prosecute. 
maintain and defend 
any 
action or 
proceeding in any court of competent jurisdiction; and 
B. 
Provide for the authentication, execution and delivery 
of 
deeds. 
contracts, 
grants 
and 
releases 
of 
municipal 
service district property and for the issuance of evidences 
of indebtedness of the municipal service district. 
2. 
Finances. 
A municipal service district may: 
A. 
Regulate the method of borrowing money for any purpose 
for which taxes may be levied and borrow on the faith and 
credit of the municipal service district for such general or 
special purposes and to such extent as is authorized by 
general statute; 
B. 
Provide for the temporary borrowing of money; 
C. 
Create a sinking fund or funds or a trust fund or funds 
or other special funds, including funds that do not lapse at 
the end of the municipal service district's fiscal year; 
D. 
Provide for the assignment of municipal tax liens on 
real property to the extent authorized by general statute; 
E. 
When not specifically prescribed by general statute or 
by charter I 
prescribe the form of proceedings and mode of 
assessing benefits and appra~s~ng damages in taking land for 
public use or in making public improvements to be paid for, 
in whole or in part. by special assessments and prescribe 
the manner in which all benefits assessed are collected: and 
F. 
Provide for the bonding of municipal service district 
officials or employees by reguiring the furnishing of such 
bond, conditioned u,pon honesty or faithfu,l performance of 
duty and determine the amou,nt. form and su,fficiency of the 
sureties thereof. 
3. 
Property. 
A mu,nicipal service district may: 
A. 
Take or acgu,ire by gift, purchase, grant, inclu,ding any 
grant from the United States or the State, bequ,est or devise 
and hold, 
condemn, lease, selL manage, transfer, release 
and 
convey 
su,ch real 
and personal property or interest 
therein absolutely or in trust as 
the purposes of 
the 
municipal service district or any public use or purpose 
require. 
Any 
lease of real or personal property or any 
interest in a lease of real or personal property, either as 
lessee or lessor, may be for such term or any extensions 
thereof and upon su,ch other terms and conditions as have 
been approved by the mu,nicipal service district. inclu,ding 
without 
limitation 
the 
power 
to 
obligate 
itself 
to 
appropriate 
funds 
as 
necessary to 
meet 
rent 
and other 
obligations as provided in any such lease: and 
-
B. 
Provide for the proper administration of gifts, grants, 
bequests and devises and meet such terms or conditions as 
are prescribed by the grantor or donor and accepted by the 
municipal service district. 
4. 
Development districts. 
A municipal service district may 
establish development districts, including bu,t not limited to 
state 
tax 
increment 
financing 
districts 
in 
accordance 
with 
chapter 206, su,bchapter 2. 
5. 
Other. 
A municipal service district may: 
A. 
Adopt rules, regulations and procedures not inconsistent 
with state law necessary to carry out its powers and duties 
under 
this 
chapter 
and its charter, 
including but 
not 
limited to rules, regulations and procedures necessary to 
resolve conflicts in ordinances or other rules or enactments 
of one or more participating municipalities: and 
B. 
Assume such other powers and duties of municipalities 
that, by agreement and revision of the charter as necessary, 
Page l4-LR2l65(1) 
participating municipalities may from time to time delegate 
to it. 
§2119. 
Duties 
In 
addition 
to 
any 
duties 
expressly 
conferred 
by 
its 
charter, a municipal service district created pursuant to this 
chapter has the duties set forth in this section. 
1. 
Establishment of budget. 
A municipal service district 
shall establish and maintain a budget system and has the duty and 
sole authority to adopt a single budget for the municipal service 
district, 
its 
school 
department 
and 
the 
participating 
municipalities. 
The municipal officers of each participating 
municipality shall provide to the municipal 
service district 
officers, at least 90 days prior to the beginning of the fiscal 
year, its proposed budget requirements. 
The school board of 
directors shall also provide to the municipal service district 
officers, at least 90 days prior to the beginning of the fiscal 
year, the proposed budget requirements of the municipal service 
district's school department. 
2. 
Taxation; 
standardization and uniform rate required. 
Notwi thstanding Title 36. Part 2, a municipal service district 
constitutes 
a 
mUlti-municipal 
primary 
assessing district 
as 
though established by the State Tax Assessor pursuant to Title 
36, chapter 102. subchapter 1 and must otherwise be treated for 
property tax purposes as though it is a single municipality. 
Notwithstanding Title 36, Part 2, the municipal service district 
officers have the authority and responsibility provided in Title 
36, Part 2 to municipal officers, assessors or tax collectors 
relative to the administration of the property tax wi thin the 
jurisdictional limits of. the municipal service district. 
Within 
years from the creation of a municipal service district. the 
property tax and fiscal years of the participating municipalities 
must be standardized and the municipal service district officers 
shall perform a revaluation of all taxable property located in 
the municipal service district consistent with the requirements 
of Title 36, Part 2. 
After the revaluation, a uniform tax rate 
must then apply against all taxable property located in the 
municipal service district. 
Until such standard valuation basis 
applies, 
the municipal service district officers shall assess 
against each participating municipality's local assessment rolls 
that municipality's share of expenses to be raised through the 
local property tax, determined by adjusting the total municipal 
taxable property valuations to 100
0/0 
of just value using each 
municipality's certified assessment ratio. 
3. 
Education. 
A municipal service district. through its 
school board of directors. has all the powers conferred and shall 
perform all the duties imposed by law upon superintending school 
boards in regard to the care, operation and management of the 
public schools within the municipal school district. 
Schools 
operated by the municipal service district are the official 
schools of the participating municipalities, in accordance with 
section 2120. 
4. 
Severs 
and 
drains. 
Within 
the 
participating 
municipalities of the municipal service district, the municipal 
service district has all the powers conferred and shall perform 
all the duties imposed by law on municipalities with respect to: 
A. 
Laying 
out, 
constructing, 
reconstructing, 
repairing, 
maintaining, 
operating, 
altering, 
extending 
and 
discontinuing 
sewer 
and 
drainage 
systems 
and wastewater 
treatment plants; and 
B. 
Prohibiting and regulating the discharge of drains from 
roofs of buildings over or upon the sidewalks, streets or 
other public places or into sanitary sewers. 
The 
municipal 
service district officers 
may, 
by 
agreement, 
delegate the authority over sewers and drains to a participating 
municipality. 
5. 
Planning and regulation of development. 
Within the 
participating municipalities of the municipal service district, 
the municipa~ service district has all the powers conferred and 
shall perform all the duties imposed by law on municipalities 
wi th respect to preparing comprehensive plans and preparing and 
enforcing zoning, subdivision and other ordinances and capital 
improvement 
plans 
to 
implement 
the 
comprehensive 
plan, 
as 
prescribed by and consistent with chapter 187. 
6. 
Buildings. 
Within the participating municipalities of 
the municipal service district, the municipal service district 
has all the powers conferred and shall perform all the duties 
imposed by law on municipalities with respect to: 
A. 
Making rules relating to the maintenance of safe and 
sanitary housing and adopting building and fire protection 
codes, consistent with state law; 
B. 
Regulating the mode of using any buildings when such 
regulations seem expedient for the purpose of promoting the 
safety, 
health, 
morals 
and 
general 
welfare 
of 
the 
inhabitants of the municipa~ity; 
c. 
Regulating and providing for the permitting or licensing 
of manufactured housing, 
trailer parks, 
and mobile 
home 
parks, consistent with state law; and 
D. 
Regulating 
plumbing, 
sewage 
disposal 
systems 
and 
drainage systems, consistent with state law. 
7. 
Solid 
vaste 
management. 
Within 
the 
participating 
municipalities of the municipal service district. the municipal 
service district has all the powers conferred and shall perform 
all the duties imposed by law on municipalities with respect to 
providing 
for 
or 
regulating the 
collection 
and 
disposal 
of 
garbage, trash, rubbish, waste material and ashes by contract or 
otherwise. 
§2120. 
Merger and transfer of authority to school management 
units 
1. 
Certification: issuance, filing and recording. 
Wi thin 
days following establishment of a municipal service district 
pursuant 
to 
section 
2112, 
the 
clerk 
of 
each 
participating 
municipality that has voted to establish the municipal service 
district shall certify that, in accordance with section 2112, the 
participating municipality has agreed to delegate its rights and 
duties for the management and control of its public schools, 
including those within any former school administrative unit, 
including any school administrative district, to the municipal 
service district. to be exercised in accordance with a municipal 
service district charter consistent with section 2112, subsection 
and otherwise in accordance with this chapter. 
Within 14 days 
of 
receipt 
of 
this 
certification 
from 
each 
participating 
municipality, 
the state board shall 
issue 
to 
the 
municipal 
service district officers 
a 
certificate of 
organization 
and 
assign a number to the school management unit in the order of its 
formation. The official title of each such school management unit 
is 
"School 
Management 
Unit 
No. 
The 
municipal 
service 
district officers shall deliver the original certificate to the 
school board of directors on the day that the school management 
unit organizes and shall file a copy, attested by the secretary 
of the state board, for recording in the office of the Secretary 
of State. 
The issuance of the certificate is conclusive evidence 
of the lawful organization of the school management unit. 
2. 
Transfer of assets. 
The transfer of school property and 
assets of a participating municipality and school administrative 
unit is 
as 
follows. 
The 
school 
board 
of 
directors 
shall 
determine 
what 
school 
property 
of 
the 
participating 
municipalities and pertinent school administrative unit or units 
is necessary to carry out the functions of the school management 
unit and: 
A. 
Reguest in writing that the school board of each school 
administrative unit or the municipal officers transfer title 
of 
their 
school 
property 
and 
buildings 
to 
the 
school 
management unit; or 
B. 
Assume 
all 
the 
duties 
and 
liabilities 
under 
any 
outstanding lease agreements. 
The 
school 
board 
or 
municipal 
officers 
of 
a 
participating 
municipality shall make the transfer notwithstanding any other 
prov1S10n in the charter of the school administrative district or 
participating municipality or other provision of law. 
3. Financing assumed debts. 
If a school management unit has 
assumed 
the 
outstanding 
indebtedness 
of 
a 
former 
school 
administrative unit; 
A. 
The school board of directors may, notwithstanding any 
other statute or any provision of any trust agreement. use 
any sinking fund or other money set aside by the school 
administrative unit to payoff the indebtedness for which 
the money was dedicated; and 
B. 
A municipality within a proposed school management unit 
may, by a majority vote of its voters, transfer money raised 
and 
appropriated 
for 
school 
construction purposes 
to 
a 
proposed school management unit if and when the unit takes 
over 
the 
operation 
of 
the 
public 
schools 
within 
its 
jurisdiction. 
The 
municipality 
may 
withdraw 
this 
appropriation only if; 
(1) 
The municipal service district is not established 
pursuant to section 2112; or 
(2) 
Nine months or more after the original vote, and 
prior to establishment of the school management unit, 
the electorate of the municipality by a majority vote 
of its voters votes to withdraw the appropriation. 
4. 
Transfer 
of 
authority. 
The 
operational 
date 
and 
transfer of authority of a school management unit is as fOllows. 
A. 
A school management unit becomes operative on the later 
of: 
(1) 
The date that the state board issues certification 
under subsection 1; and 
(2) 
The date that the state board receives from the 
clerk of the municipal service district the names of 
the members of the school board of directors. 
B. 
On the date a school management unit becomes operative 
under paragraph A, 
the 
school board of directors shall 
assume responsibility for the management and control of the 
public schools within the former school administrative units 
wi thin the school management unit and these former school 
administrative 
units 
on 
that 
date 
have 
no 
further 
responsibility for the operation or control of the public 
schools within the district. 
c. 
Notwithstanding Title 20-A, section 15004 or any charter 
of a community school district or coterminous district, the 
balances remaining in the school accounts of the school 
administrative districts, municipalities, 
community school 
districts, 
coterminous 
school districts or other 
school 
administrative units within the school management unit must 
be paid to the treasurer of the school management uni t in 
equal monthly installments over the remainder of the fiscal 
year in which the district is formed. 
D. 
The 
contracts between the municipalities within the 
school management unit and all teachers automatically are 
assigned to the district as of the date the district becomes 
operative 
under 
paragraph 
A. 
The 
district shall 
assign 
teachers 
to 
their duties 
and 
make 
payments 
upon 
their 
contracts. 
E. 
The 
contracts 
between 
the 
superintendents 
and 
municipalities within the school management unit must be 
transferred to the school management unit. 
The school board 
of directors of the school management unit shall determine 
the superintendents' duties within the district and pay that 
proportion of the salaries paid for by the former school 
administrative units in the district. 
5. 
Application of general 
la~. 
Schools 
operated by 
a 
legally established school 
management 
unit 
are 
the official 
schools of the participating municipalities. The provisions of 
general law relating to public education apply to these schools. 
State funds for public schools must be paid directly to the 
municipal 
service 
district 
for 
the 
benefit 
of 
the 
school 
management unit. 
§2121. 
Addition of municipality ,to municipal service 
district 
1. 
Addition of Participating mUD; cipality. 
In the manner 
provided for by section 2113, either the municipal officers of or 
voters in a participating municipality may petition for and, by 
majority 
vote 
in 
the 
affirmative 
in 
each 
participating 
municipality, the voters within the municipal service district 
may approve a revision of the charter of a municipal service 
district to include that municipality. 
2. 
Rights 
and 
obligations 
of 
new 
participating 
municipality; 
charter revision. 
A participating municipality 
that, 
as provided in subsection 1, 
is added to an existing 
municipal service district has and assumes in common with other 
participating municipalities all rights and obligations of those 
municipalities 
under 
and 
related 
to 
the 
municipal 
service 
district charter, including but not limited to its pro rata share 
of any debt obligations. 
3. 
Cost of petition process. 
The costs and expenses of the 
petition 
process 
to 
add 
a 
participating 
municipality 
in 
accordance with subsection 1, 
as determined by the municipal 
service district officers, must be borne by the participating 
municipality that initiated the petition if the voters within the 
municipal service distr ict do not approve its inclusion within 
the municipal service district. 
If those voters do approve the 
municipality's inclusion, the municipal service district shall 
bear these costs and expenses. 
4. 
RE:9ional 
service 
centers-
If 
a 
municipality 
or 
municipalities that constitute 
a 
regional service center are 
unable to join a municipal service district as a result of a vote 
conducted pursuant to subsection 1 or the unwillingness of other 
municipalities to enter into a municipal service district with 
that regional service center, as determined and qualified 
by the 
Executive Department, State Planning Office in accordance with a 
rule adopted pursuant to Title 5, chapter 375, a regional service 
center 
may 
by itself form 
a 
municipal service district. 
A 
regional service center that establishes 
a 
municipal 
service 
district 
pursuant 
to 
this 
subsection 
has 
the 
rights 
and 
obligations of a municipal service district provided by law, 
including but not limited to those provided by this chapter and 
chapter 
l12-A. 
Rules 
adopted 
by 
the 
State 
Planning Office 
pursuant to this subsection must identify information that a 
regional service center must provide to demonstrate eligibility 
to 
form 
a 
municipal service district and any additional and 
related 
criteria 
or 
procedures 
related 
to 
formation 
of 
a 
municipal service district under the circumstances provided for 
by this subsection. 
For purposes of this subsection, "regional 
service center" means a service center community as defined by 
section 4301. 
Rules adopted pursuant to this subsection are 
routine technical rules as defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
§2122. 
Withdrawal of municipality from municipal service 
district 
1. 
Withdrawal of single participating municipality. 
The 
municipal officers of or voters in a participating municipality 
may l?etition for withdrawal from the municipal service district 
in the manner provided for petition for the dissolution of a 
municil?al service district l?ursuant to section 2123, excel?t that: 
A. 
The l?eti tion required under section 2123, subsection 1 
must be signed by 
20% 
of the 
number of voters in the 
municil?ality seeking to withdraw who 
voted at the last 
gubernatorial election; 
B. 
The 
dissolution 
agreement 
must 
effect 
division 
of 
l?rol?erty, 
assets 
and 
liabilities 
and 
allocation 
of 
resl?onsibilities between the municil?ality l?etitioning for 
withdrawal and the municil?al service district; and 
C. 
Only 
a 
simple majority vote of those casting valid 
ballots in the municil?ality seeking to withdraw is required 
to effectuate withdrawal 
of 
that municil?ality 
from 
the 
municil?al service district. 
2. 
Re,p~nt to State. 
A l?articil?ating municil?ality that 
withdraws 
from 
a 
municipal 
service district as 
provided 
in 
subsection 1 shall repay to the Municipal Service District Fund 
established 
in 
chapter 
112-A 
an 
amount 
equal 
to 
that 
municipality's l?ro rata share of funds provided to the pertinent 
municil?al service district from the Municil?al Service District 
Fund during the 
time that the municipality was 
within that 
municipal service district. 
§2123. 
Dissolution of municipal service district 
1. 
Twenty percent petition. 
Upon receipt by municipal 
service district officers of a written petition that seeks to 
dissolve a municil?al service district and establishes a maximum 
figure for the cost of l?reparing a dissolution agreement signed 
by 20% of the number of voters in a municil?al service district as 
a whole who voted at the last gubernatorial election, with no 
more 
than 
half 
the 
required 
number 
registered 
in anyone 
l?articipating 
municipality, 
the 
municipal 
officers 
of 
each 
l?articipating 
municipality 
shall 
call 
and 
hold 
a 
special 
election, in the manner provided for the calling and holding of 
town meetings or city elections in each resl?ective municil?ality, 
to vote on the dissolution of the municipal service district. 
A. 
At least 10 
days before the election. 
a 
posted or 
otherwise advertised public hearing on the petition must be 
held 
by 
the 
municipal 
officers 
of 
each 
participating 
municipality. 
B. 
Voting in municipalities must be conducted in accordance 
with the governing ordinance and laws in each municipality. 
2. 
Form. 
The question for the dissolution of a municipal 
service district pursuant to this section to be voted upon must 
be in substantially the following form: 
"Is it resolved by the residents of (name of municipality) 
that a petition for dissolution be filed with the directors 
of 
the 
municipal 
service 
district 
in 
which 
(name 
of 
municipality) is a participating municipality and with the 
State Board of Education. that the dissolution committee be 
authorized to expend $ 
and that the municipal officers 
be 
authorized to issue notes in the 
name 
of 
(name 
of 
municipality) or otherwise pledge the credit of (name of 
municipality) in an amount not to exceed $ 
for this 
purpose?" 
3. 
Notice of vote; finding by Secretar.y of State. 
I f 
a 
majority of the voters present and voting in each participating 
municipality votes to approve a petition for dissolution. the 
clerk of eacp participating municipality shall immediately give 
written notices. by registered mail. 
to the municipal service 
district officers. the Secretary of State and the Commissioner of 
Education. 
The notices required by this subsection must include 
the petition adopted by the voters. including the positive and 
negative votes cast. 
4. 
Agreement for dissolution; notice; changes in agreement; 
final agreement. 
The agreement for dissolution must comply with 
the following. 
A. 
The 
municipal 
service 
district 
officers. 
after 
consultation 
with 
the 
municipal 
officers 
of 
the 
participating municipalities 
and 
representatives 
of 
the 
group that filed the petition under subsection 1 with the 
municipality. shall direct the municipal officers of each 
participating municipality to select as representatives to a 
committee: one member from the municipal officers of each 
participating municipality. 
one 
member 
from 
the general 
public and one member from the group filing the petition. 
Public officials may serve on the committee only as long as 
they hold their respective offices. Vacancies must be filled 
by the municipal officers and municipal service district 
officers. 
The 
chair 
of 
the 
municipal 
service 
district 
officers shall call a meeting of the committee within 30 
days of the filing of the notice of the vote in subsection 
3. The chair shall open the meeting by presiding over the 
election of a chair of the committee. The responsibility for 
the preparation of the agreement rests with the committee. 
The committee may draw upon the resources of the municipal 
service district for information not readily available at 
the local level and may employ competent advisors within the 
fiscal limit authorized by the voters. The agreement must be 
submitted to the municipal service district officers within 
days after the committee is formed. Extensions of time 
may be granted by the municipal service district officers at 
the request of the committee. 
B. 
The agreement must address the prov~s~on of educational 
services for all students in the school management unit and 
other related matters in accordance with Title 20-A, section 
1403, subsection 4. 
The agreement must provide that during 
the first year 
following 
the 
dissolution, 
students 
may 
attend the school they would have attended if the unit had 
not dissolved. The allowable tuition rate for students sent 
from 
one municipality 
to 
another 
in the 
former 
school 
management unit must be determined under Title 20-A, section 
5805, subsection L 
except that it is not subject to the 
state per pupil average limitation in Title 20-A, section 
5805, subsection 2. 
C. 
The 
agreement 
must 
contain 
any 
terms 
necessary 
to 
effectuate an equitable division of the property, including 
but not limited to that of the school management unit, among 
the 
participating 
municipalities 
represented 
by 
the 
committee and transfer title of the property to one or more 
municipalities following dissolution, except that the school 
management unit's educational program may not be disrupted 
solely because of the transfer of any given property before 
it may complete the transfer. 
D. 
The 
agreement 
must 
contain 
any 
terms 
necessary 
to 
allocate equitably among the participating municipalities 
all 
contractual 
obligations 
and 
other 
liabilities, 
as 
appropriate. 
E. 
The agreement must provide that the municipal service 
district remain intact for 
the purpose of securing and 
retiring 
any 
outstanding 
indebtedness, 
except 
that 
the 
dissolution agreement may provide for alternate means for 
retiring outstanding indeb'tedness. 
For purposes of this 
paragraph, the term "outstanding indebtedness" means bonds 
or notes issued by the municipal service district officers, 
including but not limited to those for school construction 
projects and obligations to the successor in interest to the 
former 
Maine 
School 
Building Authority pursuant 
to 
any 
contract, lease or agreement made by the school board of 
directors pursuant to approval thereof in a district meeting 
of the 
school 
management unit, 
as 
well 
as 
any general 
obligation indebtedness of any participating municipality 
assumed by the municipal service district. 
For purposes of 
this paragraph, the term "outstanding indebtedness" does not 
include any indebtedness of any municipality assumed by the 
school management unit at the time of its formation or any 
contract, lease or agreement of the successor in interest to 
the 
former 
Maine 
School Building Authority to which 
by 
operation of law the school management unit has become the 
assignee. 
F. 
The 
agreement 
must 
contain 
any 
additional 
terms 
necessary to effectuate dissolution of the municipal service 
district without undue disruption of services provided by 
the municipal service district to the public. 
G. 
Wi thin 60 days of the receipt of the agreement, 
the 
municipal 
service 
district 
officers 
shall 
review 
the 
agreement and may recommend changes. 
Changes recommended 
pursuant to this paragraph must be based upon the standards 
set forth in paragraphs B to F and the officers' findings on 
whether 
the 
agreement 
will 
provide 
for 
appropriate 
educatiQpal and other services to the public and for the 
orderly transition of assets, liabilities and governance and 
other matters related to the municipal service district. 
H. 
If the municipal service district officers recommend 
changes in the agreement, they shall notify the committee 
established pursuant to paragraph A by registered mail and 
schedule a meeting to discuss the recommended changes within 
days of the close of the 60-day period provided for by 
paragraph G. 
By majority vote, the committee may accept or 
reject the officers' recommendations. 
I. 
The municipal service district officers shall schedule a 
public 
hearing 
to 
discuss 
the 
merits 
of 
the 
proposed 
agreement of dissolution and shall provide notice to the 
clerk of each participating municipality at least 20 days 
prior to the date set for the hearing. The chair of the 
municipal 
service 
district 
officers 
shall 
conduct 
the 
hearing. 
(1) 
The municipal service district officers shall post 
a public notice in each participating municipality of 
the time and location of the hearing at least 10 days 
before the hearing. 
( 2) 
Within 
days 
following 
the 
hearing, 
the 
committee shall consider and may revise the agreement 
based on testimony provided at the hearing. 
5. 
Voting on dissolution agreement. 
Except as otherwise 
provided by this chapter, 
the timing, 
manner, 
procedures and 
other matters regarding voting on the dissolution of a municipal 
service district are those provided for by Title 20-A, section 
1403, except that the g;uestion submitted to the voters in each 
participating municipality must be in substantially the following 
form: 
"Shall the (municipal service district name), of which (name 
of 
municipality) 
is 
a 
participating 
municipality, 
be 
dissolved 
subject 
to 
the 
terms 
and 
conditions 
of 
the 
dissolution agreement dated 20 
?" 
6. 
Determination of vote. 
The clerk of each participating 
municipality, within 24 hours of determination of the result of 
the vote pursuant to subsection 
~n the clerk's respective 
municipality, shall certify to the municipal service district 
officers the total number of votes cast in the affirmative and 
the total number of votes cast in the negative on the g;uestion. 
If the certified results presented to the municipal 
service 
district officers indicate that a majority of the voters voting 
on the g;uestion voted in the affirmative, the municipal service 
district officers shall immediately take steps to dissolve the 
municipal service district in accordance with the terms of the 
agreement for dissolution and notify the Secretary of State and 
the state board of the dissolution. 
7. Ezecution of agreement: certified record: certificate of 
withdrawal. 
When the municipal service district officers have 
put the agreement for dissolution in effect. the officers shall 
notify the Secretary of State and the state board by certified 
mail that the agreement of dissolution has been executed. 
A. 
The municipal service district officers shall file a 
complete certified record of all transactions involved in 
the dissolution with the Secretary of State. 
B. 
On receipt of the record provided for by paragraph A, 
the Secretary of State shall immediately issue a certificate 
of dissolution to be sent QY certified mail for filing with 
the 
municipal 
service 
district officers, 
the 
municipal 
officers of each participating municipality and the state 
board. 
The Secretary of State shall also file a copy in the 
office of the Secretary of State. 
\ 
8. 
Dissolution of school management unit: general purpose 
aid. 
Dissolution of a 
municipal service district constitutes 
dissolution 
of 
its 
school 
management 
unit. 
When 
a 
school 
management unit dissolves, 
the general purpose aid for 
each 
participating municipality must be computed in accordance with 
Title 20-A, Part 7. 
9. 
Repa~nt to State. 
Upon dissolution as provided for by 
this section, 
a municipal service district shall repay to the 
Municipal Service District Fund established in chapter 112-A an 
amount egual to that received by that municipal service district 
from 
the 
Municipal 
Service 
District 
Fund 
prior 
to 
its 
dissolution. 
The municipal service district remains intact as 
provided 
in 
subsection 
4, 
paragraph 
E 
for 
the 
purpose 
of 
repayment to the Municipal Service District Fund. 
§2l24. 
Public hearings 
A 
participating 
municipality 
shall 
conduct 
any 
public 
hearing or meeting provided for by this chapter in accordance 
with the rules and ordinances of that participating municipality 
regarding conduct of public hearings or meetings. 
§2l25. 
Judicial review 
~ 
The Superior Court may enforce this chapter in the manner 
provided for by section 2108, except voters' rights and duties 
regarding peti tion for declaratory judgment and judicial review 
provided for by section 2108 may be exercised upon petition of 
either: 
1. 
Ten voters from each participating municipality. 
Ten 
voters 
from 
each participating municipality in the municipal 
service district; or 
2. 
One hundred voters of district. 
One hundred voters that 
reside in anyone or more municipalities in the municipal service 
district. 
§2l26. 
Construction 
This chapter must be liberally construed to accomplish its 
purposes. 
PARTB 
Sec. B-1. 20-A MRSA c. 613 is enacted to read: 
CllAPTER613 
STATE EDUCATION COST CONTROL ASSISTANCE 
§1720l. 
Legislative findings 
The 
Legislature 
finds 
that 
municipalities 
that 
form 
municipal 
service districts 
and 
school 
management 
units 
in 
accordance with Title 
30-A, 
chapter 112 
may 
capture savings 
through 
the 
creation 
of 
efficiencies 
in 
delivering 
public-school-related services and reduce local property taxes 
correspondingly. 
The Legislature further finds that provision of 
bonus funding to municipal service districts in accordance with 
this chapter as general purpose aid for local schools may serve 
as an additional incentive to encourage municipalities to form 
municipal service districts and is in the general public interest. 
§17202. 
Definitions 
As 
used 
in this chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Municipal 
service 
district. 
"Municipal 
service 
district" has the same meaning as in Title 30-A, section 2111. 
2. 
Municipality. 
"Municipality" has the same meaning as in 
Title 30-A, section 2001, subsection 8 or means a plantation. 
§17203. 
Municipal service district bonus 
In addition to 
any other 
funding 
to which 
a 
municipal 
service district is entitled, a municipal service district is 
entitled to an annual 10% bonus in general purpose aid for local 
schools. 
1. 
Funding source: calculation. 
The 
10% bonus provided 
under this section must be paid from and transferred to municipal 
service districts 
from 
the 
Municipal 
Service 
District 
Fund 
established in Title 30-A, chapter 112-A. 
The annual bonus for 
municipal service districts provided under this section must be 
calculated as 10% of the total general purpose aid for local 
schools to which each participating municipality in a municipal 
service district is entitled. 
2. Duration. 
A municipal service district is entitled to 
the annual 10% bonus in general purpose aid for local schools 
provided under this section for 5 consecutive years beginning in 
the year 
following 
the year 
in which the municipal 
service 
district is formed. 
Sec. B·2. 30·A MRSA §709 is enacted to read: 
§709. 
State assumption of participating municipalities' county 
tax obligation 
1. 
Annual 
reimbursement. 
The 
State 
shall 
annually 
reimburse a municipal service district formed under chapter 112 
for that share of any tax apportioned pursuant to section 706 to 
participating municipalities that comprise the municipal service 
district for 
the net cost of 
supporting district attorneys' 
services, 
court rents and services, jails, and registries of 
probate and deeds that have been paid by the municipal service 
district on their behalf. 
2. 
Duration. 
The obligation to make annual reimbursements 
to a municipal service district begins in the year following the 
year in which a municipality forms a municipal service district. 
The reimbursement provided under this section must be paid from 
and transferred to municipal service districts from the Municipal 
Service District Fund established in chapter 112-A. 
Sec. B·3. 30·A MRSA c.112·A is enacted to read: 
CHAPTER 112-A 
MUNICIPAL SERVICE DISTRICT FUND 
§2141. 
Municipal Service District Fund 
1. 
Establishment. 
The Municipal Service District Fund, 
referred to in this chapter as "the fund," is established as a 
dedicated, 
special 
revenue 
account 
to 
provide 
a 
financial 
incentive 
for 
municipalities 
to 
voluntarily 
form 
municipal 
service districts in accordance with chapter 112 to capture cost 
savings attributable to operations of local government and school 
systems 
that 
are 
assumed 
by 
municipal 
service districts 
as 
defined in section 2111. 
The Treasurer of State shall administer 
the fund. 
2. 
Transfers 
to 
the 
fund. 
For 
consecutive 
years, 
beginning in or after fiscal year 2004-05, the Treasurer of State 
shall transfer to the fund from the General Fund an amount egual 
to, and in addition to, the sum of that due to each participating 
municipality in each municipal service district created pursuant 
to 
chapter 
notified 
of 
eligibility in 
accordance 
with 
subsection 3, pursuant to Title 36, section 661, subsection 4, as 
a conseguence of Title 36, section 662. 
The Treasurer of State 
shall make this transfer concurrently with the transfers under 
Title 36, 
section 661. 
subsection 4. 
The fund must be held 
separate and apart from all other money, 
funds 
and accounts. 
Eligible investment earnings credited to the assets of the fund 
become part of the assets of that fund. 
Any balance remaining in 
the fund at the end of any fiscal year must be carried forward to 
the next fiscal year. 
3. 
Fund 
availability 
and 
eligibility. 
The 
fund 
is 
available solely to municipal service districts, as defined in 
section 2111. subsection 2, that are established in accordance 
wi th chapter 112 on or before January 1. 2009. 
To be eligible 
for disbursements from the fund, 
a municipal service district 
must certify to the Treasurer of State, in a manner acceptable to 
the Treasurer of State, its lawful formation and existence under 
chapter 112 in the year for which funds are sought. 
On receipt 
of this certification, the Treasurer of State shall notify the 
municipal service district of its eligibility for disbursement 
from the fund for the purposes identified in subsection 4. 
4. 
Uses of fund. 
The fund may only be used to address 
state financial obligations under sections 709 and 5686 and Title 
20-A, section 17203. 
Sec. B-4. 30-A MRSA §5686 is enacted to read: 
§5686. 
Municipal debt assumption 
1. 
Definitions. 
As 
used 
in this 
section, 
unless 
the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"Municipal service district" has the same meaning as in 
section 2111. 
B. 
"Consolidating 
municipality" 
means 
a 
participating 
municipality that is within a municipal service district 
formed in accordance with chapter 112 on or before January 
1. 2009. 
2. 
State assumption of certain general obligation debts. 
In accordance with this section, the State shall assume 50% of 
the 
qualifying general 
obligation 
debts 
of 
a 
consolidating 
municipality. 
The State shall pay its obligations incurred under 
this section from the Municipal Service District Fund established 
in chapter l12-A. 
3. 
Oualifying general Obligation debts. 
The 
qual i fying 
general obligation debts that the State assumes in accordance 
with 
subsection 
are 
all 
general 
obligation 
debts 
of 
a 
consolidating municipality, including but not limited to general 
obligation debts of any school administrative unit that served 
the 
consolidating municipality prior 
to its formation of 
a 
municipal service district, that: 
A. 
Were incurred prior to June 30, 2003: and 
B. 
Must be paid using property tax revenue, as opposed to 
user fees, state grants, loans or revenues other than those 
provided pursuant to this section, or other federal, state 
or local revenue sources other than property tax. 
Sec. B-5. Legislative implementation. 
No later than March 1, 
2004, 
the Joint Standing Committee on Taxation and the Joint 
Standing Committee on Appropriations and Financial Affairs shall 
review and may report out legislation in accordance with the 
intentions 
of 
and 
not 
inconsistent with this 
Resolution 
to 
further clarify and govern the design, implementation, management 
and oversight of the financial incentives for the formation of 
municipal service districts provided by education cost control 
assistance under the Maine Revised Statutes, Title 20-A, chapter 
613, state assumption of county tax obligations under Title 30-A, 
section 709, 
the municipal debt assumption under Title 30-A, 
section 5686 and the Municipal Service District Fund established 
in Title 
30-A, 
chapter 
112-A, 
including but not limited to 
provisions regarding transfers to and from the Municipal Service 
District Fund from the General Fund to effectuate the purposes 
and intent of this Resolution. 
No later than March 1, 2004, the 
Joint Standing Committee on State and Local Government shall 
review the State's statutes regarding the rights, duties and 
obligations of municipalities, 
including those 
laws 
in Title 
30-A, and develop and report out legislation to amend those laws, 
as 
necessary, 
in accordance with the intentions of 
and not 
inconsistent with the purposes and intents of this Resolution. 
PARTC 
Sec. C-l. 36 MRSA §661, sub-§4-A is enacted to read: 
4-A. 
Payment to municipal service district municipalities. 
A municipality that receives payment pursuant to subsection 4 
that is a member of a municipal service district, as established 
by Title 30-A, chapter 112, shall pay that same amount to the 
Treasurer of State. 
Sec. C-2. 36 MRSA §661, sub-§6 is enacted to read: 
6. 
Municipal service districts. 
Notwithstanding any other 
provision of law, 
a municipal service district established in 
accordance with Title 30-A, chapter 112 has all the rights and 
obligations of the municipalities within the municipal service 
district under the Constitution of Maine, Article IV, Part Third, 
Section 23 and this section. 
The Treasurer of State shall pay to 
each municipal service district 50% of the property tax revenue 
loss in each of the municipalities within the municipal service 
district, 
as 
determined in accordance with this section, 
by 
December 15th of the year following the year in which property 
tax revenue was lost. 
Sec. C-3. 36 MRSA §662 is enacted to read: 
§662. 
Business egyipment 
1. 
Eligible business egyipment exempt. 
Eligible business 
equipment is exempt from all taxation under this Part. except 
chapters 111 and 112. 
2. 
Definitions. 
As 
used 
in this 
section, 
unless 
the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"BETR-expired property" means property that was eligible 
for property tax reimbursement under chapter 915, but is no 
longer eligible for such reimbursement due to the fact that 
reimbursements have been made for the entire length of time 
for which reimbursements were allowed under section 6652, 
subsection 1. 
B. 
"Eligible 
business 
equipment" 
means 
BETR-expired 
property 
and 
qualified 
business 
property 
that, 
in 
the 
absence of this section, would first be subject to taxation 
under this Part after April 1, 
2003. 
"Eligible business 
equipment" 
includes, 
without 
limitation, 
repair 
parts, 
replacement parts, additions, accessions and accessories to 
other qualified business property that first became taxable 
under this Part on or before April 1, 
2003 if the part, 
addition, accession or accessory would, in the absence of 
this section, first be subject to taxation under this Part 
after April 1, 
2003. 
"Eligible business equipment" also 
includes inventory parts for qualified business property 
that, in the absence of this section, would first be subject 
to taxation under this Part after April 1, 2003. 
"Eligible business equipment" does not include: 
(1) 
Office furniture( 
including, without limitation, 
tables, chairs, desks, bookcases, filing cabinets and 
modular office partitions; 
(2) 
Lamps and lighting fixtures; and 
(3) 
Property owned or used by an excluded person. 
C. 
"Excluded person" means: 
(1) 
A public utility as defined in Title 3S-A, section 
102, subsection 13; 
( 2) 
A person that provides radio paging services as 
defined in Title 3S-A, section 102, subsection IS; 
(3) 
A person that provides mobile telecommunications 
services 
as 
defined 
in 
Title 
3S-A, 
section 
102, 
subsection 9-A; 
(4) 
A cable television company as defined in Title 
30-A, section 2001, subsection 2; 
(S) 
A person that provides 
satellite-based direct 
television broadcast services; or 
(6) 
A person that provides multichannel, multipoint 
television distribution services. 
D. 
"Inventory parts" includes repair parts, 
replacement 
parts, 
replacement 
equipment, 
additions, 
accessions 
and 
accessories 
on 
hand but not 
in 
service 
and 
stocks 
or 
inventor ies of repair parts, replacement parts, replacement 
equipment, additions, accessions and accessories on hand but 
not in service if acquired after April 1, 2003, regardless 
of when placed in service. 
E. 
"Qualified business property" means tangible personal 
property that: 
(1) 
Is used or held for use exclusively for a business 
purpose by the person in possession of it or, in the 
case of construction in progress or inventory parts, is 
intended to be used exclusively for a business purpose 
by the person who will possess that property: and 
(2) 
Either: 
(a) 
Was subject to an allowance for depreciation 
under the Code on April 1st of the property tax 
year for which the owner of the property files a 
claim for exemption under subsection 4, or would 
have been subject to an allowance for depreciation 
under the Code as of that date but for the fact 
that the property has been fully depreciated; or 
(b) 
In the case of construction in progress or 
inventory parts, would be subject under the Code 
to an allowance for depreciation when placed in 
service or would have been subject to an allowance 
for depreciation under the Code as of that date 
but for the fact that the property has been fully 
depreciated. 
"Qualified business property" also includes all property 
that is affixed or attached to a building or other real 
estate if it is used primarily to further a particular trade 
or business activity taking place in that building or on 
that real estate. 
"Qualified business property" does not 
include components or attachments to 
a 
building if used 
primarily to serve the building as a building, regardless of 
the particular trade or activity taking place in or on the 
building. 
"Qualified 
business 
property" 
also 
does 
not 
include land improvements if used primarily to further the 
use of the land as land, regardless of the particular trade 
or business activities taking place in or on the land. 
In 
the case of construction in progress or inventory parts, the 
term "used" means intended to be used. 
"Qualified business 
property" also does not include any vehicle registered for 
on-road use on which a tax assessed pursuant to chapter III 
has been paid or any watercraft registered for use on state 
waters on which a tax assessed pursuant to chapter 112 has 
been paid. 
3. 
Additional 
limitations. 
The 
exemptions 
provided 
pursuant to this section are limited as follows. 
A. 
Exemption 
for 
certain energy facilities 
under 
this 
section is limited as follows. 
(1) 
The exemption provided by this section does not 
apply to a natural gas pipeline, including pumping or 
compression stations, 
storage depots 
and appurtenant 
facilities used in the transportation, delivery or sale 
of natural gas but not including a pipeline that is 
less than a mile in length and is owned by a consumer 
of natural gas delivered through the pipeline. 
(2) 
Except 
as 
provided 
in 
subparagraph 
( 3) , 
the 
exemption provided by this section does not apply to 
property used to produce or transmit energy primarily 
for sale. 
For purposes of this subparagraph, energy is 
primarily for sale if during the immediately preceding 
property tax year 2/3 or more of the useful energy is 
directly or indirectly sold and transmitted through the 
facilities of a transmission and distribution utility. 
(3) 
A cogeneration facility is eligible for a partial 
exemption 
under 
this 
section. 
The 
exemption 
is 
calculated by mUltiplying the value of the cogeneration 
facility by a fraction, the numerator of which is the 
total amount of useful energy produced by the facility 
during the property tax year immediately preceding the 
property tax year for which a claim is being made that 
is directly used by a manufacturing facility without 
transmission over the facilities of a transmission and 
distribution utility, and the denominator of which is 
the total 
amount 
of useful energy produced by the 
facility 
during 
the 
property 
tax 
year 
immediately 
preceding the property tax year for which a claim is 
being made. 
(4) 
For purposes of this paragraph, unless the context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
(a) 
"Cogeneration facility" 
means 
the eligible 
business eguipment within a facility that produces 
electrical energy, 
thermal 
energy or 
both 
for 
commercial or industrial use when less than 2/3 of 
the useful energy produced by the facility during 
the property tax year is sold and transmitted 
directly or indirectly through the facilities of a 
transmission 
and 
distribution 
utility. 
"Cogeneration facility" includes eligible business 
eguipment within a heat recovery steam generator. 
(b) 
"Transmission and distribution utility" has 
the same meaning as defined in Title 35-A, section 
102, subsection 20-B. 
(c) 
"Useful energy" is energy in any form that 
does not include waste heat, efficiency losses, 
line losses or other energy dissipation. 
B. 
Pollution 
control 
facilities 
that 
are 
entitled 
to 
exemption pursuant to section 656, subsection 1, paragraph E 
are not entitled to an exemption under this section, except 
that such property is entitled to exemption under this 
section if: 
(1) 
The property is entitled to an exemption under 
section 656, subsection 1, paragraph E but has not yet 
been certified for exemption under that paragraph: 
(2) 
The property has been placed in service after the 
December 1st immediately preceding April 1st of the tax 
year for which the exemption is sought but prior to 
April 1st of the property tax year 
for 
which the 
exemption is sought: and 
(3) 
The 
taxpayer 
has 
submitted 
the 
reguired 
application for certification to the Commissioner of 
Environmental Protection. 
The exemption under this section continues for property that 
meets the reguirements of subparagraphs (1), 
(2) and (3) 
only until the certification for exemption under section 
656, subsection L 
paragraph E has been granted. 
If the 
assessor denies an exemption on the ground that the property 
in guestion is entitled to exemption under section 656, 
subsection 1, 
paragraph E 
and the 
taxpayer 
appeals 
the 
denial, the assessor shall, at the taxpayer's reguest, allow 
the taxpayer up to one year to obtain a statement from the 
Commissioner of Environmental Protection that the property 
at issue is not exempt under section 656, 
subsection 1, 
paragraph 
E. 
If 
the 
taxpayer 
timely 
produces 
such 
a 
statement or otherwise demonstrates that the property is not 
exempt under section 656, 
subsection 1, paragraph E, 
the 
assessor shall allow the exemption under this section. 
4. 
Reporting. 
On 
or before May 
15th of each year, 
a 
taxpayer claiming an exemption under this section shall file a 
report with the assessor of the taxing juriSdiction in which the 
property would otherwise be subject to taxation. 
The report must 
itemize the property as to which exemption is claimed and must be 
made on a form prescribed by the State Tax Assessor, who shall 
furnish copies of the form to each municipality in the State. 
The assessor may reguire the taxpayer to sign the form and make 
oath to its truth and may reguire an answer in writing to all 
reasonable inguiries as to the nature, situation and value of the 
property for which exemption is reguested. 
Refusal or neglect to 
answer such inguiries and subscribe the same bars an appeal, but 
such answers are not conclusive upon the assessor. 
A failure by the taxpayer to comply with the provisions of this 
subsection disgualifies the property involved from exemption. 
If 
an exemption has already been granted and the State Tax Assessor 
then determines that the property is not entitled to exemption, a 
supplemental assessment must be made with respect to the property 
in compliance with section 713, without regard to the limitations 
contained in that section regarding the justification necessary 
for a supplemental assessment. 
5. 
Local 
review. 
Reports 
properly 
filed 
pursuant 
to 
subsection 4 must be reviewed by the assessor with whom they are 
filed. 
A 
taxing 
jurisdiction 
is 
not 
entitled 
to 
state 
reimbursement pursuant to section 661 with respect to property 
entitled to exemption under this section unless the assessor 
certifies to the State Tax Assessor that the property qualifies 
for such exemption. 
The local taxing jurisdiction shall file an 
annual 
certification 
for 
business 
equipment 
exemptions 
by 
November 1st following the April 1st exemption date or 30 days 
after commitment of taxes, whichever is later, but in no event 
later than 120 days following November 1st following the April 
1st exemption date. 
All 
exemptions certified by the local 
taxing jurisdiction must be applied in calculating the taxable 
valuation 
of 
property 
in 
that 
jurisdiction, 
unless 
the 
jurisdiction determines that the property is not entitled to 
exemption and provides a corrected certification to the State Tax 
Assessor. 
6. 
State valuation. 
The State Tax Assessor shall annually 
determine the value of property that is exempt pursuant to this 
section 
based 
upon 
the 
business 
equipment 
exemption 
certifications 
filed 
by 
local 
taxing 
jurisdictions 
under 
subsection 5. 
The State Tax Assessor shall use the valuation of 
exempt 
property 
so 
determined 
to 
compute 
the 
reimbursement 
required by section 661 arising from property tax exemptions. 
The State Tax Assessor shall establish a uniform methodology to 
be 
used 
in determining 
the 
just value 
of certified exempt 
property. 
The 
valuations 
of 
certified 
exempt 
property 
as 
determined by the State Tax Assessor must be reported to local 
taxing jurisdictions no later than July 1st following receipt of 
the certified reports. 
The valuations determined may be appealed 
in 
the 
same 
fashion 
as 
provided 
for 
the 
state 
valuation 
determined in accordance with section 305, subsection 1, with the 
exception that 
the 
State 
Board 
of 
Property 
Tax 
Review, 
as 
established by Title 
5, 
section 
12004-B, 
subsection 
6, 
must 
render its decision no later than November 15th following the 
date on which the appeal is taken. 
The board must certify its 
decisions on these exemption appeals to the State Tax Assessor by 
December 
1st of 
the 
year 
following 
the 
application of 
the 
exemption. 
The valuations of exempt property must be filed with 
the Secretary of State by December 10th following the year of 
exemption. 
7. 
State 
review. 
The 
State 
Tax 
Assessor 
may 
review 
exemption claims made under this section and may disqualify any 
exemption certified under subsection 5 within a 
2-year period 
from the date of the local tax jurisdiction certification. 
In a 
case in which a local taxing jurisdiction has already received 
reimbursement, the excess reimbursement may be offset against the 
next 
reimbursement 
payment. 
A 
local 
taxing 
jurisdiction 
aggrieved by a decision of the State Tax Assessor to disgualify a 
certified exemption after the exemption amount has been filed 
with the Secretary of State may 
seek review as provided by 
section 151. 
8. 
Legislative 
findings. 
The 
Legislature 
finds 
that 
encouragement of the growth of capital investment in this State 
is in the public interest and promotes the general welfare of the 
people of the State. 
The Legislature further finds that the high 
cost of owning gualified business property in this State is a 
disincentive to the growth of capital investment in this State. 
The Legislature further finds that the tax exemption set forth in 
this 
section 
is 
a 
reasonable 
means 
of 
overcoming 
this 
disincentive and will encourage capital investment in this State. 
Sec. C-4. 36 MRSA c. 105, sub-c. 4-B, as enacted by PL 1997, c. 
643, Pt. HHH, §3 and affected by §10, is repealed. 
Sec. C-5. 36 MRSA c. 216 is enacted to read: 
CHAPTER 216 
LIMITED LOCAL OPTICIf SALES AIm USE TAX 
S187l. 
Definitions 
As 
used 
in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Capital project. 
"Capital project" 
means 
a 
major, 
permanent or long-lived improvement, including, but not limited 
to, the acquisition or development of land and structures and 
related eguipment, that would be properly chargeable to a capital 
asset account, 
as distinguished from current expenditures and 
ordinary maintenance expenses. 
2. 
Eligible municipality. 
"Eligible municipality" means: 
A. 
A municipal service district established pursuant to 
Title 30-A, chapter 112; and 
B. 
A municipality that has demonstrated to the satisfaction 
of the assessor that it has adopted administrative and other 
service-delivery practices. that 
achieve 
cost 
savings 
in 
operating funds related to administrative services and that 
the money saved has been directed for property tax relief. 
3. 
Municipal clerk. 
"Municipal clerk" means the clerk of 
an eligible municipality. 
4. 
Municipal referendum. 
"Municipal referendum" means 
a 
referendum conducted pursuant to this chapter by an eligible 
municipality. 
5. 
Municipal treasurer. 
"Municipal treasurer" means the 
treasurer of an eligible municipality. 
§1872. 
Authority to impgse local tax: administration 
1. 
Generally. 
The 
legislative 
body 
of 
an 
eligible 
municipality 
may, 
if 
the 
legal 
voters 
of 
the 
eligible 
municipality give their approval in a referendum vote conducted 
pursuant to section 1874, and subject to the other requirements 
of this chapter, impose an additional 1 % local option sales tax 
on transactions that are otherwise subject to the tax imposed by 
this Part, together with a local option use tax of an additional 
1% on storage, use or other consumption that is otherwise subject 
to the tax imposed by this Part. 
Any tax imposed under this 
chapter 
must 
receive 
certification 
by 
the 
Commissioner 
of 
Economic and Community Development pursuant to section 1875. 
2. 
Collection and 
remittance: 
administration by State. 
Retailers that collect the 1% sales and use tax adopted by an 
eligible municipality pursuant to this chapter shall transfer the 
revenue from that tax at the time and in the manner required by 
chapter 
219. 
Taxes 
imposed 
pursuant 
to 
this 
chapter 
are 
administered by the assessor and are subject to the interest, 
penalty and administrative provisions of Parts 1 and 3. 
3. 
Effective date of tax. 
A local option sales and use tax 
approved by the voters of an eligible municipality pursuant to 
section 1874 is effective on the first day of the first full 
calendar quarter that begins more than 60 days after the date on 
which the assessor receives from the Commissioner of Economic and 
Community Development certification of the local option sales and 
use tax pursuant to section 1875. 
If the effective date provided 
by 
this 
subsection does 
not 
allow 
the 
assessor 
to 
provide 
retailers with at least 60 days' notice of the imposition of the 
tax, the effective date is the beginning of the next succeeding 
calendar guarter; however, a tax imposed pursuant to this chapter 
may not take effect prior to July 1, 2004. 
4. 
Expiration of tax. 
A local option sales and use tax 
imposed pursuant to this chapter expires on the first day of the 
calendar quarter that begins after the earliest of the following 
dates: 
A. 
The end of the month during which the time period for 
the tax specified in the municipal referendum expires; 
B. 
The end of the 3rd month following the month during 
which 
the 
revenue 
limit 
specified 
in 
the 
municipal 
referendum is reached: 
C. 
The end of the 3rd month after the municipal clerk 
forwards to the assessor certification of the discontinuance 
of the local option sales and use tax as a result of a 
referendum vote conducted in accordance with the provisions 
of this chapter: and 
D. 
Five years from the effective date of the tax. 
If the expiration date provided by this subsection does not allow 
the assessor to provide retailers with at least 60 days I 
notice 
of 
the 
expiration of 
the 
tax, 
the expiration date 
is 
the 
beginning of the next succeeding calendar quarter. 
§1873. 
Eligible capital projects 
The 1% sales and use tax authorized by this chapter may be 
adopted only for the purpose of financing one or more eligible 
capital projects that have a regional impact. 
Property acquired 
pursuant to 
an eligible capital project must be 
owned by 
a 
governmental body or regional nonprofit organization. 
Only the 
following types of projects are eligible for financing under this 
chapter: 
1. 
Visitor 
facilities. 
A 
capital 
project 
that 
will 
generate 
regional 
economic 
activity 
or 
attract 
and 
support 
visitors to a region, including, but not limited to, a convention 
and conference center, an industrial park for regional employers, 
an aquarium, the repair and replacement of downtown facilities, a 
regional land conservation or recreation project and a sports 
arena; 
2. 
Educational facilities. 
A capital project involving 
construction or renovation that will enhance regional educational 
opportunities, 
including, 
but 
not 
limited 
to, 
a 
regional 
vocational center and a high school serving a municipal service 
district established pursuant to Title 30-A, 
chapter 112. 
An 
educational facility project may 
not be 
financed unless 
the 
school 
administrative 
unit 
establishes 
and 
complies 
with 
a 
maintenance and capital improvement program as required under 
Title 20-A, 
section 4001 and 
a facility maintenance plan as 
required under Title 20-A, section 15905, subsection 6: 
3. 
Public infrastructure. 
A capital project that will 
provide utility or transportation services to 
more 
than one 
municipality, 
including, 
but 
not 
limited 
to, 
a 
regional 
wastewater treatment system, a regional solid waste facility, a 
transit facility, a bikeway, a parking garage and an arterial or 
collector road; 
4. 
Environmental projects. 
A capital project that will 
restore or protect a natural environmental system including, but 
not limited to, 
the restoration or preservation of a 
beach, 
wetland or river system and the acquisition of land with regional 
environmental significance; and 
5. 
Affordable 
housing. 
A 
capital 
project 
for 
the 
construction of affordable housing, as defined by the Maine State 
Housing Authority. 
§1874. 
Referendum process 
1. 
Generally. 
The 
question 
of 
whether 
to 
impose 
or 
discontinue a limited local option sales and use tax must be 
submitted in a referendum to the legal voters of the eligible 
municipality and approved by a majority of those voting. 
The 
petition process and the voting at an election held by a town or 
plantation that is not part of a municipal service district under 
Title 30-A, 
chapter 112 must be conducted in accordance with 
Title 30-A, sections 2528, 
2529 and 2532 even if the town or 
plantation in question has not accepted the provisions of Title 
30-A, 
section 
2528. 
The 
voting 
at 
elections 
held 
by 
municipalities, other than towns 
and plantations that are not 
part of 
a 
municipal service district, 
must 
be 
conducted in 
accordance with the provisions of Title 21-A. 
The voting at 
elections held by a municipal service district must be conducted 
in accordance with the provisions of Title 30-A, chapter 112. 
A 
referendum conducted pursuant to this section must take place at 
a general election with a turnout equal to or greater than 30% of 
the votes cast in that municipality in the last gubernatorial 
election. 
The 
municipal 
clerk 
shall 
prepare 
the 
required 
ballots, make a return of the results, certify those results and 
send them to the Secretary of State, the Commissioner of Economic 
and Community Development and the assessor. 
2. 
Concurrent levies prohibited. 
Only one local option 
sales and use tax may be levied in an eligible municipality at 
one time. 
3. 
Form of ballots. 
BallQts for 
q~estions of local option 
sales and use taxes must be as provided in this subsection. 
A. 
Ballots on the question of whether to impose the local 
option sales and use tax must read substantially as follows: 
"Do you favor the (enactment of) (extension of) a 1% local 
option sales and use tax to be imposed in (name of eligible 
municipality) 
for 
a 
period of time not to exceed (time 
period) 
in 
order 
to 
raise 
$ 
for 
the 
purpose[s] of (purpose)?" 
The voters shall indicate their opinion by a cross or check 
mark placed against the word "Yes" or "No." 
B. 
If an eligible municipality is to issue 
a 
debt in 
conjunction with the purpose for which the tax is to be 
imposed, the term of the debt may not exceed 10 years, and 
the 
debt 
is 
a 
general 
obligation 
of 
the 
eligible 
municipality that proposes to impose the tax. 
In such cases 
the ballot must also have written or printed thereon the 
following: 
"If imposition of the tax is approved by the voters, this 
vote also constitutes approval of the issuance of general 
obligation debt of 
(name of eligible municipality) in a 
principal amount not to exceed $ 
for 
the purpose stated above." 
C. 
Ballots on the question of whether to discontinue the 
tax must read substantially as follows: 
"Do you favor discontinuing by (target date of repeal) the 
1% local option sales and use tax that has been in place in 
(name of eligible municipality) since (original effective 
date of tax) even if the sum of $ 
originally 
authorized 
by 
referendum 
vote 
dated 
(date 
of 
original 
referendum vote approving adoption of the tax) has not been 
raised?" 
The voters shall indicate their opinion by a cross or check 
mark placed against the word "Yes" or "No." 
§1875. 
Certification of Commissioner of Economic and Community 
Development 
1. 
Commissioner of Economic and Community Development to 
certify local option sales and use tax. 
An eligible municipality 
must obtain 
from 
the Commissioner 
of Economic 
and 
Community 
Development a certification that the capital project or projects 
to be financed by the proposed local option sales and use tax has 
a regional impact and is an eligible project under section 1873. 
The commissioner may not certify a local option sales and use tax 
unless the commissioner finds that the project or projects for 
which the tax was proposed will directly serve residents of the 
eligible municipality and visitors and workers from communities 
other than the eligible municipality in which the improvement is 
located. 
A project does not provide a regional benefit if it is 
primarily local in nature and serves a single municipality, with 
only 
incidental 
or 
indirect 
benefit 
to 
residents 
of 
that 
municipality and visitors and workers from other communities, or 
is a type of project that is routinely funded out of the local 
property 
tax. 
The 
Department 
of 
Economic 
and 
Community 
Development may adopt rules to implement this section. 
Rules 
adopted under this section are routine technical rules pursuant 
to Title 5, chapter 375, subchapter 2-A. 
2. 
Coomissioner to notify assessor. 
The Commissioner of 
Economic 
and Community Development shall notify the assessor 
whenever the commissioner certifies a local option sales and use 
tax pursuant to this section. 
§1876. 
Distribution of revenues 
Beginning on the 15th day of the 2nd month following the 
month in which a 
tax adopted pursuant to this chapter first 
becomes effective, and on the 15th day of each month thereafter, 
the assessor shall identify the amount of revenues that have been 
collected pursuant to local option sales and use taxes adopted 
pursuant to this chapter, including tax, interest and penalties, 
net of refunds, credits and other appropriate adjustments. 
The 
assessor shall determine the amount of such revenues attributable 
to each eligible municipality and subtract 
2~, which must be 
credited to the Local Option Sales Tax Fund, established in the 
Department of Administrative and Financial Services, Bureau of 
Revenue Services. 
The assessor shall certify to the Treasurer of 
State 
the 
net 
amount 
due 
each 
eligible 
municipality. 
The 
Treasurer of State shall make 
monthly payments 
to municipal 
treasurers of the net amounts certified by the assessor under 
this subsection. 
Revenues collected pursuant to taxes imposed 
under this chapter do not constitute receipts from the taxes 
imposed under this Part for purposes of transfers to the Local 
Government Fund under Title 30-A, section 5681. 
§1877. 
Use of proceeds by eligible municipality 
The revenue raised by the adoption of a local option sales 
and use tax must be held by the eligible municipality in a 
segregated account. 
Revenue from that account may be expended 
only for the purpose or purposes specified in the referendum on 
the adoption of the tax, or to pay general obligation debt issued 
for the approved purpose or purposes. 
If the proceeds exceed the 
maximum amount specified in the referendum for the financing of 
the capital project or projects, 
they must 
be 
placed in 
a 
designated 
fund 
that 
may 
be 
used 
only 
for 
the 
purpose 
of 
maintaining the project or projects once completed. 
Sec. C-6. 36 MRSA §5111, sub-§l-B, as enacted by PL 1999, c. 
731, Pt. T, §3, is amended to read: 
I-B. 
Single individuals and married persons filing separate 
returns; tax years beginning 2002. 
For tax years beginning on or 
after January 1, 2002, for single individuals and married persons 
filing separate returns, 
the tax imposed by this section is 
calculated as follows, except that the top rate provided by this 
subsection is annually reduced by .0005 starting with tax years 
that begin during calendar year 2005, until such rate reaches 
.0775 in 2019: 
If Maine Taxable income is: 
Less than $4,200 
At least $4,200 but 
less than $8,350 
At least $8,350 but 
less than $16,700 
$16,700 or more 
The tax is: 
2°1> of the Maine 
taxable income 
$84 plus 4.5% of 
the excess over 
$4,200 
$271 plus 7"'0 of 
the excess over 
$8,350 
$856 plus 8.5% 
of the excess 
over $16,700 
Sec. C-7. 36 MRSA §5111, sub-§2-B, as enacted by PL 1999, c. 
731, Pt. T, §5, is amended to read: 
2-B. 
Beads of households; tax years beginning 2002. 
For 
tax years beginning on or after January 1, 2002, for unmarried 
individuals or legally separated individuals who qualify as heads 
of households, the tax imposed by this section is calculated as 
follows, except that the top rate provided by this subsection is 
annually reduced by .0005 starting with tax years that begin 
during calendar year 2005, until such rate reaches .0775 in 2019: 
If Maine Taxable income is: 
Less than $6,300 
At least $6,300 but 
The tax is: 
2% of the Maine 
taxable income 
$126 plus 4.5% 
less than $12,500 
of the excess 
over $6,300 
At least $12,500 but 
$405 plus 7% of 
less than $25,050 
the excess over 
$12,500 
$25,050 or more 
$1,284 plus 8.5% 
of the excess 
over $25,050 
Sec. e-s. 36 MRSA §5111, sub-§3-B, as enacted by PL 1999, c. 
731, Pt. T, §7, is amended to read: 
3-B. 
Individuals filing married joint return or surviving 
spouses; tax years beginning 2002. 
For tax years beginning on or 
after January 1, 
2002, 
for 
individuals filing married joint 
returns or surviving spouses permitted to file a joint returnL 
the tax imposed by this section is calculated as follows, except 
that the top rate provided by this subsection is annually reduced 
by .0005 starting with tax years that begin during calendar year 
2005, until such rate reaches .0775 in 2019: 
If Maine Taxable income is: 
Less than $8,400 
At least $8,400 but 
less than $16,700 
At least $16,700 but 
less than $33,400 
$33,400 or more 
The tax is: 
2% of the Maine 
taxable income 
$168 plus 4.5°1> 
of the excess 
over $8,400 
$542 plus 7% of 
the excess over 
$16,700 
$1,711 plus 8.5% 
of the excess 
over $33,400 
Sec. e-9. 36 MRSA §5402, sub-§l-B, as enacted by PL 1999, c. 
731, Pt. T, §8 and affected by §11, is repealed and the following 
enacted in its place: 
I-B. 
Cost-of-living adjustment. 
Except 
as 
provided 
in 
subsection l-C, "cost-of-living adjustment" means the Consumer 
Price Index for the 12-month period ending June 30th of the 
immediately preceding calendar year divided by the Consumer Price 
Index for the immediately preceding 12 month period ending June 
30th of the prior calendar year. 
Sec. C-IO. 36 MRSA §5402, sub-§l-C is enacted to read: 
I-C. 
Cost-of-living adjustment: 
2005 to 2019. 
For 
tax 
years beginning on or after January 1, 2005 to December 31, 2019, 
"cost-of-living adjustment" means the cost-of-1iving adjustment 
as defined by subsection 1-B multiplied by 0.5. 
Sec. C-ll. 36 MRSA §5403, as repealed and replaced by PL 
1999, c. 731, Pt. T, §10 and affected by §11, is repealed and the 
following enacted in its place: 
§5403. 
Annual adjustments for inflation 
Beginning 
in 
2003, 
and 
each 
subsequent 
calendar 
year 
thereafter, on or about September 15th, the State Tax Assessor 
shall index for inflation the dollar amounts of the tax rate 
tables specified in section 5111, subsections 1-B, 2-B and 3-B by 
multiplying those adjusted amounts by one plus the cost-of-living 
adjustment. 
If the dollar amounts of each rate bracket, adjusted 
by 
application 
of 
the 
cost-of-living 
adjustment, 
are 
not 
multiples of $50, any increase must be rounded to the next lowest 
multiple 
of 
$50. 
If the 
cost-of-living adjustment 
for 
any 
taxable year is 1.000 or less, no adjustment may be made for that 
taxable year in the dollar bracket amounts of the tax rate 
tables. 
The assessor shall incorporate such changes into the 
income tax forms, 
instructions and withholding tables for the 
taxable year. 
Sec. C-12. 36 MRSA §5404 is enacted to read: 
§5404. 
Legislative review 
The 
joint standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over taxation matters shall review during the First 
Regular Session of the 124th and 127th Legislatures the impact of 
the reduction of the cost-of-living adjustment and the top tax 
rates for individuals provided by this Part. 
The committee may 
request 
information 
and 
assistance 
from 
the 
Department 
of 
Administrative 
and 
Financial 
Services, 
Bureau 
of 
Revenue 
Services. 
The committee may report out implementing legislation 
in order to adjust the reduction of the cost-of-living adjustment 
as provided in this chapter and individual income tax rates as 
provided in chapter 803. 
Sec. C-13. 36 MRSA §6207, sub-§l, 1[A-l, as amended by PL 1997, 
c. 557, Pt. A, §3 and affected by Pt. G, §1, is further amended 
to read: 
A-I. 
¥i~~y Eighty percent of that portion of the benefit 
base that exceeds 4%-~~-~-~~-eHeeeQ-~~--~~-plQs 
lQQ%-e~-~~-~~-~-&~-~Re-aeRe~4~-~~~-~~&-8% 3~ 
of income to a maximum payment of $lT999 $2,000. 
Sec. C-14. 36 MRSA §6207, sub-§2, as amended by PL 1997, c. 
557, Pt. A, §3 and affected by Pt. G, §l, is further amended to 
read: 
2. 
Income 
eligibility. 
Single-member 
households 
wi th 
household incomes in excess of $69T+99 $39,000 and households 
with 2 or more members with a household income in excess of 
$49T999 $51,200 are not eligible for a benefit. 
Sec. C-15. 36 MRSA §6651, sub-§l, as amended by PL 2001, c. 
396, §43, is further amended to read: 
1. 
Eligible property. 
"Eligible property" means qualified 
business 
property first placed in service in the State, 
or 
constituting construction in progress 
commenced in the State, 
after April 1, 1995, but does not include any property that is 
exempt from property tax under section 662. 
"Eligible property" 
includes, without limitation, repair parts, 
replacement parts, 
additions, accessions and accessories to other qualified business 
property placed in service on or before April 1, 1995 if the 
part, 
addition, 
accession 
or 
accessory 
is first 
placed 
in 
service, or constitutes construction in progress, in the State 
after April 1, 1995, but does not include any property that is 
exempt from property tax under section 662. 
"Eligible property" 
also includes inventory parts. 
Sec. C-16. 36 MRS A §6654, as amended by PL 2001, c. 714, Pt. 
BB, §l and affected by §4, is further amended to read: 
§6654. 
Claim for reimbursement 
A person entitled to reimbursement of property taxes paid 
with respect to eligible property pursuant to section 6652 may 
file a claim for reimbursement with the State Tax Assessor. 
The 
reimbursement claim must be filed with the State Tax Assessor on 
or after August 1st and on or before the following December 31st 
for property taxes paid during the preceding calendar year for 
which no previous reimbursement pursuant to this chapter has been 
made. 
For good cause, the State Tax Assessor may at any time 
extend the time for filing a claim for reimbursement for a period 
not exceeding 60 days from the original due date. 
An application 
for 
reimbursement 
may not be filed after February 29, 
2016. 
Except as otherwise provided, the claim must be accompanied by 
the statement obtained by the claimant pursuant to section 6653. 
If the claimant requests reimbursement of an amount of tax that 
differs 
from 
the 
amount 
of 
tax 
specified for 
the eligible 
property in the statement provided by the assessor or assessors 
of the taxing jurisdiction, the claimant must attach to the claim 
form an explanation of the reasons for that difference and the 
State 
Tax 
Assessor 
shall 
determine 
the 
correct 
amount 
of 
reimbursement to which the claimant is entitled, 
taking into 
consideration both the statement from the assessor or assessors 
and the taxpayer's explanation. 
If, for any reason, the claimant 
is unable to obtain the statement specified in section 6653 from 
the assessor or assessors within the time specified in section 
6653, the claimant must attach to the claim form an explanation 
of the 
amount of reimbursement 
requested 
and 
the State 
Tax 
Assessor shall process the claim without that statement. 
Sec. C·17. Application. 
That 
section 
of 
this 
Part 
that 
repeals 
the 
Maine 
Revised Statutes, 
Title 
36, 
chapter 
105, 
subchapter 4-B is effective April 1, 2004. 
Those sections of 
this Part that 
amend Title 36, 
section 6207, 
subsection 1, 
paragraph A-I and subsection 2 apply to Maine Residents Property 
Tax Program applications filed after July 31, 2004. 
PARTD 
Sec. D·l. 
Local Option Sales Tax Reserve Fund; 
transfer 
authorized. 
The Local Option Sales Tax Reserve Fund, referred to 
in this section as "the fund," is created under the jurisdiction 
and control of the Department of Administrative and Financial 
Services, Bureau of Revenue Services. 
The State Controller shall 
transfer $956,561 in fiscal year 2004-05 from the Undedicated 
Revenue Account within the General Fund to the fund to pay for 
start-up costs of the administration of the local option sales 
tax. 
Beginning on the 15th day of the 2nd month following the 
month in which 
a 
tax adopted pursuant to the Maine 
Revised 
Statutes, Title 36, chapter 216 first becomes effective and on 
the 15th day of each month thereafter, the State Controller shall 
transfer 2% of revenues attributable to the local option sales 
tax to the fund. 
Expenditures from the fund may be made only for 
the 
administration 
of 
the 
local 
option 
sales 
tax. 
Funds 
allocated or appropriated to the fund may not lapse but must be 
carried forward. 
Sec. 
D·2. 
Appropriations 
and 
allocations. 
appropriations and allocations are made. 
ADMINISTRATIVE AND FINANCIAL SERVICES, 
DEPAR"lMEI!IT OF 
Revenue Services -
Bureau of 0002 
The 
following 
Initiative: 
Pro.vides funds fo.r 3 Claims Administratio.n Po.sitio.ns. 
General Fund 
Po.sitio.ns - Legislative Co.unt 
Perso.nal Services 
All Other 
General Fund To.tal 
Revenue Services -
Bureau of 0002 
2003-04 
(0.000) 
$0 
o 
$0 
2004-05 
(3.000) 
$165,786 
88,500 
$254,286 
Initiative: 
Pro.vides fo.r the deappro.priatio.n o.f funds due to. the 
repeal o.f the Maine Revised Statutes, Title 36, 
chapter 105, 
subchapter 4-B as o.f April 1, 2004. 
General Fund 
All Other 
General Fund To.tal 
Revenue Services -
Bureau of 0002 
2003-04 
$0 
2004-05 
($34,931,664) 
$0 
($34,931,664) 
Initiative: 
Pro.vides 
fo.r 
the appro.priatio.n 
to. 
the Municipal 
Service District Fund o.f o.ne-time savings 
fro.m 
repeal 
o.f 
the 
Maine Revised Statutes, Title 36, chapter 105, subchapter 4-B. 
General Fund 
All Other 
General Fund To.tal 
Revenue Services -
Bureau of 0002 
2003-04 
$0 
$0 
2004-05 
$7,821, 908 
$7,821,908 
Ini tiati ve: 
Pro.vides funds to. reimburse municipalities fo.r 90% 
o.f the estimated lo.cal administrative Co.sts incurred fro.m the 
repeal o.f the Maine Revised Statutes, Title 36, 
chapter 105, 
subchapter 4-B. 
General Fund 
All Other 
General Fund To.tal 
Revenue Services -
Bureau of 0002 
2003-04 
$0 
$0 
2004-05 
$190,000 
$190,000 
Initiative: 
Pro.vides 
funds 
fo.r 
increased benefits 
under 
the 
Maine Residents Pro.perty Tax Program due to. the expansio.n in the 
pro.gram. 
General Fund 
2003-04 
2004-05 
All Other 
$0 
$25,807,443 
General Fund Total 
$0 
$25,807,443 
Revenue Services -
Bureau of 0002 
Initiative: 
Provides 
funds 
to hire additional 
personnel 
to 
process the increased number of applications due to the expansion 
in the Maine Residents Property Tax Program. 
Also includes funds 
to make changes in Maine' s automated tax system to reflect the 
changes in the program and to print and mail the additional 
application forms and instructions. 
General Fund 
Positions - Legislative Count 
Personal Services 
All Other 
General Fund Total 
Revenue Services -
Bureau of 0002 
2003-04 
(0.000) 
$0 
o 
$0 
2004-05 
(2.000) 
$92,270 
182,913 
$275,183 
Ini tiati ve: 
Provides initial funding to pay for the costs of 
implementing the local option sales tax initiative. 
Start-up 
costs will be for software development. 
Funds allocated for 
fiscal year 2004-05 will pay the cost of ongoing administration 
of the initiative. 
Other Special Revenue Funds 
Positions - Legislative Count 
Personal Services 
All Other 
Other Special Revenue Funds Total 
~NISTRATIVE AND FINANCIAL SERVICES, 
DEPARTMERT OF 
DEPARTMERT "lU'rALS 
GENERAL FUlID 
OTHER SPECIAL REVENUE FUlIDS 
DEPARTMERT TOTAL -
ALL FUNDS 
PART E 
2003-04 
(0.000) 
$0 
$0 
2003-04 
$0 
o 
$0 
2004-05 
(3.000) 
$134,696 
821,865 
$956,561 
2004-05 
($131,120) 
956,561 
$825,441 
Sec. E·l. Intent of Legislatur"e; competing measure. 
It is the 
intent of the Legislature that this Resolution be interpreted as 
a competing measure within the meaning of the Constitution of 
Maine, Article IV, Part Third, Section 18, Subsection 2 with 
Initiated 
Bill 
3, 
Legislative 
Document 
1372 
of 
the 
121st 
Legislature, "An Act To Enact the School Finance and Tax Reform 
Act of 2003." 
It is the further intent of the Legislature that 
this measure be subject to referendum as a competing measure with 
that bill. 
Sec. E·2. Statutory referendum procedure; submission at statewide 
election; form of question; effective date. 
This Resolution must be 
submitted to the legal voters of the State of Maine at the next 
statewide election in the month of November following passage of 
this Resolution as a competing measure with Initiated Bill 3, 
Legislative Document 1372 of the 121st Legislature, "An Act To 
Enact the School Finance 
and Tax 
Reform Act of 2003." 
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 Resolution by voting 
on the following question: 
"Do you want the State to pay 55% of 
public 
education 
and 
lower 
property 
government spending?" 
the annual 
taxes 
by 
cost of 
cutting 
The legal voters of each city, town and plantation shall 
vote by ballot on this question and the question established by 
the Secretary of State for Initiated Bill 3 and shall designate 
their choice by a cross or check mark placed in the corresponding 
square next to either the question relating to Initiated Bill 3, 
the question relating to the competing measure or an option of 
against both Initiated Bill 3 and the competing measure. 
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 Resolution, the Governor shall proclaim that fact without 
delay, and the Resolution takes effect in accordance with the 
Constitution of Maine, Article IV, Part Third, Section 19. 
SUMMARY 
This bill proposes a resolution as a competing measure with 
Initiated 
Bill 
3, 
Legislative 
Document 
1372 
of 
the 
121st 
Legislature, "An Act to Enact the School Finance Act of 2003." 
This 
bill 
provides 
a 
reform package that reduces 
borne by municipalities and 
comprehensive, 
self-funded 
fiscal 
costs of governmental services now 
reduces property tax burdens. 
This 
bill provides tools enabling the State to pay 55% of the cost of 
public 
education 
while 
reducing 
local 
property 
taxes. 
The 
proposed changes in current tax laws make funds available to 
serve as financial incentives for municipalities to establish 
municipal service districts that will regionalize and create 
efficiencies in delivery of public services currently provided by 
municipalities. 
The proposed tax law changes are also intended 
to increase Maine's economic competitiveness. 
PART A 
Part 
A provides 
for 
establishment of municipal 
service 
districts. 
This Part induces municipalities to cooperate in the 
efficient and effective exercise of municipal obligations and 
home-rule authority pursuant to the Maine Revised Statutes, Title 
30-A, 
Part 
through voluntary creation of municipal service 
districts. 
Pursuant to its charter and using home-rule authority 
delegated by the municipalities that form it, a municipal service 
district will assume its participating municipalities' powers and 
duties regarding public education, taxation and budgeting, land 
use and other matters. 
A majority of the voters in each of the 
participating 
municipalities 
must 
approve 
formation 
of 
a 
municipal service district. 
PART B 
Part B of this resolution provides 
municipalities 
to 
achieve resulting 
their citizens. 
establish 
municipal 
cost savings 
and tax 
financial 
service 
burden 
incentives 
districts 
reductions 
for 
to 
for 
It establishes a bonus in general purpose aid for local 
schools for municipal service districts. 
When municipalities 
form a municipal service district, the district is entitled to an 
annual 
10% 
bonus 
in general purpose aid for 
local schools, 
calculated as 10% of that to which each of its participating 
municipalities is entitled. 
This incentive will be available to 
a municipal service district for 5 years, beginning in the year 
following the year in which the district is formed. 
It provides that the State will annually reimburse municipal 
service districts for their participating municipalities' share 
of county taxes supporting district attorneys' services, court 
rents and services, jails and registries of probate and deeds. 
This incentive will be available to a municipal service district 
beginning in the year following the year in which the district is 
formed. 
It establishes 
the 
Municipal 
Service District 
Fund. 
A 
dedicated, special revenue account, this fund will be capitalized 
with state cost savings realized through elimination of the 
personal property tax on machinery and equipment and phaseout of 
the 
BETR 
program 
and 
a 
one-time 
savings 
generated 
through 
redirection of the current homestead exemption as provided in 
Part C. 
The fund may be used by the State only to pay for 50% of 
participating 
municipalities' 
general 
obligation 
debts, 
participating municipalities' share of county taxes and the 10% 
general purpose aid for education bonus. 
It provides for a one-time assumption by the State of 50% of 
the total general obligation debts of all municipalities that 
join 
to 
form 
municipal 
service 
districts. 
The 
general 
obligations that the State will 
assume are those that were 
incurred before June 30, 2003 and that would otherwise have to be 
paid with local property tax revenue. 
In order 
to 
encourage municipalities 
to 
form 
municipal 
service districts promptly, this Part provides that only those 
municipal service districts formed on or before January 1, 2009 
are entitled to the financial incentives through the Municipal 
Service District Fund. 
It 
authorizes 
the 
joint 
standing 
committee 
of 
the 
Legislature having jurisdiction over taxation matters, the joint 
standing committee of the Legislature having jurisdiction over 
appropriations and allocations matters and the joint standing 
committee of the Legislature having jurisdiction over state and 
local government matters to develop and report out legislation on 
specified topics in accordance with the intentions of and not 
inconsistent with the purposes and intents of the resolution. 
PART C 
Part C of this bill provides a package of tax law changes. 
It requires a municipality that is a member of a municipal 
service district to pay to the Treasurer of State the amount 
received from the Treasurer of State pursuant to the Constitution 
of Maine, Article IV, 
Part Third, Section 23, which mandates 
reimbursement of 50% of the property tax revenue loss suffered by 
a 
municipality 
due 
to 
statutory property tax 
exemptions 
or 
credits enacted after April 
1, 
1978. 
The municipal service 
district is then paid by the Treasurer of State 50% of the 
property tax revenue loss in each of the municipalities in the 
municipal service district. 
Part C establishes a property tax exemption for property 
that would have been first subject to property tax after April 1, 
2003 
in the 
absence of this exemption. 
Property placed in 
service on or before April 1, 2003 will remain eligible for the 
Business Equipment Tax Reimbursement program for the duration of 
the l2-year window for BETR program entitlement. 
Property placed 
in service on or before April 1, 
2003 will remain subject to 
property taxation as long as it continues to be otherwise subject 
to 
personal 
property taxation in Maine. 
This 
section also 
establishes a procedure whereby the business equipment entitled 
to personal property tax exemption will be valued by the State 
Tax Assessor. 
Continuing valuation of this class of property 
will be required in order to provide the required 50% municipal 
reimbursement lost property tax revenues. 
Valuation by the State 
Tax Assessor will help ensure uniform determinations of just 
value, 
eliminate 
the 
opportunity 
for 
inflated 
municipal 
valuations 
and 
relieve 
the municipalities 
of 
the 
burden of 
continuing to value exempt property. 
It allows municipal service districts, qualified service 
center communities and municipalities that the State Tax Assessor 
determines have achieved cost savings related to administrative 
services and used the money saved for property tax relief to 
adopt a 1% limited local option sales and use tax for specific 
purposes and for a specific time period, contingent upon the 
certification of 
the 
Commissioner 
of 
Economic 
and 
Community 
Development. 
This Part provides for the reduction of the top individual 
income tax rates from 8.5% to 7.75% by reducing the tax rates by 
.0005 each year from 2005 to 2019. 
The reductions are partially 
funded 
from 
savings 
that 
are 
the 
result 
of 
reducing 
the 
cost-of-living adjustment by 1/2 during the same time period. 
The 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over taxation matters is directed to review the 
impact 
of 
the 
rate 
reductions 
and 
the 
reduction 
in 
the 
cost-of-living adjustments. 
The committee is further authorized 
to report out implementing legislation to adjust the reductions 
provided for in this bill. 
It repeals the Maine Revised Statutes, Title 36, 
chapter 
105, subchapter 4-B as of April 1, 2004. 
It expands the Maine Residents Property Tax Program, 
so-called "circuit breaker" program, for applications filed 
July 
31, 
2004. 
It provides that the 
changes 
to 
the 
Residents Property Tax Program apply to applications filed 
July 31, 2004. 
the 
after 
Maine 
after 
It 
clarifies 
reimbursement 
under 
program, as amended. 
what 
the 
personal 
property 
qualifies 
for 
Busin~ss Equipment 
Tax 
Reimbursement 
PART D 
Part D establishes the Local Option Sales Tax Reserve Fund. 
Part D requires the State Controller to transfer $956,561 in 
fiscal year 2004-05 from the Undedicated Revenue Account within 
the General Fund to the fund to pay for start-up costs of the 
administration of the local option sales tax. 
Part D also 
provides 
for 
the 
transfer 
to 
the 
fund 
of 
2~ of 
revenues 
attributable to a local option sales tax adopted pursuant to the 
Maine Revised Statutes, Title 36, chapter 215 to be used only for 
the administration of the local option sales tax. 
Part D provides the necessary appropriations and allocations. 
It appropriates $254,286 in fiscal year 2004-05 from the 
General Fund for 3 Claims Administration positions and related 
expenses 
in 
the 
Department 
of 
Administrative 
and 
Financial 
Services. 
It deappropriates $34,931,664 from the General Fund due to 
the repeal of the Maine Revised Statutes, Title 36, chapter 105, 
subchapter 4-B as of April 1, 2004. 
It appropriates from the General Fund in fiscal year 2004-05 
to the Municipal Service District Fund $7,821,908 of one-time 
savings from repeal of the Maine Revised Statutes, Title 36, 
chapter 105, subchapter 4-B. 
It appropriates $190,000 from the General Fund in fiscal 
year 2004-05 to reimburse municipalities for 
90~ of the estimated 
local administrative costs incurred from the repeal of the Maine 
Revised Statutes, Title 36, chapter 105, subchapter 4-B. 
It appropriates $25,807,443 from the General Fund in fiscal 
year 2004-05 for increased benefits under the Maine Residents 
Property Tax Program due to the expansion in the program. 
It appropriates $275,183 
from the General Fund in fiscal 
year 2004-05 to provide funds to hire additional personnel to 
process the increased number of applications due to the expansion 
in the Maine Residents Property Tax Program. 
This appropriation 
also includes funds to make changes in Maine's automated tax 
system to reflect the changes in the program and to print and 
mail the additional application forms and instructions. 
It allocates $956,561 from Other Special Revenue funds to 
provide initial funding to pay for the costs of implementing the 
local option sales tax initiative. Start-up costs will be for 
software development. 
Funds allocated for fiscal year 2004-05 
will pay the cost of ongoing administration of the initiative. 
PART E 
Part E specifies that it is the intent of the Legislature 
that this bill be interpreted as a competing measure within the 
meaning of the Constitution of Maine, Article IV, Part Third, 
Section 18, 
Subsection 
with Initiated Bill 3, 
Legislative 
Document 1372 of the l2lst Legislature, 
"An Act To Enact the 
School Finance and Tax Reform Act of 2003," as well as the 
Legislature's intent that it be subject to 
referendum as 
a 
competing measure with that bill.