An Act To Impose Limits on Real and Personal Property Taxes Transmitted to the Clerk of the 121st Maine Legislature by the Secretary of State on February 26, 2004 and ordered printed.
Maine Legislature, Session 121, LD 1893
Committee: Taxation

12lst MAINE LEGISLATURE 
Legislative Document 
No. 1893 
I.B. 4 
House of Representatives, March 1, 2004 
An Act To Impose Limits on Real and Personal Property Taxes 
Transmitted to the Clerk of the 121st Maine Legislature by the Secretary of State on 
February 26, 2004 and ordered printed. 
Reference to the Committee on Taxation suggested and ordered printed. 
Printed on recycled paper 
'-7Y/~ 1J?1l/d£~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 36 MRSA c.I03, sub-c. I, Art. I-A is enacted to read: 
ARTICLE I-A 
LIMITATIQRS (If REAL AND PERS(JiAL PROPERTY TAXES 
§35l. 
Definitions 
As 
used 
in this article, 
unless 
the 
context otherwise 
indicates, the following terms have the following meanings. 
1. 
Base-year value. 
"Base-year value" means the 1996-97 
full-cash value of real and personal property as shown on tax 
bills under "total value." 
2. 
Change in o1lJlership. 
"Change in ownership" means the 
sale, 
transfer or acquisition of real or personal property. 
"Change in ownership" does not include the acquisition, prior to 
January L 
1999, of real or personal property as a replacement 
for 
comparable property if the person 
acqu~r~ng the real or 
personal property has been displaced from the property by eminent 
domain proceedings, 
by acquisition by a 
public entity or by 
governmental action that has resulted in a judgment of inverse 
condemnation. 
"Change 
in 
ownership" 
also 
does 
not 
include 
transfer 
between 
spouses 
or 
transfers 
between 
parents 
and 
children. 
3. 
Comparable property. 
"Comparable property" means real 
or 
personal 
property that is similar in size, 
utility and 
function to the property being replaced or property that conforms 
to 
state 
regulations 
governing 
the 
relocation 
of 
persons 
displaced by disaster or government action. 
4. 
Full-cash 
value. 
"Full-cash 
value" 
means 
the 
governmental 
entity's 
total 
assessed 
valuation 
of 
real 
or 
personal property as shown on the 1996-97 tax bill under "total 
value." 
For 
newly 
constructed 
or 
newly 
purchased 
real 
or 
personal property that changes in ownership after the 1996-97 
assessment, "full-cash value" means the appraised value. 
5. 
Govermnental entity. 
"Governmental entity" means 
any 
city, town, county, plantation, unorganized territory, district 
or other municipality that assesses ad valorem taxes on real or 
personal property as of the 1996-97 fiscal year. 
6. 
Local affected agency. 
"Local affected agency" means 
any city, town, county, plantation, unorganized territory, school 
Page l-LR2760(1) 
district or community college that receives an annual property 
tax revenue allocation from any governmental entity or entities 
listed above. 
7. 
Newly 
constJ;:]lcted 
property. 
"Newly 
constructed 
property" means real property that is constructed after the April 
1, 1999 local assessment. 
"Newly constructed property" does not 
include replacement property. 
"Newly constructed property" does 
not include the portion of reconstruction or improvement to a 
structure 
constructed 
of 
reinforced 
masonry 
bearing 
wall 
construction 
necessary 
to 
comply 
with 
any 
local 
ordinance 
relating to seismic safety during the first 15 years following 
the reconstruction or improvement. 
"Newly constructed property" 
does not include the construction or addition of any active solar 
energy system or the construction or addition of a fire sprinkler 
system or other fire extinguishing system, fire detection system 
or 
fire related 
egress 
improvement 
that 
is 
installed 
or 
constructed after the effective date of this article. 
8. 
Replacement dwelling. 
"Replacement dwelling" means 
a 
building, 
structure or other shelter constituting a 
place of 
abode or business, whether real or personal property, and any 
land on which it may be situated. 
9. 
Repl~_cgJ!lent p~~rty. 
"Replacement property" means any 
real or personal property that is 
reconstructed after being 
substantially damaged or destroyed in a disaster, as declared by 
the Governor, where fair market value of the real or personal 
property, 
as reconstructed or purchased, is comparable to its 
fair market value immediately prior to the disaster. 
10. 
Substantially 
damaged 
or 
destroyed 
property. 
"Substantially 
damaged 
or 
destroyed property" 
means 
real 
or 
personal property that sustains physical damage amounting to 50°0 
of its value immediately before a disaster, as declared by the 
Governor. 
11. 
Transfer between parent and child. 
"Transfer between 
parent 
and 
child" 
means 
the 
purchase 
or 
transfer, 
either 
voluntarily or as a result of a court order or judicial decree, 
of 
the principal 
residence and 
the first $1,000,000 
of 
the 
full-cash value of all other real or personal property between a 
parent and child. 
12. 
Transfer 
bet~e~nL-~s~pQ~~u~s~e~s~. ___ 
'~'T~r~a~n~s~f~e~r~~b~e~t~w~e~e~n~~s~p~o~u~s~e9s_" 
means a transfer or purchase of real or personal property, on or 
after April 1, 1999, between spouses. 
"Transfer between spouses" 
includes, but is not limited to: 
A. 
A transfer to a trustee for the beneficial use of a 
spouse, or to the survivin9 spouse of a deceased transferor, 
or by a trustee of such a trust to the spouse of the trustor; 
B. 
A transfer to a spouse that takes effect upon the death 
of that person's spouse; 
C. 
A transfer by a person to that person's spouse or former 
spouse in connection with a property settlement agreement or 
le9al separation or dissolution of a marriage; 
D. 
The creation, transfer or termination, solely between 
spouses, of any coowner's interest: or 
E. 
The distribution of 
a 
legal entity's property to 
a 
spouse or former spouse in exchange for the interest of the 
spouse or former spouse in the legal entity in 
connection 
with a property settlement a9reement or legal separation or 
decree of dissolution of a marriage. 
§352. 
Mazimum ad valorem tax on real or personal property; 
apportionment of tax revenues 
1. 
I(al[imum tax. 
The maximum amount of any ad valorem tax 
on real property and personal property shall not exceed 1% of the 
full-cash value of such property. 
The n, tax must be collected 
by the governmental entity and apportioned according to the law 
within the city, county, town, plantation, unorganized territory 
or district. 
2. 
Exemption. 
The limitation provided for in subsection 1 
shall not apply to ad valorem taxes or special assessments to pay 
the interest and redemption charges on any indebtedness approved 
by voters prior to the effective date of this article. 
3. 
Exceptions to limitations. 
The limitation provided for 
in subsection 1 shall not apply to ad valorem taxes or special 
assessments to pay the interest and redemption charges on any 
indebtedness approved by the voters prior to July L 
1999 or to 
any bonded indebtedness for the acguisition or improvement of 
real or personal property approved on or after July L 
1999 by 
of the votes cast by voters votin9 on the proposition in a 
general election. 
§353. 
Valuation of real and personal property - appraised value 
after 1997 assessment -
replacement dwelling 
1. 
Full-cash value. 
The full-cash value means the city, 
town, 
plantation, 
unorganized territory or district assessors 
total valuation of real and personal property as shown on the 
1996 97 
tax 
bill 
under 
"Total 
Value" 
or, 
thereafter, 
the 
appraised value of real and personal property when purchased, 
newly constructed or a change in ownership has occurred after the 
1997 
assessment. 
All real and personal property not already 
assessed up to the state regulation of 
100'+0 valuation of the 
1996 97 total value may be reassessed to reflect that valuation. 
For 
purposes 
of this 
section, 
"newly 
constructed" 
does 
not 
include real property that is reconstructed after a disaster, as 
declared by the Governor, where the fair market value of the real 
property, 
as reconstructed, is comparable to its fair market 
value prior to the disaster. 
Also, the term "newly constructed" 
shall not include the portion of reconstruction or improvement to 
a 
structure, 
constructed of 
reinforced masonry 
bearing wall 
construction, 
necessary 
to 
comply 
with 
any 
local 
ordinance 
relating to seismic safety during the first 15 years following 
that reconstruction or 
improvement. 
Depreciation on personal 
property shall be depreciated and listed from the annual form as 
supplied by the taxpayer. 
However, 
the 
Legislature 
may 
provide 
that 
under 
appropriate 
circumstances 
and 
pursuant 
to 
definitions 
and 
procedures 
established by the Legislature, any person over the age of 55 
years 
who 
resides 
in 
property 
which 
is 
eligible 
for 
the 
homeowner's 
exemption 
and 
any 
implementing 
legislation 
may 
transfer 
the 
base 
year 
value 
of 
the 
property entitled 
to 
exemption, with the adjustments authorized by subsection 5, to 
any replacement dwelling of equal or lesser value located within 
the same state and purchased or newly constructed by that person 
as his or her principal residence within 2 years of the sale of 
the original property. 
For purposes of this section, "any person 
over the age of 55 years" includes a married couple one member of 
which is over the age of 55 years. 
For purposes of this section, 
"replacement dwelling" means 
a building or structure or other 
shelter constituting a place of abode, whether real property and 
personal property, and any land on which it may be situated. 
For 
purposes of this section, a 2-dwelling unit shall be considered 
as 
separate single-family dwellings. 
This 
paragraph shall 
apply to any replacement dwelling that was purchased or newly 
constructed on or after passage of this article. 
In addition, the Legislature may authorize a government entity, 
after consultation with the local affected agencies within the 
government entity's boundaries. to adopt an ordinance making the 
provisions of this subdivision relating to transfer of base year 
value also applicable to situations in which the replacement 
dwellings are located in that government entity and the original 
properties are located in another county within this State. 
For 
purposes of this paragraph. "local affected agency" means any 
city, 
special district, 
school district or 
community college 
district 
that 
receives 
an 
annual 
property 
tax 
revenue 
allocation. 
This 
paragraph 
shall 
apply 
to 
any 
replacement 
dwelling that was purchased or newly constructed on or after the 
date 
the 
county 
adopted 
the 
prov~s~ons of 
the 
subdivision 
relating to the transfer of base year value, but shall not apply 
to 
any 
replacement 
dwelling 
that 
was 
purchased 
or 
newly 
constructed before the passage of this article. 
z. 
Inflationary 
rate. 
The full cash value, listed on real 
and personal property tax bills as "Total value," as the total 
base may reflect from year to year an inflationary rate not to 
exceed 2 percent for any given year or reduction as shown in the 
Consumer Price Index or comparable data for the area under tax 
jurisdiction, or may be reduced to reflect substantial damage, 
destruction or other factors causing a decline in value. 
3. 
Newly constructed. 
For purposes of subsection 1, the 
Legislature may provide that the term "newly constructed" shall 
not include both of the following. 
A. 
The construction or addition of any active solar energy 
system. 
B. 
The construction or installation of any fire sprinkler 
system, 
other 
fire 
extinguishing 
system, 
fire 
detection 
system or fire-related egress improvement, as defined by the 
Legislature, which is constructed or installed after the 
effective date of this paragraph. 
4. 
Change in ownerShip. 
For purposes of subsection 1, the 
term "change in ownership" shall not include the acquisition of 
real 
property 
and 
personal 
property 
as 
a 
replacement 
for 
comparable property if the person acquiring the real or personal 
property has been displaced from the property by eminent domain 
proceedings, by acquisition by a public entity or a governmental 
action that has resulted in a judgment of inverse condemnation. 
The 
real 
and 
personal 
property 
acquired 
shall 
be 
deemed 
comparable to the property replaced if it is similar in size, 
utility and function, or it conforms to state regulations defined 
by the Legislature governing the relocation of persons displaced 
by governmental 
actions. 
The 
provisions of this subdivision 
shall be applied to any property acquired after the date of 
passage, but shall affect only those assessments of that property 
that occur after the provisions of this subdivision take effect. 
5. 
Disasters. 
Notwithstanding any other provision of this 
section, the Legislature shall provide that the base-year value 
of property that is substantially damaged or destroyed by 
a 
disaster, as declared by the Governor, 
may be transferred to 
comparable property, 
within the 
same 
town, 
city, plantation, 
unorganized territory or other district, that is acquired or 
newly constructed as a replacement for the substantially damaged 
or destroyed property. 
This 
subdivision 
shall 
apply 
to 
any 
comparable 
replacement 
property acguired or newly constructed on or after July 1, 1999 
and to the determination of base-year values for the 1996-97 
fiscal year and fiscal years thereafter. 
6. 
Replacement property. 
For the purposes of subsection 5: 
A. 
Property is substantially damaged or destroyed if it 
sustains physical damage amounting to more than 50 percent 
of 
its 
value 
immediately 
before 
the 
disaster. 
Damage 
includes 
a 
diminution in the value of real or personal 
property as 
a 
result of restricted access caused by the 
disaster; and 
B. 
Replacement 
property is 
comparable 
to 
the 
property 
substantially damaged or destroyed if it is similar in size, 
utility and function to the real and personal property that 
it replaces, and if the fair market value of the acguired 
property is 
comparable to the· fair market value of the 
replaced said property prior to the disaster. 
7. 
Property transfers between spouses. 
For the purpose of 
subsection 1, the terms "purchased" and "change in ownership" 
shall not include the purchase or transfer of real or personal 
property between spouses since April 1, 1999, including, but not 
limited to, all of the following: 
A. 
Transfers to 
a 
trustee for the beneficial use of 
a 
spouse, or the surviving spouse of a deceased transferor, or 
by a trustee of such a trust to the spouse of the trustor; 
B. 
Transfer to a spouse that takes effect upon the death of 
a spouse; 
c. 
Transfer to a spouse or former spouse in connection with 
a property settlement agreement or decree of dissolution of 
a marriage or legal separation; 
D. 
The creation, transfer or termination, solely between 
spouses, of any coowner's interest; and 
E. 
The distribution of 
a 
legal entity's property to 
a 
spouse or a former spouse in exchange for the interest of 
the 
spouses 
in 
the 
legal 
entity in 
connection 
with 
a 
property settlement agreement or a decree of dissolution of 
a marriage or legal separation. 
8. 
Property transfers 
between parents 
and 
child. 
For 
purposes of subsection 1, the terms "purchased" and "change of 
ownership" shall not include the purchase or transfer of the 
principal residence and personal property of the transferor in 
the case of a purchase or transfer between parents and their 
children, 
as defined by the Legislature, 
and the purchase or 
transfer of the first $1, 000, 000 of the full cash value of all 
other 
real 
and personal 
property 
between 
parents 
and 
their 
children, as defined by the Legislature. 
This subdivision shall 
apply to both voluntary transfers and transfers resulting from a 
court order or judicial decree. 
§354. 
Imposition of special taxes 
A governmental entity, by a 2/3 referendum vote of qualified 
voters held at a general election, held by referendum, may impose 
special taxes on a governmental entity, except no 
ad valorem 
taxes or special tax may be imposed on real and personal property 
or 
a 
transaction tax or sales tax on the sale of real and 
personal property within that governmental entity. 
§355. 
Effective date of article 
This article shall take effect for the tax year beginning on 
April 1 following the passage of this Amendment, except section 
354, 
which shall 
become effective 
upon 
the passage 
of this 
article. 
§356. 
Condition 
From 
and after the effective date of this article, 
any 
changes in the taxes on any ad valorem tax on real property and 
personal 
property 
for 
the 
purpose 
of 
increasing 
revenues 
collected pursuant thereto whether by increased rates or changes 
in the methods of computation must be imposed by an Act passed by 
not less than 2/3 of the votes cast, and said vote shall be held 
in a statewide referendum in a general election. 
§357. 
Real and personal property transfers between parents and 
children 
For purposes of subdivision (A), the terms "purchased" and 
"change of ownership" shall not include the purchase or transfer 
of 
the 
principal 
residence 
and 
personal 
property 
of 
the 
transferor in the case of a purchase or transfer between parents 
and their children, 
as 
defined 
by 
the Legislature, 
and 
the 
purchase or transfer of the first $1,000, 000 of the full cash 
value of all other real and personal property between parents and 
their children, as defined by the Legislature. 
This subdivision 
shall apply to both voluntary transfers and transfers resulting 
from a court order or judicial decree. 
§358. 
Certain taxes prohibited 
A special district tax, user fee tax or county tax may not 
be imposed on any real or personal property. 
§359. 
Construction 
This article may not be construed to prevent or prohibit a 
town, city, county, plantation, unorganized territory, county or 
district from initiating taxes or fees with a 
2/3 vote in a 
general election, except no ad valorem tax on real and personal 
property or a transaction tax or sales tax on the sale of real 
and personal property within such city, county, town, plantation, 
unorganized territory, county or district may be imposed. 
§360. 
Application 
This Act applies to all government entities that assess ad 
valorem taxes on real and personal property tax. 
This Act does 
not preclude or prohibit a city, town, plantation, unorganized 
territory or district from assessing or collecting taxes 
and 
fees, except no ad valorem taxes on real and personal property or 
a transaction tax or sales tax on the sale of real and personal 
property 
within 
such 
city, 
town, 
plantation, 
unorganized 
territory, county or special district may be imposed. 
§361. 
Severability 
If any portion, word, clause or phrase of this initiative 
for any reason is held to be invalid or unconstitutional by a 
court of competent j ur isdiction, the remaining portions, clauses 
and phrases may not be affected, but shall remain in full force 
and effect. 
SUMMARY 
This initiated bill limits the ad valorem taxes levied on 
real or personal property to a maximum rate of 1% of the value of 
the property. 
The base value of the property is the 1996-97 
assessed value. 
For property constructed, 
sold or transferred 
after the 1996-97 assessment, the base value is the appraised 
value at the time of construction or acquisition. 
This base 
value may be adjusted up or down each year by a maximum of 2 Q". 
Certain 
exemptions, 
including 
transfers 
between 
spouses 
and 
transfers between a parent and child, are included. 
This initiated bill also prohibits any change in the maximum 
property tax rate except by 
a 
2/3 vote of all voters in a 
statewide 
referendum. 
Localities 
may 
impose 
special 
taxes, 
except on property, and only by a 2/3 vote of the electors in the 
locality by referendum at a general election in November.