An Act to Allow a Local Option Sales Tax on Short-term Lodging to Fund Affordable Housing
Maine Legislature, Session 131, LD 1298
Committee: Taxation
Sponsors: SKOLD, CHIPMAN, CROCKETT, DODGE, MATLACK, RANA, TERRY, WARREN, WILLIAMS, BAILEY
Amends: 36 MRSA §1821

Legislative Document
No. 1298
H.P. 823
House of Representatives, March 23, 2023
An Act to Allow a Local Option Sales Tax on Short-term Lodging to 
Fund Affordable Housing
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative SKOLD of Portland.
Cosponsored by Senator CHIPMAN of Cumberland and
Representatives: CROCKETT of Portland, DODGE of Belfast, MATLACK of St. George, 
RANA of Bangor, TERRY of Gorham, WARREN of Scarborough, WILLIAMS of Bar 
Harbor, Senator: BAILEY of York.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §1821 is enacted to read:
§1821.  Municipal local option sales tax on short-term lodging
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A. "Affordable housing" has the same meaning as in Title 30-A, section 5002, 
subsection 2.
B.  "Local option sales tax" means a sales tax imposed pursuant to subsection 2.
C.  "Lower income households" has the same meaning as in Title 30-A, section 5002, 
subsection 11.
D.  "Moderate income households" has the same meaning as in Title 30-A, section 
5002, subsection 12.
E.  "Participating municipality" means a municipality that has imposed a local option 
sales tax pursuant to this section.
F. "Program for affordable housing" includes a housing development involving 
construction or renovation that is wholly or partly subsidized by municipal funds for 
which at least 50% of units are affordable housing units, rental assistance for lower 
income households and moderate income households and other programs that provide 
assistance for or support affordable housing.
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 1% on the value 
of rental of living quarters in any hotel, rooming house, tourist or trailer camp, 
accommodations rented via a transient rental platform or any other accommodation for 
which the rental duration is any single nonrenewable period of less than 30 days.
3.  Local option sales tax limited to lodging.  A municipality may not impose a local 
option sales tax on the value of rental of living quarters of any hotel, rooming house or 
tourist or trailer camp not subject to tax under section 1811.
4.  Notify State Tax Assessor.  A participating municipality shall notify the assessor 
at least 90 days before the local option sales tax is effective.
5.  Administration.  A retailer in a participating municipality shall transfer the revenue 
from a 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.
6.  Distribution of revenue.  On a quarterly basis, the 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 for that 
municipality to the Treasurer of State for distribution pursuant to this subsection.  From the 
net amount certified for a municipality under this subsection, the Treasurer of State shall 
make monthly payments to the participating municipality. For the purposes of this 
subsection, the unorganized territory must receive reimbursement as if it is one 
municipality and "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 a local 
option sales tax.
7.  Revenue restricted to affordable housing programs.  Revenue received pursuant 
to subsection 6 may not be used for any purpose other than programs for affordable housing 
within the participating municipality.
8.  Effect on revenue sharing and other state aid programs.  Revenue distributed 
pursuant to subsection 6 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 6 may not be used to reduce or 
eliminate any funding otherwise due a municipality under any provision of law providing 
aid to the 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 in accordance with this subsection to the legal voters of a municipality that seeks 
to impose the local option sales tax.
A. The referendum question must indicate the rate of the local option sales tax.
B. 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.  
C. The voting at elections must be held and conducted in accordance with Title 21-A.
D. 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.
E. The local option sales tax may be discontinued by referendum conducted in the same 
manner as the referendum adopting the tax under this subsection.
10.  Effective date of tax; acceptance by voters.  A local option sales tax authorized 
by this section takes effect 120 days after the municipal referendum vote under subsection 
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 the municipality in 
the most recent gubernatorial election.  A local option sales tax may not take effect before 
July 1, 2024.
SUMMARY
This bill allows a municipality to impose a local option sales tax of 1% on short-term 
lodging that is subject to the state sales and use tax if approved by referendum of the voters 
in that municipality. The revenue from the local option sales tax must be distributed to the 
municipality imposing the local option sales tax.  The distributed revenue must be used in 
municipal programs that support affordable housing development in that municipality, 
including rental assistance for lower income households or moderate income households. 
Revenue received by a municipality may not be used to reduce or eliminate funding 
otherwise due the municipality under other provisions of law.  The local option sales tax 
may not take effect before July 1, 2024.