LIMESTONE, Maine — The Select Board is considering offering a “tax club” to residents so they could make monthly payments on their annual property taxes.
Police Chief and Interim Town Manager Stacey Mahan brought the idea to the board’s attention during their Feb. 6 meeting, explaining that Houlton and Rockport currently offer this plan to their residents, and that TRIO (a software program used by towns and smaller municipalities) has a “module” for this plan that could easily track monthly payments if Limestone decided to go this route.
Mahan told the board members that the plan involves residents paying their yearly tax bill in “12 month installments” and that, as long as no payments are missed, no interest would be assessed.
Rockport tax club members, for example, make monthly payments that are based on the previous year’s tax bill, divided by 12, from July 1 to the end of June. Once the new tax rate is established (which in Rockport is in either August or September), the difference is spread across remaining payments.
According to the town of Houlton’s web site, the tax club there relieves the pressure on tax payers of having to make a large lump sum payment. Having some of those monthly payments come in before the annual bills are due also helps the town with its cash flow and “decreases the amount of money borrowed for operation costs.”
Selectperson Melissa Devoe asked during Tuesday’s meeting how much extra work it would be for the clerk to process monthly payments as opposed to a single, annual payment.
Town Clerk Vicki Page said it is “really not a lot of work,” and that it would be as simple as keeping track of receipts, adding that TRIO can process monthly tax payments.
Devoe asked if residents would have to pay interest if they miss a payment.
“If you miss a payment,” said Selectman Greg Ward, “you will pay interest.”
Devoe voiced concern that, if officials present this as an option during their town meeting, residents should be able to choose between the tax club and the three percent discount for early payments that is currently offered.
“I don’t think the [three percent] discount is even really legal,” said Ward. “We do it, but we’re one of a few towns that do. You still have a significant amount of money that still needs to be raised by taxes.”
Mahan said that in his discussions with Houlton officials, they explained it as a benefit to both the municipality and the taxpayers, as residents don’t get hit with interest and the town can receive early payments.
Devoe said she wants to make sure the town offers residents “what they want,” and that she doesn’t want to offer the tax club during town meeting, only to have it voted down by a majority that would prefer to keep the three percent discount.
“We could have two warrants,” Ward said.
“But what if they vote yes for both?” Devoe asked.
“It would be a choice for one or the other,” said Ward.
Mahan said the best option would be a “public hearing” in which the options are introduced to residents.
While the board members did not take any action on the matter during the meeting, they agreed to have Mahan conduct further research into tax clubs and discuss the matter during their next regular meeting, at which point the board will schedule a public hearing to obtain local consensus on which plan is best for the town.
Mahan said on Feb. 8 that he plans to set up a meeting with a clerk in Houlton to learn more about how the tax club would be implemented. He said he believes that monthly payments could be based on prior taxes, adding that “there are a few more moving parts we need to lock down.”
