An Act To More Closely Coordinate the Classification of Forested Farmland under the Farm and Open Space Tax Laws with the Maine Tree Growth Tax Law
Maine Legislature, Session 125, LD 0507
Committee: Taxation
Sponsors: CURTIS, WHITTEMORE, CUSHING, FITTS
Amends: 36 MRSA §578, 36 MRSA §1112

Legislative Document 
No. 507 
H.P. 400 
House of Representatives, February 14, 2011 
An Act To More Closely Coordinate the Classification of Forested 
Farmland under the Farm and Open Space Tax Laws with the 
Maine Tree Growth Tax Law 
Reference to the Committee on Taxation suggested and ordered printed. 
HEATHER J.R. PRIEST 
Clerk 
Presented by Representative CURTIS of Madison. 
Cosponsored by Senator WHITTEMORE of Somerset and 
Representatives: CUSHING of Hampden, FITTS of Pittsfield. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §578, sub-§1, as amended by PL 2009, c. 213, Pt. O, §1, is 
further amended to read: 
1.  Organized areas.  The municipal assessors or chief assessor of a primary 
assessing area shall adjust the State Tax Assessor's 100% valuation per acre for each 
forest type of their county by whatever ratio, or percentage of current just value, is 
applied to other property within the municipality to obtain the assessed values.  Forest 
land in the organized areas, subject to taxation under this subchapter, must be taxed at the 
property tax rate applicable to other property in the municipality. 
The State Tax Assessor shall determine annually the amount of acreage in each 
municipality that is classified and taxed in accordance with this subchapter.  Each 
municipality is entitled to annual payments distributed in accordance with this section 
from money appropriated by the Legislature if it submits an annual return in accordance 
with section 383 and if it achieves the minimum assessment ratio established in section 
327.  The State Tax Assessor shall pay any municipal claim found to be in satisfactory 
form by August 1st of the year following the submission of the annual return.  The 
municipal reimbursement appropriation is calculated on the basis of 90% of the per acre 
tax revenue lost as a result of this subchapter.  For property tax years based on the status 
of property on April 1, 2008 and April 1, 2009, municipal reimbursement under this 
section is further limited to the amount appropriated by the Legislature and distributed on 
a pro rata basis by the State Tax Assessor for all timely filed claims.  For purposes of this 
section, classified forest lands are forest lands classified pursuant to this subchapter as 
well as all areas identified as forested land within farmland parcels that are transferred 
from tree growth classification pursuant to section 1112 on or after October 1, 2011. For 
the purposes of this section, the tax lost is the tax that would have been assessed, but for 
this subchapter, on the classified forest lands if they were assessed according to the 
undeveloped acreage valuations used in the state valuation then in effect, or according to 
the current local valuation on undeveloped acreage, whichever is less, minus the tax that 
was actually assessed on the same lands in accordance with this subchapter, and adjusted 
for the aggregate municipal savings in required educational costs attributable to reduced 
state valuation.  A municipality that fails to achieve the minimum assessment ratio 
established in section 327 loses 10% of the reimbursement provided by this section for 
each one percentage point the minimum assessment ratio falls below the ratio established 
in section 327. 
The State Tax Assessor shall adopt rules necessary to implement the provisions of this 
section.  Rules adopted pursuant to this subsection are routine technical rules for the 
purposes of Title 5, chapter 375, subchapter 2-A. 
C.  The State Tax Assessor shall distribute reimbursement under this section to each 
municipality in proportion to the product of the reduced tree growth valuation of the 
municipality multiplied by the property tax burden of the municipality.  For purposes 
of this paragraph, unless the context otherwise indicates, the following terms have the 
following meanings. 
(1)  "Property tax burden" means the total real and personal property taxes 
assessed in the most recently completed municipal fiscal year, except the taxes 
assessed on captured value within a tax increment financing district, divided by 
the latest state valuation certified to the Secretary of State. 
(2)  "Undeveloped land" means rear acreage and unimproved nonwaterfront 
acreage that is not: 
(a)  Classified under the laws governing current use valuation set forth in 
chapter 105, subchapter 2-A, 10 or 10-A; 
(b)  A base lot; or 
(c)  Waste land. 
(3)  "Average value of undeveloped land" means the per acre undeveloped land 
valuations used in the state valuation then in effect, or according to the current 
local valuation on undeveloped land as determined for state valuation purposes, 
whichever is less. 
(4)  "Reduced tree growth valuation" means the difference between the average 
value of undeveloped land and the average value of tree growth land times the 
total number of acres classified as forest land under this subchapter plus the total 
number of acres of forest land that is transferred from tree growth classification 
pursuant to section 1112 on or after October 1, 2011. 
Sec. 2.  36 MRSA §1112, 3rd ¶, as amended by PL 1989, c. 555, §19 and c. 748, 
§6, is further amended to read: 
A penalty may not be assessed at the time of a change of use from the farmland 
classification of land subject to taxation under this subchapter to the open space 
classification of land subject to taxation under this subchapter.  A penalty may not be 
assessed upon the withdrawal of open space land from taxation under this subchapter if 
the owner applies for the land to be classified as and the land is accepted for classification 
as timberland under subchapter II-A 2-A.  There also is no penalty imposed when land 
classified as timberland is accepted for classification as open space land.  A penalty may 
not be assessed upon withdrawal of open space land from taxation under this subchapter, 
or from timberland taxation under subchapter II-A, if the owner applies for the land to be 
classified as and the land is accepted for classification as farmland under this subchapter.  
A penalty may not be assessed upon withdrawal of land enrolled under the Maine Tree 
Growth Tax Law if the owner applies for the land to be classified as and the land is 
accepted for classification as farmland under this chapter, except that on or after October 
1, 2011 the applicant for such a transfer, and any subsequent owner of the property while 
so enrolled, must conform to the forest management and harvest plan requirements 
pursuant to section 574-B with respect to all forested land on that farmland parcel.  The 
recapture penalty for withdrawal from farmland classification within 10 years of a 
transfer from either open space tax classification or timberland tax classification is the 
same imposed on withdrawal from the prior tax classification, open space or tree growth.  
The recapture penalty for withdrawal from farmland classification more than 10 years 
after such a transfer will be the regular farmland recapture penalty provided for in this 
section.  In the event a penalty is later assessed under subchapter II-A 2-A, the period of 
time that the land was taxed as farmland or as open space land under this subchapter must 
be included for purposes of establishing the amount of the penalty. 
SUMMARY 
Under current law, a person may transfer property enrolled under the Maine Tree 
Growth Tax Law into the farm and open space tax program without penalty, and the 
forested acreage included in that transferred parcel is treated for all taxation purposes as 
though it were still under the Maine Tree Growth Tax Law. The affected municipality, 
however, loses the tree growth reimbursement it was receiving from the State that was 
associated with the forested acreage, and the landowner is under no obligation to provide 
a forest management and harvest plan with respect to the forested land included within 
the transferred parcel. This bill provides that with respect to all such transfers occurring 
after October 1, 2011 the municipality will still receive tree growth reimbursement for 
that forested property even after a transfer, and the landowner must continue to comply 
with the forest management plan requirements associated with the forested land being 
transferred.