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Press Herald Viewpoints
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Sunday, November 3, 2002

EDITORIAL:

Land bank would give Maine a property-tax remedy

Copyright 2002 Blethen Maine Newspapers Inc.

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ABOUT THE AUTHOR


ABOUT THE AUTHOR
David R. Hill of Yarmouth is a business counselor and Center Director with the Maine Small Business Development Center, sponsored by Coastal Enterprises Inc. at the Kennebec Valley Council of Governments in Fairfield. His e-mail address is davehill@maine.rr.com.

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It used to be when a town revalued its property or built a new school, the cry would go out from anguished citizens that they were being taxed out of their homes by increases approaching 20 percent.

But by the next year the increase was back down to 3 or 4 percent and the furor died away. Property-tax reform was discussed but nothing was done. Times have changed.

Recently, Cumberland was faced with a sharp increase to fund a new middle school. To blunt the impact on most homeowners, they revalued the town, resulting (as expected) in precipitous increases in the assessments on shorefront properties, as high as 100 percent or more, most on top of similar increases only five years earlier.

When confronted by anguished Chebeague Islanders, town leaders would only shrug their shoulders and say, "We're just obeying the law." They were right. But is the law right?

What has changed is the source of pressure on property taxes. Before, it was our spending. If we decided a new school was needed, we'd raise taxes. If taxes got out of hand, we'd cut spending. We had control of the system.

Now we have outside pressure. With the near death of the stock market, people who still have money left to invest are looking for something with a respectable rate of return. So they're investing in Maine's relatively cheap land.

They're flocking to our lakes, rivers, ponds, mountains, shores and wilderness areas and paying top dollar. And when they do, as mandated by law, up go the taxes on their neighbors, driven not by the service needs of the local population but rather by the demand for their land. And driving out long-time residents.

Now there's a new demand for tax reform, with Carol Palesky's tax cap in the forefront. Hers is a truly scary proposition that deserves to go no further than it has already. But it may be the last refuge of people who can find nothing better.

There are several more viable plans. Each has its merits and would result in property-tax relief for some people. However, none addresses skyrocketing assessments. What good is a 20 percent reduction when your increase exceeds 100 percent?

In Harpswell's Grange Hall and around a Chebeague Island kitchen table, ordinary folks may have found a true solution for the entire state - the Maine Land Bank Program.

It doesn't address all of the state's taxation issues, but it squarely solves the problem of runaway land assess- ments.

The idea is simple and completely voluntary. It takes the concept of Maine's existing Tree Growth Tax Program and extends it to any land that any person intends to own for a long time. It's not for speculators.

Partially based on assessment cap programs in 13 states, land in the program is assessed at the value in place up to five years ago. Subsequent increases are limited to 2 percent or the cost of living, whichever is lower. The land can be passed to direct relatives and remain in the program.

If an owner, for whatever reason, decides to sell the land outside the family, a sizable penalty will be paid, thereby reducing the profit realized from the sale. These penalties will more than offset the reduced tax revenues.

Once the program is up and running, it will support itself, costing the municipalities and the state nothing.

Not only will people avoid eviction by the taxman, communities will maintain their continuity. For some small communities, that may mean their very survival.

Small businesses, including shore- based fishermen, will be able to take advantage of a cost-reduction mechanism at a time when it is sorely needed.

An added benefit is that young people will be motivated to stay in their family homes or return when the time comes, thereby reducing the "brain drain" exodus of youth from Maine.

The land bank program stands on its own, but it could happily co-exist with almost any of the other proposed tax-reform measures.

How would I like to see this long strange trip end? First, I'd like people to put Carol Palesky's tax-cap proposal on hold. Second, the Maine Land Bank Program should be enacted as soon as possible. And, third, people should demand that our new governor and Legislature finish the job and enact comprehensive tax reform within the next year.

- Special to the Telegram

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