An Act To Apply a System of Spending Limitations to State, County and Municipal Governments and School Administrative Units
Maine Legislature, Session 122, LD 0030
Committee: Appropriations and Financial Affairs
Sponsors: CARR, DAVIS
Amends: 5 MRSA §1678, 30-A MRSA §706-A, 30-A MRSA §7102

Legislative Document 
No. 30 
H.P.33 
House of Representatives, January 6,2005 
An Act To Apply a System of Spending Limitations to State, County 
and Municipal Governments and School Administrative Units 
Reference to the Committee on Appropriations and Financial Affairs suggested and ordered 
printed. 
Presented by Representative CARR of Lincoln. 
Cosponsored by Senator DAVIS of Piscataquis. 
Printed on recycled paper 
7J1~ 
1J?·712~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A·I. 5 MRSA §I664, last" as enacted by PL 2003, c. 451, 
Pt. X, §8, is repealed and the following enacted in its place: 
The total General Fund appropriation for each fiscal year of 
the biennium. 
other than transfers of unallocated surplus or 
expenditures constituting direct payments to taxpayers to reduce 
their 
tax 
liability. 
may 
not 
exceed 
the 
General 
Fund 
appropriation of the previous fiscal year multiplied by a growth 
factor. 
For 
purposes 
of 
this 
paragraph, 
the 
growth 
factor 
applicable to fiscal years following the effective date of this 
paragraph is the base growth factor. defined as the following 
sum: one plus the average real personal income growth rate. as 
defined in section 1665, subsection 1, which rate may not exceed 
2.75%. 
For fiscal years commencing after such time as the state 
tax burden ranks in the middle 113 of all states, the growth 
factor 
must 
become 
the 
personal 
income 
growth 
factor. 
The 
personal income growth factor is one plus the average percent 
change in personal income in this State for the prior 10 calenda( 
years, ending with the most recent calendar year for which data 
are available, as estimated by the United States Department of 
Commerce, 
Bureau of Economic Analysis. 
For purposes of this 
section, "state tax burden" means the total amount of state and 
local taxes collected during the calendar year concluding on the 
preceding December 31st, as calculated by the State Tax Assessor, 
divided by the total personal income of all residents of the 
State during that same calendar year as calculated by the Bureau 
of Economic Analysis. 
The State Tax Assessor shall undertake 
this calculation no less often than once per year. 
For 
any 
fiscal year thereafter, if the State Tax Assessor determines that 
the state tax burden has increased to the highest 113 of all 
states, the growth factor for the following fiscal year must be 
the base growth factor. 
In all other fiscal years when the state 
tax burden ranks in the middle 1/3 of all states, the growth 
factor 
must 
be 
the 
personal 
income 
growth 
factor. 
The 
appropriation limitation set forth in this paragraph may 
be 
exceeded only in an amount necessary to comply with a court order 
or decree or to pay costs associated with extraordinary events 
outside the control of the Governor or Legislature, 
such as 
natural disasters, severe weather events, acts of God, acts of 
terrorism. fire. war and riots. but in no event may such events 
include changes in economic conditions, 
revenue shortfalls or 
increases in salaries or benefits; 
however, 
for 
purposes 
of 
calculating total General 
Fund appropriations 
for 
any future 
fiscal year, any appropriations made pursuant to this sentence 
may not be deemed an appropriation of the previous fiscal year 
for 
purposes 
of 
calculating 
the 
State's 
General 
Fund 
appropriation limitation, nor may such appropriations in excess 
of the appropriation limitation continue for longer than reguired 
to 
comply 
with 
the 
court 
order 
or 
decree 
or 
address 
the 
extraordinary event. 
Notwithstanding any of the limitations in 
this paragraph, the limitation on General Fund appropriations may 
be exceeded upon the 2/3 vote of each House of the Legislature, 
provided 
that 
any 
resolution 
or 
legislation authorizing 
the 
appropriation 
contains 
specific 
language 
indicating that 
the 
Legislature intends to override the appropriation limitations for 
the 
current 
fiscal 
year. 
The 
General 
Fund 
appropriation 
limitation 
in 
this 
section 
may 
adjust 
up 
or 
down, 
on 
a 
going-forward basis, as necessary to permit the State to meet the 
goal of 55% state funding of kindergarten to grade 12 education 
costs pursuant to the School Finance Act of 2003 set forth in 
Title 20-A, chapter 606-C and to implement the essential programs 
and services model set forth in Title 20-A, chapter 606-B. 
Sec. A·2. 5 MRSA §1678 is enacted to read: 
§1678. 
Annual spending limitation report 
The Office of Fiscal and Program Review, 
in consultation 
with the Department of Administrative and Financial Services, 
Maine Revenue Services, the Department of Education, a statewide 
organization 
representing 
municipalities, 
a 
statewide 
organization 
representing 
school 
management 
and 
a 
statewide 
organization 
representing 
county 
commissioners 
and 
other 
interested parties or associations that may be able to collect 
the necessary data in a 
timely manner, 
shall issue a 
report 
annually that identifies for each fiscal year the degree to which 
State 
Government 
complied 
with 
the 
spending 
limitations 
established in section 1664, the county governments complied with 
the 
spending 
limitations established in Title 
30-A, 
section 
706-A, the school administrative units complied with the spending 
limitations established in Title 20-A, chapter 101, subchapter 3 
and the municipalities complied with the spending limitations 
established in Title 30-A, section 5721-A or, in the alternative, 
exceeded their respective statutory spending limits. 
Upon its 
publication, the report must be distributed to the Governor, the 
Legislature 
and 
each 
of 
the 
parties 
or 
associations 
that 
consulted with the Office of Fiscal and Program Review in the 
development of the report. 
PART 8 
Sec. 8·1. 30·A MRSA §5721.A is enacted to read: 
§5721-A. 
Limitation on municipal appropriations 
1. 
Appropriation limit established. 
Notwithstanding any 
other provision of law, a municipality may not in any fiscal year 
make 
an 
appropriation, 
including 
amounts 
appropriated 
or 
allocated to reserves, 
except as 
otherwise provided in this 
section 
when 
that 
appropriation 
uses 
the 
revenues 
collected 
through property taxes levied by the municipality and when the 
appropriation would cause the municipality to exceed its property 
tax levy limit for the fiscal year. 
A municipality's property 
tax levy limit for any fiscal year must be set at its property 
tax 
levy limit for 
the prior fiscal year multiplied by the 
following sum: 
one plus the income growth factor set forth in 
subsection 
plus 
the municipality's 
annual 
property 
growth 
factor. 
The annual property growth factor for a municipality is 
a fraction, established by the municipality, whose denominator 
i~ 
the total taxable valuation of the municipality for the tax year 
associated 
with 
the 
municipality's 
fiscal 
year 
and 
whose 
numerator is the amount of increase in the assessed valuation of 
any real or personal property in the municipality during the 
prior tax year that may become subject to taxation for the first 
time, may be taxed as a separate parcel for the first time during 
the current tax year or has had an increase in its assessed 
valuation 
over 
the 
prior 
year's 
valuation 
as 
a 
result 
of 
improvements to or expansion of the property. 
2. 
Scope. 
Appropriation 
and 
property 
tax 
levy 
limits 
established 
in 
subsection 
apply 
to 
any 
general 
fund 
appropriation of a municipality, other than appropriations and 
revenues related to tax increment financing districts or similar 
special tax districts pursuant to state law, but do not apply to 
expenditures related to the budget of 
a 
school administrative 
unit or county or to assessments or tuition expenditures properly 
issued by a 
school administrative unit or county of which the 
municipality is a member. 
3. 
Transition; 
extraordinary events. 
The 
appropriation 
limi t 
established in subsection 1 must become effective for a 
municipality 
for 
its 
first 
full 
fiscal 
year 
following 
the 
effective date of this section. 
A. 
For purposes of determining the property tax levy limit 
for 
the 
first 
fiscal 
year 
for 
which 
this 
section 
is 
effective, 
the 
limit must 
be 
set at 
the 
property 
tax 
commitment of the municipality for the fiscal year during 
which 
this 
section 
becomes 
effective multiplied 
by 
the 
following sum: 
one plus the income growth factor set forth 
in subsection 
plus 
the municipality's 
annual property 
growth factor set forth in subsection 1. 
B. 
If a prior year's tax commitment reflects the effect of 
extraordinary, 
nonrecurring 
events, 
a 
municipality 
may 
submit a written notice to the State Tax Assessor requesting 
an adjustment in the levy calculation, which adjustment must 
be determined in a reasonable amount of time. 
4. 
Income 
growth 
factor. 
The 
income 
growth 
factor 
applicable to fiscal years following the effective date of this 
section is the base growth factor, which for purposes of this 
section means the average real personal income growth rate as 
defined in Title 5, section 1665, subsection It which rate may 
not exceed 2.75%. 
For fiscal years commencing after such time as 
the state tax burden ranks in the middle 113 of all states, the 
growth factor must become the personal income growth factor as 
defined in Title 5, section 1664. 
For purposes of this section, 
"state tax burden" has the same meaning as set forth in Title 5, 
section 1664. 
For any fiscal year thereafter, if the State Tax 
Assessor determines pursuant to Title 5, section 1664 that the 
state tax burden has increased to the highest 1/3 of all states, 
the growth factor for the following fiscal year must be the base 
growth factor. 
In all other fiscal years when the state tax 
burden ranks in the middle 1/3 of all states, the growth factor 
must be the personal income growth factor. 
5. 
Adjustment for new state funding. 
If the State provides 
net new funds to a municipality for existing services funded in 
whole or in part by property taxes, other than reguired state 
mandate 
funds 
pursuant to section 
5685 that do not displace 
current property tax expenditures, the municipality shall lower 
its property tax levy limit in that year in an amount egual to 
the net new funds. 
For purposes of this subsection, "net new 
funds" means the amount of funds received by the municipality 
from the State in that fiscal 
y~ar, with respect to services 
funded in whole or in part by property taxes, less the following 
product: 
the amount of such funds received in the prior fiscal 
year multiplied by an adjustment factor. 
The adjustment factor 
eguals: one plus the income growth factor set forth in subsection 
plus 
the 
municipality's 
annual 
property growth 
factor 
as 
defined in sUbsection 1. 
If a municipality receives net new 
funds in any fiscal year for which its levy limit has not been 
adjusted as provided in this subsection, the municipality shall 
adjust its levy limit in the following year in an amount egual to 
the net new funds. 
6. 
Extraordinary event. 
Upon the affirmative vote of its 
legislative body, a municipality may exceed its property tax levy 
limit in an amount necessary to comply with a court order or 
decree or to respond to an extraordinary event. 
"Extraordinary 
event" includes any catastrophic event outside the control of the 
legislative 
body, 
such 
as 
natural disasters, 
severe 
weather 
events, acts of God, 
acts of terrorism, 
fire, 
war and riots. 
"Extraordinary 
event" 
does 
not 
include 
changes 
in 
economic 
conditions, 
revenue 
shortfalls 
or 
increases 
in 
salaries 
or 
benefits. 
An appropriation under this subsection may not cause 
the municipality's property tax levy limit to be adjusted for any 
future fiscal years and may not continue for longer than required 
to 
comply 
with 
the 
court 
order 
or 
decree 
or 
address 
the 
extraordinary event. 
For municipalities with a town meeting form 
of government, "legislative body" means all registered voters of 
that municipality who are assembled for the purpose of voting at 
any legally convened town meeting. 
7. 
Election. 
A municipality 
may 
elect 
to 
raise 
its 
property tax levy limit upon the affirmative vote of a majority 
of the voters voting by municipal election held at any regular or 
special election. 
Notwithstanding any law to the contrary, such 
an election may be called only upon the affirmative vote of a 
majority of the municipal officers and must be governed according 
to state law and any applicable municipal charter. 
The warrant 
for the election must set forth the question in the following 
form: 
"Do 
you 
favor 
raising 
the 
levy 
limit 
of 
[name 
of 
municipali tyJ 
for the purpose of 
[insert purpose J?" 
For 
the 
purposes of this section, "municipal election" means 
a 
secret 
ballot referendum unless otherwise provided by charter, for those 
municipalities with a 
charter that governs municipal election 
procedures, 
or 
by 
ordinance 
for 
all 
other 
municipalities. 
Notwithstanding any other provisions of law, a charter amendment 
proposed to the voters of a municipality as a result of this 
section is controlled by section 2104, and a municipal ordinance 
proposed to the voters of a municipality as a result of this 
section 
must 
be 
approved 
by 
a 
referendum 
voting 
procedure 
pursuant to section 2528. 
8. 
Treatment 
of 
surplus; 
reserves. 
Any 
property 
tax 
revenues collected by a municipality in any fiscal year in excess 
of its property tax levy limit, as determined by a final audited 
accounting, must be transferred to a property tax relief fund, 
which 
each municipality shall establish, 
and 
used to 
reduce 
property tax levies in subsequent fiscal years. 
To the extent 
the transfers required by this section cannot be accomplished 
under the financial management authority vested in the municipal 
officers, the transfers must be authorized by an action of the 
legislative body. 
Nothing in 
~his subsection is intended to 
limit the ability of a municipality to maintain adequate reserves 
pursuant to section 5801, provided that annual allocations or 
appropriations of funds to reserves are treated as appropriations 
subject to the appropriation limits set forth in subsection 1. 
9. 
Fractional divisions. 
A municipality may, 
consistent 
with Title 36, section 710, exceed its property tax levy limit in 
a reasonable amount necessary to avoid fractional divisions. 
10. 
Enforcement. 
In 
the 
event 
a 
municipality 
makes 
appropriations 
in violation of 
this 
section, 
the 
State 
Tax 
Assessor may require the municipality to adjust its appropriation 
limi t 
downward in 
a~ amount equal to the illegal appropriation 
and 
may 
impose 
such other 
penalties 
as 
the Legislature 
may 
provide. 
PARTC 
Sec. C-l. 20-A MRSAc. 101, sub-c. 3 is enacted to read: 
SUBCHAPTER 3 
FINANCE FOR SCHOOL ADMINISTRATIVE UNITS 
§101l. 
Limitation on appropriations 
1. 
Appropriation limit established. 
Notwithstanding any 
other provision of law, a school administrative unit may not in 
any fiscal year make an appropriation, including an appropriation 
to reserves or balance of allocations pursuant to section 
15613~_ 
subsection 9, except as otherwise provided in this section, when 
the 
appropriation 
is 
funded 
by 
an 
appropriation 
or 
by 
an 
assessment on one or more member municipalities and when such an 
appropriation 
would 
cause 
the 
school 
administrative 
unit 
tQ 
exceed its appropriation or 
assessment 
limit for 
the 
fiscal 
year. 
A school administrative unit's appropriation or assessment 
limit for any fiscal year must be set at its appropriation or 
assessment limit for the prior fiscal year multiplied by the 
following sum: 
one plus an income growth factor as defined in 
subsection 
plus the 
annual property growth factor 
for 
the 
member 
municipality 
or 
municipalities. 
The 
annual 
property 
growth factor 
is 
a 
fraction whose 
denominator 
is 
the total 
valuation of 
the 
member 
municipality 
or 
the 
total 
combined 
valuation of all the 
member municipalities for 
the tax year 
associated with the school administrative unit's fiscal year and 
whose numerator is the total increase in the assessed valuation 
of any real or personal property in the municipality or the total 
combined 
increase in the 
assessed valuation of 
any 
real 
or 
:rulisonal property in all the member municipalities during the 
prior tax year that may become_subject to taxation for the first 
time, may be taxed as a separate parcel for the first time during 
the current tax year or has had an increase in its assessed 
valuation 
over 
the 
prior 
year's 
valuation 
as 
a 
result 
of 
improvements to or expansion of the property. 
In establishing 
the 
property 
growth 
factor 
under 
this 
section, 
the 
school 
administrative 
unit 
must 
rely 
on 
the 
tota~ 
valuation 
and 
increased valuation 
calculations 
of 
each 
member 
municipality 
'. 
under 
Title 
30-A, 
section 
572l-A, 
subsection 
for 
the 
corresponding fiscal year. 
2. 
Transition and scope. 
The aQproQriation and assessment 
limit established in subsection 1 becomes effective for a school 
administrative unit for its first full fiscal year following the 
effective date of this section. 
A. 
For purposes of determining the assessment limit for the 
first fiscal year for which this section is effective, the 
limit must be set at the amount appropriated of assessed by 
the school administrative unit during the prior fiscal year 
multiplied by the following sum: one plus the income growth 
factor set forth in subsection 3 plus the annual property 
growth factor for the member municipality or municipalities 
set forth in subsection 1. 
B. 
Beginning 
with 
fiscal 
year 
2006-07, 
the 
limits 
established by this subchapter do not apply to the budget of 
any 
school 
administrative 
unit 
that 
aQpropriates 
a 
combination of state 
and 
local 
resources 
that does 
not 
exceed the total budget identified as reasonably necessary 
for that school administrative unit according to 
chapte~ 
606-B, as divided by its base-year factor. 
For the purposes 
of this subsection, a school administrative unit's base-yeal-
factor is calculated with the numerator being the total 
budget identified as reasonably necessary for that school 
administrative unit according to this subchapter for 
the 
2005-2006 school year and the denominator being the actual 
amount of state and local resources appropriated for the 
school administrative unit by its legislative body for that 
same fiscal year, except that the base-year factor may not 
exceed 1. O. 
The limits established by this subchapter do 
apply if the school budget proposed by the governing body of 
a school administrative unit exceeds the adjusted budget as 
described in this 
subsection, 
and 
the 
adoption of that 
school budget must be approved according to the procedures 
established in subsection 5. 
C. 
If the prior year's assessment reflects the effect of 
extraordinary, 
nonrecurring 
events, 
the 
school 
administrative unit 
may 
submit 
a 
written notice 
to 
the 
commissioner 
requesting 
an 
adjustment 
in 
the 
assessment 
calculation, 
which 
adjustment 
must 
be 
determined 
in 
a 
reasonable amount of time. 
3. 
Income 
growth 
factor. 
The 
income 
growth 
factor 
applicable to fiscal years following the effective date of this 
section is the base growth factor, which for purposes of this 
section means the average real personal income growth rate as 
defined in Title 5, section 1665, subsection 1, which rate may 
not exceed 2.75%. 
For fiscal years commencing after such time as 
the state tax burden ranks in the middle 113 of all states, the 
growth factor must become the personal income growth factor as 
defined in Title 5, section 1664. 
For purposes of this section, 
"state tax burden" has the same meaning as set forth in Title 5, 
section 1664. 
For any fiscal year thereafter. if the State Tax 
Assessor determines pursuant to Title 5, section 1664 that the 
state tax burden has increased to the highest 1/3 of all states, 
the growth factor for the following fiscal year must be the base 
growth factor. 
In all other fiscal years when the state tax 
burden ranks in the middle 11 3 of all states, the growth factor 
must be the personal income growth factor. 
4. 
Adjustment for new state funding. 
If the State provides 
net 
new 
funds 
to 
a 
school 
administrative 
unit for 
existing 
services funded in whole or in part by assessments, other than 
required state mandate funds pursuant to Title 30-A, section 5685 
that do not displace current assessment-funded expenditures, the 
school administrative unit shall lower its assessment limit in 
that year in an amount equal to the net new funds. 
For purposes 
of this section, "net new funds" includes, but is not limited to, 
any additional state subsidies provided to the school district 
related to implementation of the goal of 55°'0 state funding of 
kindergarten to grade 12 education costs pursuant to the School 
Finance Act of 2003 set forth in chapter 606-C and includes the 
net of any additional local costs or additional state subsidies 
resulting 
from 
implementation 
of 
the 
essential 
programs 
and 
services model set forth in chapt-ar 606-B, 
and "net new funds" 
means the amount of subsidy received by the unit from the State 
in that fiscal year, with respect to services funded in whole or 
in part by assessment, less the following product: 
the amount of 
such subsidy received in the prior fiscal year multiplied by an 
adjustment factor. 
The adjustment factor equals: 
one plus the 
income growth factor defined in subsection 3 plus the annual 
property growth factor as defined in subsection 1 
for member 
municipalities. 
In 
the 
event 
a 
school 
administrative 
unit 
receives 
net 
new 
funds 
in 
any 
fiscal 
year 
for 
which 
its 
assessment limit has 
not 
been 
adjusted as 
provided in this 
subsection, 
the 
school 
administrative 
unit 
shall 
adjust its 
assessment limit in the following year in an amount equal to the 
net new funds. 
5. 
Extraordinary event. 
Upon the affirmative vote of its 
legislative body, 
a 
school administrative unit may exceed its 
assessment limit in an amount necessary to comply with a court 
order 
or 
decree 
or 
to 
respond 
to 
an 
extraordinary 
event. 
"Extraordinary event" includes any catastrophic event outside the 
control __ of 
the legislative body, 
such 
as 
natural disasters, 
severe weather events, acts of God, acts of terrorism, fire, war 
and riots. 
"Extraordinary event" does not include changes in 
economic conditions, revenue shortfalls or increases in salaries 
or benefits. 
An 
appropriation under this subsection may not 
cause the unit's assessment limit to be adjusted for any future 
fiscal years and may not continue for longer than reguired to 
comply 
with 
the 
court 
order 
or 
decree 
or 
address 
the 
extraordinary event. 
6. 
Election. 
A school administrative unit may elect to 
raise 
its 
assessment 
limit 
upon 
the 
affirmative 
vote 
of 
a 
majority of the voters of the unit voting by referendum, which 
may be held at any regular or special election. 
Notwithstanding 
any law to the contrary, the referendum may be called only upon 
the affirmative vote of a majority of the governing body of the 
school administrative unit and must be governed according to 
state law for municipalities under Title 30-A or according to any 
specific law or charter applicable to that unit. 
The warrant for 
the 
referendum must set forth the c;ruestion in the 
following 
form: 
"Do you favor raising the levy limit of [name of school 
administrative unit] for the£1!..rpose of [insert purpose]?" 
7. 
Exceeding base-year relationship to essential programs 
and 
services 
school 
funding 
model: 
referendum 
ratification 
required. 
Beginning with the 2006-2007 school year budget, the 
legislative body of a school administrative unit must approve or 
otherwise 
ratify by 'a 
referendum process 
and 
in 
a 
separate 
article any school budget that appropriates 
a 
combination of 
state 
and 
local 
resources 
that 
exceeds 
the 
total 
budget 
identified as reasonably necessary for that school administrative 
uni t 
according to this subchapter, as divided by its base-year 
factor. 
For 
the 
purposes 
of 
this 
subsection, 
any 
school 
administrative unit's base-year factor is calculated with the 
numerator 
being 
the 
total 
budget 
identified 
as 
reasonably 
necessary for that school administrative unit according to this 
chapter for the 2005-2006 school year and the denominator being 
the actual amount of state and local resources appropriated for 
the school administrative unit by its legislative body for that 
Same fiscal year, except that the base-year factor may not exceed 
1.0. 
The referendum procedures governing voting on the school 
budget 
adoption 
or 
ratification must 
be 
in 
accordance 
with 
sections 1305, 1305-B, 1701-8 or, for municipal school systems, 
Title 30-A, section 2528, and the article presented to the voters 
must be in the following form: 
"Do you favor adopting a school 
budget that exceeds the school budget identified as reasonably 
necessary according to the essential programs and services school 
funding model?" 
8. 
Treatment of surplus. 
Any assessments collected by a 
school administrative unit in any fiscal year in excess of its 
assessment limit, as determined by a final audited accounting, 
must be transferred to a property tax relief fund, which each 
school administrative unit shall establish, and used to reduce 
assessments 
in 
subsequent 
fiscal 
years. 
To 
the 
extent 
the 
transfers required by this section cannot be accomplished under 
the financial management authority vested in the school officers, 
the transfers must be authorized by an action of the school 
administrative 
unit's 
legislative 
body. 
Nothing 
in 
this 
subsection 
is 
intended 
to 
limit 
the 
ability 
of 
a 
school 
administrative unit to maintain adequate reserves or balance of 
allocations as allowed by law, provided that annual allocations 
or 
appropriations 
of 
funds 
to 
reserves 
are 
treated 
as 
appropriations subject to the appropriation limits set forth in 
subsection 1. 
9. 
Enforcement. 
In the event a school administrative unit 
makes 
appropriations 
in 
violation 
of 
this 
section, 
the 
commissioner may require the unit to adjust its appropriation 
limit downward in an amount equal to the illegal appropriation 
and 
may 
impose 
such other penalties 
as 
the 
Legislature 
may 
provide. 
PARTD 
Sec. D-l. 30-A MRSA §706-A is enacted to read: 
§706-A. 
Limitation on appropriations 
1. 
Appropriation limit 
est~lished. 
Notwithstanding any 
other provision of law, a county may not in any fiscal year make 
an appropriation, including an appropriation to reserves, except 
as otherwise provided in this section when such an appropriation 
is funded by an assessment on its member municipalities and when 
the appropriation would cause the county to exceed its assessment 
limit for the fiscal year. 
A county's assessment limit for any 
fiscal year must be set at its assessment limit for the prior 
fiscal year multiplied by the following sum: one plus the income 
growth factor set forth in subsection 3 plus the annual property 
growth factor for its member municipalities. 
The annual property 
growth factor 
for 
member municipalities is 
a 
fraction whose 
denominator is the total combined valuation of all the member 
municipalities for the tax year associated with the county's 
fiscal year and whose numerator is the total combined increase in 
the assessed valuation of any real or personal property in all 
the member municipalities during the prior tax year that may 
become subject to taxation for the first time, may be taxed as a 
separate parcel for the first time during the current tax year or 
has had an increase in its assessed valuation over the prior 
year's valuation as a result of improvements to or expansion of 
the 
property. 
In 
establishing 
the 
property 
growth 
factor under this section, the county must rely on the total 
valuation and increased valuation calculations of all the member 
municipalities under section 5721-A, subsection 1 for its most 
recently concluded fiscal year. 
2. 
Transition: 
extraordinary events. 
The 
appropriation 
limi t 
established in subsection 1 must become effective for a 
county for its first full fiscal year following the effective 
date of this section. 
A. 
For purposes of determining the assessment limit for the 
first fiscal year for which this section is effective, the 
limit must be set at the amount assessed by the county on 
its 
member 
municipalities 
during 
the 
prior 
fiscal 
year 
multiplied by the following sum: one plus the income growth 
factor set forth in subsection 3 plus the annual property 
growth factor for its member municipalities set forth in 
subsection 1. 
B. 
In the event the prior year' s assessment reflects the 
effect of extraordinary, nonrecurring events, the county may 
submit a written notice to the State Tax Assessor requesting 
an 
adjustment 
in 
the 
assessment 
calculation, 
which 
adjustment must be determined in a reasonable amount of time. 
3. 
Income 
groWth 
factor. 
The 
income 
growth 
factor 
applicable to fiscal years following the effective date of this 
section is the base growth factor, which for purposes of this 
section means the average real personal income growth rate as 
defined in Title 5, section 1665, subsection 1, which rate may 
not exceed 2.75%. 
For fiscal years commencing after such time as 
the state tax burden ranks in the middle 1/3 of all states, the 
growth factor must become the personal income growth factor as 
defined in Title 5, section 1664. 
For purposes of this section, 
"state tax burden" has the same meaning as set forth in Title 5, 
section 1664. 
For any fiscal year thereafter, if the State Tax 
Assessor determines pursuant to Title 5, section 1664 that the 
state tax burden has increased to the highest 1/3 of all states, 
the growth factor for the following fiscal year must be the base 
growth factor. 
In all other fiscal years when the state tax 
burden ranks in the middle 1/3 of all states, the growth factor 
must be the personal income growth factor. 
4. 
Adjustment 
for 
new state 
funding. 
In 
addition 
to 
subsection 3, if the State provides net new funds to a county for 
existing services funded in whole or in part by assessments, 
other than required state mandate funds pursuant to section 5685 
that do not displace current assessment-based expenditures, the 
county must lower its assessment limit in that year in an amount 
equal 
to 
the 
net 
new 
funds. 
For 
purposes 
of 
Page ll-LR0891(1) 
this 
subsection, 
"net 
new 
funds" 
means 
the 
amount 
of 
funds 
received by the county from the State in that fiscal year, with 
respect to services funded in whole or in part by assessments, 
less the following product: 
the amount of such funds received in 
the prior fiscal year multiplied by an adjustment factor. 
The 
adjustment factor eguals: 
one plus the 
income growth factor 
described in subsection 3 plus the annual property growth factor 
for member municipalities as defined in subsection 1. 
In the 
event a 
county receives net new funds in any fiscal year for 
which its assessment limit has not been adj usted as provided in 
this subsection, the county must adjust its assessment limit in 
the following year in an amount egual to the net new funds. 
5. 
Extraordinary event. 
Upon the affirmative vote of its 
governing body, 
a county may exceed its assessment limit in an 
amount necessary to comply with a court order or decree or to 
respond 
to 
an 
extraordinary 
event. 
"Extraordinary 
event" 
includes any catastrophic event outside the control of the county 
commissioners, such as natural disasters, severe weather events, 
acts 
of 
God, 
acts 
of 
terrorism, 
fire, 
war 
and 
riots. 
"Extraordinary 
event" 
does 
not 
include 
changes 
in 
economic 
conditions, 
revenue 
shortfalls 
or 
increases 
in 
salaries 
or 
benefits. 
An appropriation under this subsection may not cause 
the county's assessment limit to be 
adjusted for 
any future 
fiscal years and may not continue for longer than reguired to 
comply 
with 
the 
court 
order 
or 
decree 
or 
address 
the 
extraordinary event. 
6. 
Referendum. 
A county may elect to raise its assessment 
limit by referendum upon the affirmative vote of a majority of 
the voters 
of 
the 
county voting at 
any 
regular 
or 
special 
election. 
Notwithstanding 
any 
law 
to 
the 
contrary, 
the 
referendum may be called only upon the affirmative vote of 
a 
majority of the county commissioners, and the referendum must be 
governed according to state law and any applicable charter. 
The 
warrant for the referendum must set forth the guestion in the 
following form: 
"Do you favor raising the levy limit of [name of 
county] for the purpose of [insert purpose]?" 
1. 
Treatment of surplus. 
Any assessments collected by a 
county in any fiscal year in excess of its assessment limit, as 
determined by a final audited accounting, must be transferred to 
a property tax relief fund, which each county shall establish, 
and 
used 
to 
reduce 
assessments 
in 
subseguent 
fiscal 
years. 
Nothing in this subsection is intended to limit the ability of a 
county 
to 
maintain 
adeguate 
reserves 
as 
permitted 
by 
law, 
provided that annual allocations or appropriations of funds to 
reserves 
are 
treated 
as 
appropriations 
subject 
to 
the 
appropriation limits set forth in subsection 1. 
8. 
Enforcement. 
In the event a county makes appropriations 
in violation of this section,· the State Tax Assessor may require 
the 
county to adjust its appropriation limit downward in an 
amount equal to the illegal appropriation and may 
impose any 
other penalties the Legislature provides. 
UHE 
Sec. E-l. 30-A MRSA §7102, as enacted by PL 1987, c. 737, Pt. 
A, §2 and Pt. C, §106 and amended by PL 1989, c. 6; c. 9, §2; and 
c. 104, Pt. C, 
§§8 and 10, is further amended by adding at the 
end a new paragraph to read: 
The appropriation limitations set forth in section 5721-A 
are applicable to the appropriations and revenues of plantations. 
SUMMARY 
This bill establishes spending limitation systems governing 
state, 
county and local governments 
and school administrative 
uni ts. 
The bill is modeled on the spending limitation system 
provided in an initiative proposed by the Maine State Chamber of 
Commerce, with some adjustments relating to the use of certain 
governance systems at "the local, school and county levels. 
The 
bill establishes a growth allowance, based on the average real 
growth of total personal 
income, 
to 
govern 
the 
year-to-year 
growth 
of 
the 
State' s 
General 
Fund 
appropriations, 
county 
assessments, 
school 
district 
assessments, 
the 
property 
tax 
commitments levied for municipal school systems and the property 
tax 
commitments 
levied 
for 
municipal 
services. 
For 
local 
government, 
the 
base 
growth 
allowance 
is 
adjusted 
by 
the 
appropriate property growth factor, which is a measure of new 
taxable property introduced into a municipality or multimunicipal 
region. 
Except for limited emergency situations, the Legislature 
may exceed its spending limit only by a 2/3 vote of both Houses. 
Except 
for 
emergency 
situations, 
the 
spending 
limit 
may 
be 
exceeded by county, school and local governments only by placing 
the budget before the voters at referendum, unless alternative 
budget adoption procedures are established by charter amendment 
or the adoption of a local ordinance by referendum approval. 
The 
budgets of school administrative units are exempted 
from 
the 
limitations to the extent those budgets, on a year-to-year basis, 
do not exceed a baseline relationship between the total school 
budget and the total essential programs and services allocation 
for that school administrative unit. 
Page l3-LR0891(1)