An Act To Limit Homestead Property Taxes to 5% of Income
Maine Legislature, Session 123, LD 1671
Committee: Taxation
Sponsors: WOODBURY
Amends: 20-A MRSA §1310, 20-A MRSA §1703, 36 MRSA §697, 36 MRSA §6204, 36 MRSA §6221, 30-A MRSA §5681, 30-A MRSA §6201, 30-A MRSA §6204, 36 MRSA §699, 36 MRSA §700-B, 36 MRSA §714, 36 MRSA §1815, 5 MRSA §1531, 20-A MRSA §15671-A, 20-A MRSA §15672, 30-A MRSA §706-A

Legislative Document 
No. 1671 
H.P.1180 
House of Representatives, March 22, 2007 
An Act To Limit Homestead Property Taxes to 5% of Income 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative WOODBURY of Yarmouth. 
Primed nil rt:l.:ydet..l paptr 
'7r/~ /J7.17!II£~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 20-A MRSA §1310, sub-§6, as repealed and replaced by PL 2003, c. 
212, § 1, is amended to read: 
6. Enforcement. If a municipal treasurer fails to pay the installment due, or any 
part, on the dates required, to initiate collection procedures, the treasurer of the school 
administrative district may notify the municipal treasurer of the failure to pay. Interest 
accrues on each unpaid installment at the rate established under Title 36, section 186 
beginning on the 60th day after the date the installment is due under subsection 4. If 
payment of an installment is not made within 60 days after the due date, the treasurer of 
the district may initiate an action in Superior Court to compel payment of the delinquent 
installment. 
The court shall determine the amount owed by the municipality to the 
district and shall order the municipal treasurer to pay all delinquent installments, accrued 
interest and any court costs and reasonable attorney's fees incurred by the district. To 
ensure prompt payment of the delinquent installments, the court may require that amounts 
due to the municipality from the State under Title 30 A, section 5681 and Title 36, 
sections section 578 and 685 be paid to the district until the amount determined by the 
court is satisfied. The court shall promptly notify the disbursing state agency of the 
determination and direct the agency to make the required change in payee and the 
amounts to be paid. If additional funds are needed to satisfy the amount determined by 
the court to be paid to the district, the court may order the attachment or trustee process 
and sale of real or personal property owned by the municipality or the attachment of the 
municipality's bank accounts or require property tax payments to the municipality to be 
turned over to the court and may pay the amount owed the district from the proceeds and 
return any excess to the municipality. 
Sec. A-2. 20-A MRSA §1703, suh-§6, as repealed and replaced by PL 2003, c. 
212, §2, is amended to read: 
6. Enforcement. If a municipal treasurer fails to pay the installment due, or any 
part, on the dates required, to initiate collection procedures, the treasurer of the 
community school district may notify the municipal treasurer of the failure to pay. 
Interest accrues on each unpaid installment at the rate established under Title 36, section 
beginning on the 60th day after the date the installment is due under subsection 4. If 
payment of an installment is not made within 60 days after the due date, the treasurer of 
the district may initiate an action in Superior Court to compel payment of the delinquent 
installment. The court shall determine the amount owed by the municipality to the 
district and shall order the municipal treasurer to pay all delinquent installments, accrued 
interest and any court costs and reasonable attorney's fees incurred by the district. To 
ensure prompt payment of the delinquent installments, the court may require that amounts 
due to the municipality from the State under Title 30 A, section 5681 and Title 36, 
sections section 578 and 685 be paid to the district until the amount determined by the 
court is satisfied. The court shall promptly notify the disbursing state agency of the 
determination and direct the agency to make the required change in payee and the 
amounts to be paid. If additional funds are needed to satisfy the amount determined by 
Page I - 123LR2147(Ol)-1 
I 
the court to be paid to the district, the court may order the attachment or trustee process 
and sale of real or personal property owned by the municipality or the attachment of the 
municipality's bank accounts or require property tax payments to the municipality to be 
turned over to the court and may pay the amount owed the district from the proceeds and 
return any excess to the municipality. 
Sec. A-3. 36 MRSA c. 105, sub-c. 4-B, as amended, is repealed. 
Sec. A-4. 36 MRSA §697, as enacted by PL 2005, c. 623, §J, is amended to read: 
§697. Audits; determination of bureau 
The bureau may audit the records of a municipality to ensure compliance with this 
subchapter. 
The bureau may independently review the records of a municipality to 
II 
determine if exemptions have been properly approved. If the bureau determines that an 
exemption was improperly approved for any of the 3 years immediately preceding the 
determination, the bureau shall ensure, by setoff against other payments due the 
municipality under this subchapter or sub6fiapter 4 S, that the municipality is not 
reimbursed for the exemption. 
Sec. A-S. 36 MRSA c. 843 is enacted to read: 
CHAPTER8~ 
HOMESTEAD TAX CREDIT 
§5501. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Benefit base. "Benefit base" means property taxes accrued or rent constituting 
property taxes accrued. The benefit base for rent constituting property taxes accrued may 
not exceed $3,000 for persons filing as single individuals or married persons filing 
separate returns and $4,000 for households with 2 or more members. In the case of a 
claimant paying both rent and property taxes for a homestead, "benefit base" means both 
property taxes accrued and rent constituting property taxes accrued, except that the limit 
on rent constituting property taxes accrued is adjusted by the same percentage as the 
percentage of the year that the claimant was a renter. 
2. Claimant. "Claimant" means an individual who: 
A. Has filed a claim for a credit under this chapter; 
B. Was domiciled in this State and occuRied a homestead in this State during the 
entire calendar year preceding the year in which a credit is requested; and 
C. 
Owned or otherwise maintained a homestead in this State during the entire year 
for which a credit is requested and occupied the homestead for at least 6 months 
during that year. A claimant is not excluded because the claimant rents out the 
homestead for less than 32 days in the aggregate during that year. 
Regardless of how many names of individuals appear on the property deed, the person 
who meets the qualifications described in this subsection and proves sole responsibility 
for the payment of the property taxes on the subject property is the claimant with respect 
to that property. If 2 or more individuals meet the qualifications in this subsection and 
share the payment of the rent or the responsibility for the payment of the property taxes, 
each individual may apply on the basis of the rent paid or the property taxes levied on the 
homestead that reflect the ownership percentage of the claimant and the claimant's 
household. 
If 2 or more individuals claim the same property, the matter must be referred to the State 
Tax Assessor, whose decision is final. Ownership of a homestead under this chapter may 
be by fee, by life tenancy, by bond for deed, as mortgagee or by any other possessory 
interest in which the owner is personally responsible for the tax for which a refund is 
claimed. 
3. Elderly household. "Elderly household" means a household in which: 
A. At least one member of the household has attained 62 years of age during the year 
for which relief is requested; 
B. The claimant is currently not married and has attained 55 years of age during the 
year for which relief is requested and is, due to disability, receiving federal disability 
payments, such as supplemental security income; or 
C. The claimant is currently married and has attained 55 years of age during the year 
for which relief is requested and both the claimant and the claimant's spouse are, due 
to disability, receiving federal disability payments, such as supplemental security 
Income. 
4. Gross rent. "Gross rent" means rental paid at arm's length solely for the right of 
occupancy of a homestead, exclusive of separately stated charges for any utilities, 
services, furniture, furnishings or personal property appliances furnished by the landlord 
as part of the rental agreement. If the landlord and tenant have not dealt with each other at 
arm's length, and the State Tax Assessor is satisfied that the gross rent charged was 
excessive, the State Tax Assessor may adjust the gross rent to a reasonable amount for 
purposes of this chapter. 
5. Homestead. "Homestead" means residential real property in this State that is 
occupied by the claimant as the claimant's permanent residence and that is owned or 
rented by a claimant or occupied by a claimant as a shareholder in a cooperative housing 
corporation. 
6. Inflation adjustment factor. "Inflation adjustment factor" means one plus the 
annualized cost-of-living adjustment calculated under section 5403. 
7. Income. "Income" means federal adjusted gross income. 
8. 
Permanent residence. 
"Permanent residence" means that place where an 
individual has a true, fixed and permanent home and principal establishment to which the 
individual, whenever absent, has the intention of returning. An individual may have only 
one permanent residence at a time and, once a permanent residence is established, that 
residence is presumed to continue until circumstances indicate otherwise. 
9. 
Property taxes accrued. 
"Property taxes accrued" means property taxes 
exclusive of special assessment, delinquent interest and charges for service levied on a 
claimant's homestead in this State as of April 1st. If a homestead is owned by 2 or more 
lLersons or entities as joint tenants or tenants in common, and one or more persons or 
entities are not members of the claimant's household, "property taxes accrued" is that part 
of property taxes levied on the homestead that reflects the ownership percentage of the 
claimant and the claimant's household. If a claimant and spouse own their homestead for 
II 
PMt of the vear for which relief is requested and rent it or a different homestead for part 
of the same tax year, "property taxes accrued" means taxes levied on the homestead on 
April 1 st, multiplied by the percentage of 12 months that the property was owned and 
occupied by the household as its homestead during the year for which relief is requested. 
When a household owns and occupies 2 or more different homesteads in this State in the 
same tax year, property taxes accrued relate only to that property occupied by the 
household as a homestead on April 1 st. If a homestead is an integral part of a larger unit 
such as a farm or a multipurpose or multidwelling building, "property taxes accrued" 
means that percentage of the total property taxes accrued that the val ue of the homestead 
is of the total value, except that property taxes accrued do not include any portion of taxes 
claimed as a business expense for federal income tax purposes. For purposes of this 
chapter, "unit" refers to the parcel of property separately assessed of which the homestead 
is a part. If a homestead is occupied by a claimant as a shareholder in a cooperative 
housing corporation, "property taxes accrued" means the amount assessed by the 
cooperative housing corporation as the claimant's share of the property taxes of the 
cooperative housing project. 
10. Rent constituting property taxes accrued. "Rent constituting property taxes 
accrued" means 20% of the gross rent actually paid in cash or its equivalent in any tax 
year by a claimant and the claimant's household solely for the right of occupancy of their 
Maine homestead in the tax year and which rent constitutes the basis, in the succeeding 
calendar year, of a claim for relief under this chapter by the claimant. 
§5502. Homestead tax credit 
1. Credit calculation. A homestead tax credit is equal to 50% of that portion of the 
benefit base that exceeds 4% but does not exceed 6% of income plus 100% of that portion 
of the benefit base that exceeds 6% of income. 
2. Maximum credit for rent constituting property taxes accrued. The maximum 
credit for rent constituting property taxes accrued is $2,000. 
3. Minimum benefit. The minimum credit that may be allowed is: 
A. Ten dollars for rent constituting property taxes accrued; or 
B. One hundred dollars for property taxes accrued. 
4. Manner of claiming credit. A claim for a credit may be made on a claimant's 
individual income tax return or on a separate form filed with the Bureau of Revenue 
Services on or after January 1 st and on or before the following April 15th. A person 
claiming a credit based on property taxes accrued shall specify the municipality where 
that person resides or intends to reside on April 1 st of the year in which the claim is 
made. 
5. Provision of credit. The credit must be provided as follows. 
A. A person claiming a credit based on rent constituting property taxes is entitled to 
a refundable credit toward the tax owed under this Part. 
If the claimant is not 
required to file a return under this Part, the Bureau of Revenue Services shall issue 
payment in the amount of the credit to the claimant by June 1 st of the year in which 
the claim is filed. 
B. 
A person claiming a credit based on property taxes accrued may choose one of 
the following options. 
(1) The Bureau of Revenue Services shall pay the amount of the cred it to the 
municipality specified by the claimant on the claim for credit by June 1 st of the 
year in which the claim is filed to be applied against property taxes assessed on 
the claimant's homestead. 
(2) The claimant may receive a refundable credit against the tax assessed under 
this Part equal to 50% of the amount of the credit calculated under subsections 1 
t03. 
§5503. Elderly option 
1. Elderly option. If a claimant representing an elderly household would qualify for 
a larger credit under this section than the claimant would receive under section 5502, the 
claimant may choose to receive the credit calculated under this section. 
2. Single-member elderly households. For single-member elderly households, the 
credit is calculated as follows: 
If income equals: 
$0 to $12,000 
$12,001 to $12,400 
$12,401 to $12,800 
$12,801 to $13,200 
The credit equals: 
100% of the benefit base up to a 
maximum of $400 
75% of the benefit base up to a maximum 
of$300 
50% of the benefit base up to a maximum 
of $200 
25% of the benefit base up to a maximum 
of$100 
• 
3. Elderly households with 2 or more members. For elderly households with 2 or 
more members, the credit is calculated as follows: 
If income equals: 
$0 to $14,700 
ll1.,]0 1 to $15,200 
$15,201 to $15,800 
$15,801 to $16,300 
§SS04. Annual adjustment 
The credit equals: 
100% of the benefit base up to a 
maximum of $400 
75% ofthe benefit base up to a maximum 
of$30~ 
50% of the benefit base up to a maximum 
of$200 
25% of the benefit base up to a maximum 
of $100 
Beginning September 15, 2007, the State Tax Assessor shall annually multiply the 
inflation adjustment factor by the household income levels in section 5503 and the 
maximum benefit base amounts specified in section 5501, subsection 1, as previously 
adjusted. The result must be rounded to the nearest $50 and applies to the application 
period beginning the next January 1 st. 
§SSOS. Administration 
The State Tax Assessor shall make available suitable forms with instructions for 
claimants. The claim must be in the form prescribed by the assessor and must be signed 
by the claimant. 
The assessor shall also provide a paperless option for filing an 
application under this chapter. 
§5S06. Coordination required 
The bureau shall seek the advice and cooperation of the Department of Health and 
Human Services, Bureau of Elder and Adult Services, Bureau of Family Independence 
and Bureau of Child and Family Services; advocates for elderly and low-income 
individu_~ls; municipal officials: and other interested agencies and organizations in 
9~~eloping the application form and instructions for the credit provided in this chapter 
and in achieving full particjpation by those persons eligible for the credit. 
Sec. A-6. 36 MRSA §6204, as amended by PL 2005, c. 2, Pt. E, §3 and affected 
by §§7 and 8, is further amended to read: 
§6204. Filing date 
A claim may not be paid unless the claim is filed with the Bureau of Revenue 
Services on or after August I st and on or before the following May 31 st, except th'lt 
claims filed for the period beginning August 1, 2007 must be filed on or before December 
1,2007. 
Sec. A-7. 36 MRSA §6221 is enacted to read: 
§6221. 
Repeal 
This chapter is repealed January 1, 2008. 
PARTB 
Sec. B-1. 21-A MRS A §1124, sub-§2, ~, as amended by PL 2003, c. 673, Pt. 
EE, § 1, is further amended to read: 
B. 
Two million dollars of the revenues from the taxes imposed under Title 36, Parts 
and 8 and credited to the General Fund, transferred to the fund by the State 
Controller on or before January 1st of each year, beginning January 1, 1999. These 
revenues must be offset in an equitable manner by an equivalent reduction within the 
administrative divisions of the legislative branch and executive branch agencies. 
This section may not affect the f\clAds distributed to the Local Government fund 
under Title 30 A, section 5681. 
If the commission determines that the fund will not have sufficient revenues to cover 
the likely demand for funds from the Maine Clean Election Fund in an upcoming 
calendar year, by January 1 st the commission shall provide a report of its projections 
of the balances in the Maine Clean Election Fund to the Legislature and the Governor 
and may request that the State Controller make the following transfers to the Maine 
Clean Election Fund from the General Fund: 
(1) Up to $2,000,000 no later than February 28, 2006, reflecting an advance of 
the transfer of the amounts that would be received on or before January I, 2007 
pursuant to this paragraph; 
(2) Up to $2,000,000 no later than July 31, 2006, reflecting an advance of the 
transfer of the amounts that would be received on or before January 1, 2008 
pursuant to this paragraph; and 
(3) 
Up to $1,500,000 no later than September I, 2004, reflecting a partial 
advance of the transfer of the amounts that would be received on or before 
January 1, 2005 pursuant to this paragraph; 
Sec. B-2. 30-A MRSA §5681, as amended by PL 2005, c. 266, § 1, is repealed. 
Sec. B-3. 30-A MRSA §6201, sub-§6, as enacted by PL 2005, c. 266, §2, is 
repealed. 
Sec. B-4. 30-A MRS A §6202, as enacted by PL 2005, c. 266, §2, is amended to 
read: 
• 
IS 
• 
§6202. Fund source; nonlapsing; dedicated, special revenue account 
The fund consists of revenues transferred from the Local Government Fund pursuant 
to section 5681, subsection 5 B and any funds received as contributions from private and 
public sources. Eligible investment earnings credited to the assets of the fund become part 
of the assets of the fund. Any balance remaining in the fund at the end of any fiscal year 
must be carried forward to the next fiscal year. The fund is a dedicated, special revenue 
account. 
Sec. B-5. 30-A MRSA §6204, first ~, as enacted by PL 2005, c. 266, §2, IS 
amended to read: 
Except as otherwise provided by this section and section 5681, subsection 3, the fund 
is available solely for grants for qualifying projects. The department may use the fund to 
cover its costs of administration, including contracting for services to administer the 
grants. 
Sec. B-6. 36 MRSA §699, sub-§2, as enacted by PL 2005, c. 623, § 1, is amended 
to read: 
2. 
Intent. 
It is the intent of the Legislature to fund fully transfers to the 
Disproportionate 
Ta)( 
Burden 
Fund 
under 
section 
A, 
subsection 
and 
reimbursements under the business equipment tax reimbursement program under section 
6652, subsection 4, paragraph B. 
Sec. B-7. 36 MRS A §700-A, as enacted by PL 2005, c. 623, §1, is repealed. 
Sec. B-8. 36 MRSA §700-B, as enacted by PL 2005, c. 623, § 1, is amended to 
read: 
§700-B. Adjustments to revenue 
1. 
Certification. 
By June 30, 2009 and each subsequent year, the State Tax 
Assessor shall certify to the State Controller amounts certified to the Treasurer of State as 
reimbursements to be paid to municipalities during the fiscal year under section 694, 
subsection 5. The Treasurer of State shall certify to the State Controller payments due 
under section 700 A. 
2. Transfer. The State Controller shall transfer amounts certified under subsection 1 
to the Business Equipment Tax Reimbursement reserve account established, maintained 
and administered by the State Controller from the General Fund undedicated revenue 
within the individual income tax category after the reduction for the transfer to the Local 
Government Fund required by Title 30 A, section 5681, subsection 5. The assessor and 
the Treasurer of State shall pay amounts required under section 694, subsection 5 afl6 
section 700 A. 
Sec. B-9. 36 MRSA §714, as amended by PL 1987, c. 737, Pt. C, §§78 and 106 
and PL 1989, c. 6; c. 9, §2; and c. 104, Pt. C, §§8 and 10, is repealed. 
Sec. B-I0. 36 MRSA §1815, sub-§2, as enacted by PL 1999, c. 477, §1, IS 
amended to read: 
2. Monthly transfer. By the 20th day of each month, the assessor shall notify the 
State Controller and the Treasurer of State of the amount of revenue attributable to the tax 
collected under this Part in the previous month on sales occurring on the Passamaquoddy 
reservation at either Pleasant Point or Indian Township reduced by the transfer to the 
Local Government Fund required by Title 39 A, section 5681. When notified by the 
assessor, the State Control:er shaH transfer that amount to the Passamaquoddy Sales Tax 
Fund. 
PART C 
• 
II 
Sec. C-l. 5 MRSA §1531, sub-§I, as enacted by PL 2005, c. 2, Pt. A, §5 and 
affected by § 14, is repealed. 
Sec. C-2. 5 MRSA §1531, sub-§10 is enacted to read: 
10. Tax burden reduction factor. "Tax burden reduction factor" means: 
A. For fiscal years 2008-09 and 2009-10, 50%; 
B. For fiscal years 2010-11 and 2011-12, 60%; 
C. For fiscal years 2012-13 and 2013-14, 70%; 
D. For fiscal years 2014-15 and 2015-16, 80%; 
E. For fiscal years 2016-17 and 2017-18, 90%; and 
F. For fiscal year 2018-19 and later, 100%. 
Sec. C-3. 5 MRSA §1531, sub-§l1 is enacted to read: 
11. Total income growth factor. "Total income growth factor" means average real 
personal income growth plus forecasted inflation. 
Sec. C-4. 5 MRS A §1534, sub-§I, ~A, as enacted by PL 2005, c. 2, Pt. A, §5 
and affected by § 14, is amended to read: 
A. 
For the first fiscal year of the biennium, the General Fund appropriation 
limitation is equal to the biennial base year appropriation multiplied by one plus the 
spending growth limitation factor in subsection 2. 
Sec. C-5. 5 MRS A §1534, sub-§I, ~, as amended by PL 2005, c. 621, §3, is 
further amended to read: 
• 
B. 
For the 2nd year of the biennium, the General Fund appropriation limitation is 
the General Fund appropriation limitation of the first year of the biennium biennial 
base year appropriation multiplied by one plus the spending growth limitation factor 
in subsection 2. 
I 
II 
• 
Sec. C-6. 5 MRS A §1534, sub-§2, as enacted by PL 2005, c. 2, Pt. A, §5 and 
affected by § 14, is repealed and the following enacted in its place: 
2. Spending growth limitation factor. The spending growth limitation factor is the 
total income growth factor multiplied by the tax burden reduction factor. The spending 
growth limitation factor may not be less than zero. 
Sec. C-7. 20-A MRSA §15671-A, sub-§3, as amended by PL 2005, c. 2, Pt. D, 
§35 and affected by §§72 and 74 and c. 12, Pt. WW, § 18, is repealed. 
Sec. C-S. 20-A MRSA §15671-A, sub-§5, as amended by PL 2005, c. 519, Pt. 
AAAA, §2, is repealed. 
Sec. C-9. 20-A MRSA §15671-A, sub-§6 is enacted to read: 
6. Exceeding EPS local growth factor. If the sum of a school administrative unit's 
required local contribution determined pursuant to section 15688, subsection 3-A plus the 
state contribution as calculated pursuant to section 15688, subsection 3-A, paragraph D 
plus any state funds resulting from a transition adjustment pursuant to section 15686 plus 
any additional local amount proposed to be raised pursuant to section 15690, subsection 3 
exceeds the amount permitted to be spent by the school administrative unit for the 
preceding year by more than the education spending growth limit factor, the following 
provisions govern approval of that additional amount. 
A. The article approving the additional amount must conform to the requirements of 
section 15690, subsection 3, paragraph B. 
B. For all school administrative units that finally approve the school budget at a town 
meeting or district meeting, and notwithstanding section 1304, subsection 6; section 
1701, subsection 7; Title 30-A, section 2528, subsection 5; or any other provision of 
law, municipal charter provision or ordinance, the article must be approved by at 
least 2/3 of the school administrative unit's legislative body or, if the legislative body 
votes to approve the article by a simple majority but not by at least a 2/3 majority, 
the article must be finally approved by a majority of voters at referendum. 
C. For all school administrative units with a legislative body that adopts the school 
budget by a referendum process, the article must be approved by a majority of voters 
at referendum. 
D. For all school administrative districts and community school districts that have 
adopted the budget validation process established in sections 1305-A or 170 I-A, the 
article must be approved by a majority of the voters at the open district meeting and a 
majority of voters at the budget validation referendum. 
E. In a municipality where the responsibility for final adoption of the school budget 
is vested by the municipal charter in a council, this paragraph applies, except that the 
petition and referendum provisions apply only if the municipal charter does not 
otherwise provide for or prohibit a petition and referendum process with respect to 
the matters described in this paragraph. 
(1) A majority of the entire membership of the school board or committee must 
approve the additional amount in a regular budget meeting. 
(2) An article approving the additional amount must conform to the requirements 
of section 15690, subsection 3, paragraph B and be approved by at least 2/3 of 
the entire membership of the council in a vote taken in accordance with section 
15690, subsection 5 or, if the council votes to approve the article by a simple 
majority of the council but not by at least a 2/3 majority of the entire 
membership, by a majority of voters at referendum. 
(3) If an article is approved by at least 2/3 of the entire membership of the 
council pursuant to subparagraph (2), the voters may petition for a referendum 
vote on the same article in accordance with subparagraph (4). If a petition is filed 
in accordance with subparagraph (4), the vote of the council is suspended 
pending the outcome of the referendum vote. Upon approval of the article by a 
majority of the voters voting in that referendum, the article takes effect. If the 
article is not approved by a majority of the voters voting in that referendum, the 
article does not take effect. Subsequent to the vote, the school committee or 
board may again propose an additional amount, subject to the requirements of 
this section. 
(4) If a written petition, signed by at least 10% of the number of voters voting in 
the last gubernatorial election in the municipality, requesting a vote on the 
additional amount is submitted to the municipal officers within 30 days of the 
council's vote pursuant to subparagraph (2), the article voted on by the council 
must be submitted to the legal voters in the next regular election or a special 
election called for the purpose. The election must be held within 45 days of the 
submission of the petition. The election must be called, advertised and conducted 
according to the law relating to municipal elections, except that the registrar of 
voters is not required to prepare or the clerk to post a new list of voters and 
absentee ballots must be prepared and made available at least 14 days prior to the 
date of the referendum. For the purpose of registration of voters, the registrar of 
voters must be in session the secular day preceding the election. The voters shall 
indicate by a cross or check mark placed against the word "Yes" or "No" their 
opinion on the article. The results must be declared by the municipal officers and 
entered upon the municipal records. 
Sec. C-IO. 20-A MRS A §15672, sub-§3-A is enacted to read: 
3-A. Education spending growth limit factor. "Education spending growth limit 
factor" means the EPS local growth factor multiplied by the tax burden reduction factor 
as defined in Title 5, section 1531, subsection 10. The education spending growth limit 
factor may not be less than zero. 
Sec. C-l1. 20-A MRSA §15672, sub-§7-B is enacted to read: 
7-B. EPS local growth factor. "EPS local growth factor" means the percentage 
increase in the state-determined cost of essential programs and services for a school 
administrative unit over the preceding year. 
• 
1 
• 
Sec. C-12. 30-A MRSA §706-A, sub-§l, ~C-l is enacted to read: 
C-l. "Local distribution factor" means the figure detennined by dividing the property 
growth factor by the average of the property growth factors for all municipalities. 
Sec. C-13. 30-A MRSA §706-A, sub-§l, W is enacted to read: 
F. "Tax burden reduction factor" means: 
(I) For fiscal years 2008-09 and 2009-10, 50%; 
(2) For fiscal years 2010-11 and 2011-12, 60%; 
(3) For fiscal years 2012-13 and 2013-14,70%; 
(4) For fiscal years 2014-15 and 2015-16,80%; 
(5) For fiscal years 2016-17 and 2017-18, 90%; and 
(6) For fiscal year 2018-19 and later, 100%. 
Sec. C-14. 30-A MRS A §706-A, sub-§l, ~G is enacted to read: 
G. "Total income growth factor" means average real personal income growth plus 
forecasted inflation. 
Sec. C-lS. 30-A MRSA §706-A, sub-§3, as enacted by PL 2005, c. 2, Pt. B, § 1 
and affected by §§2 and 4 and c. 12, Pt. WW, § 14, is repealed and the foIlowing enacted 
in its place: 
3. Growth limitation factor. 
The growth limitation factor is the total income 
growth factor multiplied by the local distribution factor and the tax burden reduction 
factor. The growth limitation factor may not be less than zero. 
Sec. C-16. 30-A MRSA §706-A, sub-§S, ~, as enacted by PL 2005, c. 2, Pt. B, 
§1 and affected by §§2 and 4 and c. 12, Pt. WW, §14, is amended to read: 
B. 
The county assessment limit may be exceeded only as provided in subsection :;. 
7-A. 
Sec. C-17. 30-A MRSA §706-A, sub-§S, ~, as enacted by PL 2005, c. 348, § I, 
is amended to read: 
D. 
For fiscal years 2005-06 and 2006-07 in Sagadahoc County, and fiscal years 
2006 and 2007 in Lincoln County, that portion of the county assessment that is 
attributable to the costs of construction, debt service, operation and maintenance of a 
new jail facility authorized under chapter 17 is not subject to paragraphs A, Band C 
or to subsections 2, 6 and :;. 7-A. Notwithstanding subsection 2, paragraph A, the 
county assessment limit for fiscal year 2007-08 for Sagadahoc County and fiscal year 
2008 in Lincoln County is the county assessment for each county for the previous 
fiscal year, multiplied by one plus the growth limitation factor pursuant to subsection 
3. Notwithstanding subsection 2, paragraph C, the county assessments for Sagadahoc 
County in fiscal year 2008-09 and subsequent fiscal years and for Lincoln County in 
fiscal year 2009 and subsequent fiscal years are subject to subsection 2, paragraph B. 
Page :2 - 123LJUj'i7(Ol}-1 
Sec. C-18. 30-A MRSA §706-A, sub-§6, as enacted by PL 2005, c. 2, Pt. B, § 1 
and affected by §§2 and 4 and c. 12, Pt. WW, §14, is amended to read: 
6. Increase in county assessment limit. The county assessment limit established in 
subsection 2 may be increased for other purposes only as provided in subsection + 7-A. 
Sec. C-19. 30-A MRSA §706-A, sub-§7, as affected by PL 2005, c. 2, Pt. B, §4 
and amended by c. 12, Pt. WW, §10 and affected by §§13 and 14, is repealed. 
Sec. C-20. 30-A MRSA §706-A, sub-§7-A is enacted to read: 
7-A. Process for exceeding county assessment limit. A county may exceed or 
increase the county assessment limit only if approved by a vote of a majority of all the 
members of both the county budget committee or county budget advisory committee and 
the county commissioners and the approval is ratified at referendum. For the purposes of 
conducting the referendum election, the article voted on by the commissioners and budget 
advisory committee must be submitted to the legal voters in the next regular election or a 
special election called for that purpose. The election must be called, advertised and 
conducted according to the law relating to municipal elections, except that the registrar of 
voters is not required to prepare or the clerk to post a new list of voters, the filing 
requirement contained in section 2528 does not apply and absentee ballots must be 
prepared and made available at least 14 days prior to the date of the referendum. For the 
purpose of registration of voters, the registrar of voters must be in session the business 
day preceding the election. The voters shall indicate by a cross or check mark placed 
against the word "Yes" or "No" their opinion on the article. The results must be declared 
by the county commissioners and entered upon the county records. 
Sec. C-21. 30-A MRSA §S721-A, sub-§l, ~-1 is enacted to read: 
B-1. "Local distribution factor" means the figure determined by dividing the property 
growth factor by the average of the property growth factors for all municipalities. 
Sec. C-22. 30-A MRSA §S721-A, sub-§l, ~F is enacted to read: 
F. "Tax burden reduction factor" means: 
(l) For fiscal years 2008-09 and 2009-10, 50%; 
(2) For fiscal years 2010-11 and 201 1-12, 60%; 
(3) For fiscal years 2012-13 and 2013-14,70%; 
(4) For fiscal years 2014-15 and 2015-16,80%; 
(5) For fiscal years 2016-17 and 2017-1 8, 90%; and 
(6) For fiscal year 2018-19 and later, 100%. 
Sec. C-23. 30-A MRSA §S721-A, sub-§l, ~G is enacted to read: 
G. "Total income growth factor" means average real personal income growth plus 
forecasted inflation. 
• 
Sec. C-24. 30-A MRSA §S721-A, sub-§S, ~, as enacted by PL 2005, c. 2, Pt. 
C, § 1 and affected by §§3 and 5 and c. 12, Pt. WW, § 16, is amended to read: 
B. 
The property tax levy limit may be exceeded only as provided in subsection + 7-
A. 
Sec. C-2S. 30-A MRSA §S721-A, sub-§6, as enacted by PL 2005, c. 2, Pt. C, § 1 
and affected by §§3 and 5 and c. 12, Pt. WW, §16, is amended to read: 
6. Increase in property tax levy limit. The property tax levy limit established in 
subsection 2 may be increased for other purposes only as provided in subsection + 7-A. 
Sec. C-26. 30-A MRSA §S721-A, sub-§7, as affected by PL 2005, c. 2, Pt. C, §5 
and amended by c. 12, Pt. WW, § 12 and affected by §§ 15 and 16, is repealed. 
II 
Sec. C-27. 30-A MRSA §S721-A, sub-§7-A is enacted to read: 
7-A. Process for exceeding property tax levy limit. A municipality may exceed or 
increase the property tax levy limit only by the following means. 
A. If the municipal budget is adopted by town meeting, the property tax levy limit 
may be exceeded only if approved by at least 2/3 of the assembled membership of the 
town meeting or, if the legislative body votes to approve the article by a simple 
majority but not by at least a 2/3 majority, the property tax levy limit may be 
exceeded only if finally approved by a majority of voters at referendum. 
B. If the municipal budget is adopted by referendum, the property tax levy limit may 
be exceeded only if a separate article that specifically identifies the intent to exceed 
the property tax levy limit is approved by a simple majority of the referendum voters. 
C. 
In a municipality where the responsibility for final adoption of the budget is 
vested by the municipal charter in a council, this paragraph applies, except that the 
petition and referendum provisions apply only if the municipal charter does not 
otherwise provide for or prohibit a petition and referendum process with respect to 
the matters described in this paragraph. 
(1) An article approving the property tax levy limit must be approved by at least 
2/3 of the entire membership of the councilor, if the council votes to approve the 
article by a simple majority of the council but not by at least a 2/3 majority of the 
entire membership, by a majority of voters at referendum. 
I 
(2) If an article is approved by at least 2/3 of the entire membership of the 
council pursuant to subparagraph (1), the voters may petition for a referendum 
vote on the same article in accordance with subparagraph (3). If a petition is filed 
in accordance with subparagraph (3), the vote of the council is suspended 
pending the outcome of the referendum vote. Upon approval of the article by a 
majority of the voters voting in that referendum, the article takes effect. If the 
article is not approved by a majority of the voters voting in that referendum, the 
article does not take effect. Subsequent to the vote, the school committee or 
board may again propose an additional amount, subject to the requirements of 
this section. 
I 
(3) If a written petition, signed by at least 10% of the number of voters voting in 
the last gubernatorial election in the municipality, requesting a vote on the 
additional amount is submitted to the municipal officers within 30 days of the 
council's vote pursuant to subparagraph (1), the article voted on by the council 
must be submitted to the legal voters in the next regular election or a special 
election called for the purpose. The election must be held within 45 days of the 
submission of the petition. The election must be called, advertised and conducted 
according to the law relating to municipal elections, except that the registrar of 
voters is not required to prepare or the clerk to post a new list of voters and 
absentee ballots must be prepared and made available at least 14 days prior to the 
date of the referendum. For the purpose of registration of voters, the registrar of 
voters must be in session the secular day preceding the election. The voters shall 
indicate by a cross or check mark placed against the word "Yes" or "No" their 
opinion on the article. The results must be declared bv the municipal officers and 
entered upon the municipal records. 
Sec. C-28. Application. This Part applies to budgets for the first fiscal year that 
begins after the effective date of this Act. 
PARTD 
Sec. D-l. Statutory referendum procedure; submission at election; form 
of question; effective date. This Act must be submitted to the legal voters of the State 
at a statewide election held in the month of November following the passage of this Act. 
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 Act by voting on the following 
question: 
"Do you favor creating a homestead property tax credit that would limit 
property taxes on homes of Maine residents to no more than 5% of 
income in most cases and the adoption of a 10-year plan to reduce 
Maine's overall tax burden?" 
The legal voters of each city, town and plantation shall vote by ballot on this question 
and designate their choice by a cross or check mark placed within a corresponding square 
below the word "Yes" or "No." 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. If a majority of the legal votes are cast in favor of this Act, the 
Governor shall proclaim the result without delay and this Act becomes effective 30 days 
after the date ofthe proclamation. 
The Secretary of State shall prepare and furnish to each city, town and plantation all 
ballots, returns and copies of this Act necessary to carry out the purposes of this 
referendum. 
SUMMARY 
This bill proposes a homestead tax credit program that would limit property taxes to 
no more than 5% of income for property taxes on a home. The homestead tax credit is 
distributed to municipalities as a prepayment toward the tax assessment on homestead 
property so that the net tax bill imposed on homeowners is reduced accordingly. The 
homestead tax credit program replaces the Maine Residents Property Tax Program, the 
Maine Resident Homestead Property Tax Exemption and the state-municipal revenue 
sharing program and redirects funds previously allocated to those programs to support the 
cost of the homestead credits. 
Administration of the program is simplified and made concurrent with the income tax 
II 
filing period. 
For homeowners, credits are calculated based on the previous year's 
income and property taxes accrued. Credit payments are made to the municipality where 
the home is located as a credit against the current year's property taxes. Renters are also 
eligible for a credit in an amount comparable to the benefit available under current law, 
which would be paid as a refundable income tax credit. Benefits in current law for low-
income elderly persons are preserved. 
To prevent the homestead tax credit from translating into increased spending at the 
municipal level, the bill would redefine and make it harder to override the spending limits 
on municipal, county and school government units. It would incorporate tax burden 
reduction factors into the spending limits imposed on government at all levels, and it 
would change the override process for exceeding county, municipal and school growth 
limits to require either a 2/3 vote of the local body proposing the increase or approval by 
the voters at referendum. 
The changes proposed by this bill are subject to approval by the voters at a 
referendum vote in November of2007. 
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