State budget blunts property tax hikes, but replaces
Circuit Breaker with Tax Fairness Credit
From the Maine House
By Rep. Robert Saucier
The middle class is getting hit hard by Maine’s regressive property taxes and this is unfair. Mainers deserve a fair and balanced tax system.
Last winter, Governor Paul LePage proposed a two-year biennial budget that would have raised taxes on Maine’s middle class. His budget would have shifted more than $425 million dollars of the tax burden to local communities and their property taxpayers.
When his proposal was released, all seven Presque Isle city councilors signed a letter asking me to oppose the governor’s budget proposal on behalf of the property taxpayers they represent.
I gladly opposed the governor’s budget. His budget would have unfairly burdened the middle class, small businesses, the elderly and the poor. The budget would have eliminated revenue sharing for two years, cut excise tax revenues for local roads and shifted teacher retirement costs to local communities. To maintain certain services, towns would have had to raise property taxes to cover the costs.
The governor also proposed the total elimination of the Homestead Exemption and the Circuit Breaker refund for those under 65. The Circuit Breaker refund puts money in the pockets of middle-class families. Many people depend on this property tax refund to make ends meet.
Fortunately, Democratic and Republican lawmakers were able to negotiate a better, bipartisan budget that restored many of the proposed cuts. Around two-thirds of revenue sharing was restored and we retained the homestead exemption and increased funding to Maine’s schools.
However, we could not get everything that we wanted. One difficult compromise was the elimination of the Circuit Breaker refund program, also known as the Maine Residents Property Tax and Rent Refund. The program was a refund of up to $1,600.
A resident with income of $40,000 or less who paid property taxes on a home in Maine during the tax year that was more than 10% of Maine adjusted gross income, or paid rent to live in a home or apartment in Maine during the tax year that was more than 40% of Maine adjusted gross income, was eligible for the credit.
This refund will be partially replaced by a smaller, refundable Property Tax Fairness Credit of up to $300, or $400 for those 70 and older. In addition, those who have applied each year for the Circuit Breaker refund will need to wait until January, rather than applying any time after August.
Beginning in January, the 2013 Maine Individual Income Tax Form 1040ME will include a worksheet to calculate the Property Tax Fairness Credit. To receive the credit, you must meet all of the following requirements:
• Were Maine residents during any part of the tax year;
• Owned or rented a home in Maine during any part of the tax year and lived in that home during the year;
• Had Maine adjusted gross income of not more than $40,000; and
• Paid property tax on a home in Maine during the tax year that was more than 10% of Maine adjusted gross income, or paid rent to live in a home or apartment in Maine during the tax year that was more than 40 percent of Maine adjusted gross income.
For more information about the new Property Tax Fairness Credit, please visit maine.gov/revenue/taxrelief. You might also want to call the governor’s office at 287-3531.
Presque Isle citizens are encouraged to apply for the Property Tax Fairness Credit. Normally applications would be available before Aug. 1, but not this year.
The Property Tax Fairness Credit needs work, but it was the best deal that could be negotiated at the time. House Speaker Mark Eves is presenting legislation during the next session to increase funding to the new Tax Fairness Program. You can be sure I will support this effort. In the meantime, please do not hesitate to contact me if you have any questions about the new tax credit.
Rep. Robert Saucier, D-Presque Isle, is serving his first term in the Maine Legislature and represents part of Presque Isle.
