An Act to Modernize the State's Tax System LR 1697(02)
Maine Legislature, Session 121, LD 1394
Committee Amendment CA_A_H745 (House)
Amends: 36 MRSA §6201-A, 36 MRSA §6207, 36 MRSA §6209, 36 MRSA §6210, 36 MRSA §6218, 36 MRSA §6219, 36 MRSA §6220, 36 MRSA §1811

COMMITTEE AMENDMENT ,,4, to H.P. 1020, L.D. 1394, Bill, "An 
Act To Modernize the State's Tax System" 
Amend the bill by striking out everything after the enacting 
clause and before the summary and inserting in its place the 
following: 
'PART A 
Sec. A-I. 36 MRS A §683, sub-§I, as repealed and replaced by PL 
2003, c. 20, Pt. BB, §l and affected by §3, is repealed. 
Sec. A-2. 36 MRS A §683, sub-§I-A, as enacted by PL 2003, c. 
20, Pt. BB, §2 and affected by §3, is repealed. 
Sec. A-3. 36 MRS A §683, sub-§I-B is enacted to read: 
1-B. 
Exemption amount. 
The estate up to the just value of 
$7.000 of the homestead of a permanent resident of this State who 
has owned a homestead in this State for the preceding 12 months 
is exempt 
from 
taxation except 
for 
assessments 
for 
special 
benefits. 
In 
determining 
the 
local 
assessed value 
of 
the 
exemption. 
the 
assessor 
shall 
multiply 
the 
amount 
of 
the 
exemption by the ratio of current just value upon which the 
assessment is based as furnished in the assessor's annual return 
pursuant to section 383. 
If the title to a homestead is held by 
the applicant jointly or in common with others. the exemption may 
not exceed $7.000 of the just value of the homestead but may be 
apportioned among the owners who reside on the property to the 
extent of their respective interests. 
A municipality responsible 
for administering the homestead exemption has no obligation to 
Page l-LR1697(2) 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT "if" to H.P. 1020, L.D. 1394 
create separate accounts for each partial interest in a homestead 
owned jointly or in common. 
Sec. A-4. Application. 
This Part applies to property tax 
valuations based on the status of property on or after April 1, 
2005. 
PARTB 
Sec. B-1. 36 MRSA c. 907, as amended, is amended by repealing 
the chapter headnote and enacting the following in its place: 
CHAPTER 907 
lQIESTEAD TAX CAP PROGRAM 
Sec. B-2. 36 MRSA §6201-A, as enacted by PL 1989, c. 534, Pte 
A, §4, is amended to read: 
§6201-A. Short tit1e 
This chapter saa,l,l--:ge li known and may be cited as the 
"MaiBe-ResiQeB~S-PFepeF~Y Homestead Tax ~ 
Program." 
Sec. B-3. 36 MRSA §6207, sub-§l, as amended by PL 1997, c. 
557, Pt. A, §3 and affected by Pt. G, §l is further amended to 
read: 
1. 
Benefit 
calcu1ation. 
For 
claimants 
representing 
a 
nonelderly household, the benefit is calculated as follows: 
A-1T--¥if~Y-pe£€~£~-~-~~-~k~~~-~-~B&~~~-:9ase-~aa~ 
eHeeeQs-~-:9~~-~-~~-eK€~~~-ef--~-p,lQs-~-ef 
~aa~-~~~~~-~-&e£ef4~-~-~&a~-eHeeeQ6-~~~-iBeeme 
~e-a-maHimQm-paymeB~-ef-$lTQ9QT 
A-2. 
For a single-member household with household income of 
$30,300 or less and for a household with 2 or more members 
with household income of $46,900 or less, the benefit is 
equal to 
100~ of the portion of the benefit base that 
exceeds 4% of household income: and 
A-3. 
For all claimants other 
than 
those 
described in 
paragraph A-2, the benefit is equal to 100~ of the portion 
of the benefit base that exceeds 5~ of household income. 
The maximum benefit that may be paid to a claimant under this 
chapter is $5,000. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT .. If .. to H.P. 1020, L.D. l394 
Sec. B·4. 36 MRS A §6207, sub·§2, as amended by PL 1997, c. 
557, Pt. A, §3 and affected by Pt. G, §l, is repealed. 
Sec. B·5. 36 MRSA §6209, as amended by PL 1989, c. 508, §25, 
is further amended to read: 
§6209. Annua1 adjustment 
1. 
Household 
income 
adjustment; 
elderly 
households. 
Beginning March 1, 1989, and annually thereafter, the State Tax 
Assessor 
shall 
determine 
the 
household 
income 
eligibility 
adjustment factor. That factor shall ~ 
be multiplied by the 
income limitations in section 6206, applicable for the year prior 
to that for which relief is requested. The result shall must be 
rounded to the nearest $100 and shall-appJ:y applies to the year 
for which relief is requested corresponding to the year on which 
the annualized cost of living adjustments were based. 
8e~iBBiB~ 
MaFeh-*7-*~~*7-~~~~~~~~~~~~?&G-~-aaj~s~-~he 
iBe9ffie-liffii~a~i9B-iB-see~i9B-9aQ+T-s~9see~i9B-aT 
2. 
Household 
income 
adjustment; 
nonelderly households. 
Beginning March 1, 2005, and annually thereafter, the State Tax 
Assessor 
shall 
determine 
the 
household 
income 
eligibility 
adjustment factor. 
That factor must be multiplied by the income 
factors in section 6207, subsection 1, paragraph A-2, applicable 
for the year prior to that for which relief is requested. 
The 
result must be rounded to the nearest $100 and applies to the 
year for which relief is requested corresponding to the year on 
which the annualized cost-of-liVing adjustments were based. 
Sec. B·6. 36 MRSA §6210, as amended by PL 1997, c. 557, Pte 
A, §4 and affected by Pt. G, §1, is further amended to read: 
§62l0. Administration 
The State Tax Assessor shall make available suitable forms 
with instructions for claimants. The claim shall ~ 
be in the 
form the State Tax Assessor 
HlaY-pF~-se~i:ee prescribes and 
sha~~ 
must be signed by the claimant. 
The State Tax Assessor shall include a checkoff to request 
an application for the MaiBe-ResiQeB~S-PF9peF~y Homestead Tax Cap 
Program on the individual income tax form. 
The assessor shall 
also provide for the option of filing an application for the 
MaiBe-~ident~-P£9peF~y Homestead Tax ~ Program using the 
telefile system established by the assessor. 
Sec. B·7. 36 MRSA §6218, as enacted by PL 1989, c. 534, Pte 
A, §10, is amended to read: 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT .. A 
.. to H.P. 1020, L.D. 1394 
§6218. Readability; application; instructi~ns 
The application form and instructions used by applicants for 
assistance under the Ma~Re-~-dent-s--PFepeF'=Y Homestead Tax Cap 
Program and its successor, if any, saa** must have a readability 
score, as determined by a 
recognized instrument for measuring 
adult literacy levels, equivalent to no higher than a 6th grade 
reading level. 
Sec. B-8. 36 MRSA §6219, as amended by PL 1997, c. 526, §14, 
is further amended to read: 
§6219. Outreach plan required 
The Bureau of Revenue Services shall develop and implement a 
plan of outreach to ensure that all eligible households are made 
aware of assistance available under the Ma~ae-Res4Qea,=s-P£epeE'=Y 
Homestead Tax ~ 
Program and its successor, if any. 
Sec. B-9. 36 MRSA §6220, as amended by PL 1995, c. 418, Pt. 
A, §39 and by PL 1997, c. 526, §14 and c. 668, §40, is further 
amended to read: 
§6220. Coordination required 
The bureau shall seek the advice and cooperation of the 
Bureau 
of 
Elder 
and 
Adult 
Services; 
the 
Bureau 
of 
Family 
Independence; the Bureau of Child and Family Services; advocates 
for elderly and low-income individuals; 
and other interested 
agencies and organizations in developing the application form and 
instruction booklet for the 
Ma4ae-~-s--P;Fepe;F,=y Homestead 
Tax ~ 
Program and the outreach plan required by section 6219. 
Sec. B-I0. Application. 
This Part applies to applications for 
benefits on or after August 1, 2004. 
Sec. B-ll. 
Appropriations and allocations. 
appropriations and allocations are made. 
The 
following 
ADMIBISTRATIVE AND FIBARCIAL SERVICES, DEPAR"DIEHT OF 
Maine Residents Property Tax Program 
0648 
Initiative: 
Provides 
funds 
to 
expand 
the 
Maine 
Residents 
Property Tax Program to create the Homestead Tax Cap Program. 
General Fund 
All Other 
General Fund Total 
2003-04 
$0 
$0 
2004-05 
$65,600,000 
$65,600,000 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT "j{" to H.P. 1020, L.D. 1394 
PARTC 
Sec. C-l. 36 MRSA §1811, as amended by PL 2003, c. 510, Pt. 
C, §12 and affected by §13, is further amended to read: 
§18ll. Sales tax 
A tax is imposed on the value of all tangible personal 
property and taxable services sold at retail in this State. 
The 
rate of tax is 7% 
on the value of liquor sold in licensed 
establishments as defined in Title 28-A, section 2, subsection 
15, in accordance with Title 28-A, chapter 43; 7% on the value of 
rental of living quarters in any hotel, rooming house or tourist 
or trailer camp; 10% on the value of rental for a period of less 
than one year of an automobile; 7% on the value of prepared food; 
and 
9% 
1/2% on the value of all other tangible personal 
property and taxable services. 
Value is measured by the sale 
price, except as otherwise provided. 
The tax imposed upon the sale and distribution of gas, water 
or electricity, or telecommunications services, by any public 
utili ty, 
the 
rates 
for 
which 
sale 
and 
distribution 
are 
established by the Public Utilities Commission, must be added to 
the rates so established. N'e A tax may ~ 
be imposed upon the 
sale or use of electrical energy, or water stored for the purpose 
of generating electricity, when the sale is to or by a wholly 
owned subsidiary by or to its parent corporation, except for 
electrical energy or water purchased for resale to or by such 
wholly owned subsidiary. 
Rental or lease of an automobile for one year or more must 
be taxed at the time of the lease or rental transaction at 9% 
~ 
1/2% 
of 
the 
following: 
the 
total 
monthly 
lease 
payment 
multiplied by the number of payments in the lease or rental, the 
amount of equity involved in any trade-in and the value of any 
cash down payment. 
Collection and remittance of the tax is the 
responsibility 
of 
the 
person 
that 
negotiates 
the 
lease 
transaction with the lessee. 
Sec. 
C-2. 
Appropriations 
and 
allocations. 
appropriations and allocations are made. 
The 
ADMDlISTRATIVE AND FIBARCIAL SERVICES, DEPARTMENT OF 
Maine Residents Property Taz Program 0648 
following 
Initiative: 
Provides 
funds 
to 
expand 
the 
Maine 
Residents 
Property Tax Program to create the Homestead Tax Cap Program. 
COMMITTEE AMENDMENT 
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•. 
COMMITTEE AMENDMENT .. f{.. to H. P. 1020, L.D. 1394 
General Fund 
A1l Other 
General Fund Total 
Maine Revenue Services 
0002 
2003-04 
$0 
$0 
2004-05 
$65,600,000 
$65,600,000 
Initiative: 
Provides 
funds 
for 
the 
administrative 
costs 
associated with the 
changes 
to 
the homestead exemption, 
the 
circuit breaker program and the general increase in the sales and 
use tax, including funds for one Tax Examiner position. 
General Fund 
Positions - Legislative Count 
Personal Services 
A1l Other 
General Fund Total 
2003-04 
(O.OOO) 
$0 
o 
$0 
2004-05 
(1.000) 
$53,037 
167,401 
$220,438 
Homestead Property Tax Exemption -
Mandate Reimbursement 0887 
Initiative: 
Provides funds to reimburse municipalities for 
90°-(:) 
of the estimated local costs incurred to revise the Homestead 
Property Tax Exemption. 
General Fund 
All Other 
General Fund Total 
ADMIBISTRATIVE AIm FIBARCIAL SERVICES, 
DEPARTMERT OF 
DEPARTMERT mrAL 
General Fund 
DEPAR"l'MERT mrAL -
ALL FORDS 
2003-04 
$0 
$0 
2003-04 
$0 
$0 
2004-05 
$110,000 
$110,000 
2004-05 
$65,930,438 
$65,930,438 
Sec. C-3. Effective date. 
This Part takes effect August 1, 
2004 .• 
SUMMARY 
This amendment is a minority report of the committee. 
The 
amendment replaces the bill and proposes the following changes. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT "ff' to H.P. 1020, L.D. 1394 
Part A restores the homestead property tax exemption to the 
or iginal exempt amount of $7,000 regardless of the value of the 
homestead. 
Part B changes the name of the Maine Residents Property Tax 
Program to the Homestead Tax Cap Program. 
It expands the program 
to include all homeowners, 
regardless of income, 
and provides 
reimbursement 
for 
the 
amount 
of 
property 
taxes, 
or 
rent 
constituting property taxes, that exceeds 5% of household income, 
or 
4q,o of household income for those persons who qualified under 
the former program. 
The maximum benefit is increased from $1,000 
to $5,000. 
Part C increases the general sales tax rate from 5% to 5 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Net Cost (Savings) 
General Fund 
Appropriations! Allocations 
General Fund 
Revenue 
General Fund 
Other Special Revenue Funds 
State Mandate 
New or Expanded Activity 
Approved: 03/08/04 :;:b:.?ac 
Office of Fiscal and Program Review 
LD 1394 
An Act to Modernize the State's Tax System 
LR 1697(02) 
Fiscal Note for Bill as Amended by Committee Amendment tt tt 
Committee: Taxation 
Fiscal Note Required: Yes 
Fiscal Note 
Projections 
Projections 
2003-04 
2004-05 
2005-06 
2006-07 
$0 
$6,665,293 
$11,571,143 
$25,909,971 
$0 
$65,930,438 
$80,196,863 
$97,805,343 
$0 
$59,265,145 
$68,625,720 
$71,895,372 
$0 
$3,184,955 
$3,764,280 
$3,943,628 
Unit Affected 
Costs 
Administrative responsibilities for municipalities to revise the Homestead Property 
Municipality 
$110,000 
Tax Exemption 
Fiscal Detail and Notes 
Increasing the sales tax to 5 112 % beginning August -1,2004 will generate an additional $62,450,100 in fiscal year 2004· 
05. The General Fund cost of expanding the Maine Residents Property Tax Program to create the Homestead Tax Cap 
Program is estimated to be $65,600,000 in fiscal year 2004-05. Additional General Fund appropriations will also be 
required beginning in fiscal year 2005-06 to eliminate the tiered portion of the Homestead Property Tax Exemption. 
This bill provides $110,000 in fiscal year 2004-05 to reimburse local municipalities for 90% of the estimated local cost 
of changes to the homestead exemption program. Maine Revenue Services will also require $220,438 in fiscal year 
2004-05 for the administrative costs associated with these changes. 
General Fund Detail 
2004-05 
2005-06 
2006-07 
Increase Sales Tax Rate to 5.5% 
$59,265,145 
$68,625,720 
$71,895,372 
Expand Maine Resident Property Tax Program 
$65,600,000 
$74,800,000 
$92,4oo,()( 
Restore $7,000 Homestead Exemption 
$0 
$5,259,475 
$5,264,52v 
Mandate Reimbursement - Homestead Exemption 
$110,000 
$0 
$0 
Administrative Costs 
$220,438 
$137,388 
$140,823 
LR1697(2) - Fiscal Note - Page 1 of 1 
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