An Act To Permit a Local Option Sales Tax
Maine Legislature, Session 125, LD 0826
Committee: Taxation
Sponsors: DILL, BLISS, BERRY, FLEMINGS, MORRISON, VOLK
Amends: 36 MRSA §1817

Legislative Document 
No. 826 
H.P. 622 
House of Representatives, March 3, 2011 
An Act To Permit a Local Option Sales Tax 
Reference to the Committee on Taxation suggested and ordered printed. 
HEATHER J.R. PRIEST 
Clerk 
Presented by Representative DILL of Cape Elizabeth. 
Cosponsored by Senator BLISS of Cumberland and 
Representatives: BERRY of Bowdoinham, FLEMINGS of Bar Harbor, MORRISON of South 
Portland, VOLK of Scarborough. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §1817 is enacted to read: 
§1817.  Municipal local option sales tax 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Participating municipality" means a municipality that has imposed a local option 
sales tax pursuant to this section. 
B.  "Sales tax base" means those items subject to sales taxation under this Part. 
C.  "Single transaction limitation" means a dollar limit that a municipality imposing a 
local option sales tax pursuant to this section may place on the amount of tax the 
municipality collects from a single transaction subject to the local option sales tax. 
2.  Authorization to impose local option sales tax.  A municipality by referendum 
conducted pursuant to subsection 9 may impose a local option sales tax of no more than 
3% on those items that are part of the sales tax base.  A municipality that adopts a local 
option sales tax pursuant to this section may not alter the range of items subject to sales 
taxation under this Part.  A municipality that adopts a local option sales tax also may 
adopt a single transaction limitation.  The single transaction limitation may not exceed 
$100. 
3.  Notify State Tax Assessor.  A municipality that imposes a local option sales tax 
under subsection 2 shall notify the State Tax Assessor at least 90 days before the local 
option sales tax is effective. 
4.  Administration.  Retailers in a participating municipality shall transfer the 
revenue from the local option sales tax at the time and in the manner provided in section 
1951-A for the transfer of state sales tax revenue.  The tax is subject to the same 
enforcement provisions, interest, penalties and administrative actions as other taxes 
assessed under this Part. 
5.  Distribution of revenue.  Each month, the State Tax Assessor shall identify the 
amount of revenue attributable to each participating municipality under this section, 
subtract the costs of administering this section and certify the net amount due each 
participating municipality to the Treasurer of State. 
Of the net amount certified under this subsection, the Treasurer of State shall make 
monthly payments as follows: 
A.  To the participating municipality, 50% of the net amount; 
B.  To the county in which that participating municipality is located, 25% of the net 
amount; and 
C.  To the General Fund, 25% of the net amount. 
For purposes of this subsection, "costs of administering this section" means the lesser of 
the actual cost to the assessor of administering this section and 2% of the total revenue 
generated by local option sales taxes. 
6.  Use of revenue by participating municipality for homestead tax relief and 
property tax relief.  Each participating municipality that receives funds pursuant to 
subsection 5, paragraph A shall manage those funds as prescribed in this subsection. 
A.  Each participating municipality shall deposit the revenue received pursuant to 
subsection 5, paragraph A in a segregated account.  The participating municipality 
shall use the funds in the segregated account to: 
(1)  Fund a municipal property tax assistance program established within the 
participating municipality pursuant to chapter 907-A; 
(2)  Fund that portion of the participating municipality's approved homestead 
exemptions under chapter 105, subchapter 4-B not recovered from the State 
pursuant to section 685, subsection 2; or 
(3)  Stabilize or lower the projected property tax rate of the participating 
municipality. 
B.  A participating municipality shall determine its annual budget and assessment 
without consideration of the amount received pursuant to subsection 5, paragraph A.  
Revenue generated pursuant to subsection 5, paragraph A may not be used to 
supplant local funds. 
7.  Use of revenue by county for property tax relief.  Each county that receives 
revenue pursuant to subsection 5, paragraph B shall deposit that revenue received in a 
segregated account.  The county shall use the funds in the segregated account to stabilize 
or lower the annual assessment for county taxes imposed pursuant to Title 30-A, section 
701.  A county shall determine its annual budget and assessment without consideration of 
the amount received pursuant to subsection 5, paragraph B.  Revenue generated pursuant 
to subsection 5, paragraph B may not be used to supplant other funds. 
8.  Effect on revenue sharing and other state aid programs.  Revenue received 
pursuant to subsection 5 may not be considered to be receipts from the taxes imposed 
under this Part for the purpose of transfers to the Local Government Fund under Title 
30-A, section 5681.  Revenue received pursuant to subsection 5 may not be used to 
reduce or eliminate any funding otherwise due the county or participating municipality 
under any provision of law providing aid to the county or participating municipality, 
including, but not limited to, aid for schools, roads, public assistance or jails. 
9.  Referendum.  The question of whether to impose a local option sales tax must be 
submitted to the legal voters of a municipality that seeks to impose the local option sales 
tax. 
The petition process and voting must be held and conducted in accordance with Title 
30-A, sections 2528, 2529 and 2532 even if the municipality has not accepted the 
provisions of Title 30-A, section 2528.  The voting at elections must be held and 
conducted in accordance with Title 21-A. 
The municipal clerk shall make a return of the results, certify the results and send them to 
the Secretary of State. The Secretary of State shall forward the results to the assessor. 
The local option sales tax may be discontinued by referendum conducted in the same 
manner as the referendum adopting the tax under this section. 
10.  Effective date of tax; acceptance by voters.  The local option sales tax 
authorized by this section takes effect 120 days after the municipal referendum vote 
under subsection 9 if it is accepted by a majority of the legal voters voting at the election 
and the total number of votes cast equals or exceeds 20% of the total number of votes cast 
in that municipality in the most recent gubernatorial election. 
SUMMARY 
This bill allows a municipality to impose a local option sales tax of 3% or less by 
local referendum.  Revenue from the local option sales tax is distributed as follows:  50% 
to the municipality, 25% to the county in which the municipality is located and 25% to 
the General Fund.  The revenue received by the municipality and county must be used to 
reduce the property tax, either through specific programs, such as by funding a municipal 
property tax assistance program or funding the portion of the homestead property tax 
exemptions not funded by the State or generally stabilizing or lowering the projected 
property tax rate of the municipality or the county tax assessment.