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Sunday, December 29, 2002

Tax reform activists aim straight for voters

Copyright 2002 Blethen Maine Newspapers Inc.

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AUGUSTA — Action on tax reform is taking place not just in the Legislature. Activists are moving on a parallel track to let the voters decide at the ballot box. There may be as many as three citizen-initiated referendums on the ballot next November, depending on whether organizers collect 50,519 valid signatures and decide to schedule their referendums in 2003 rather than 2004.

Under the state Constitution, any citizen-initiated referendum first goes to the Legislature, which has the option of passing it as written or sending it on to the voters.

Lawmakers rarely enact initiated referendums; almost all end up on the ballot.

The most controversial of the three in the works is proposed by the Maine Taxpayers Action Network, which has tried but failed to get a tax cap on the ballot in the past.

Carol Palesky, the group's president, says she does not believe the Legislature "has enough guts to do any meaningful tax reform," so she wants the voters to take action.

The group's latest proposal would limit property taxes to 1 percent of the value of the property, based on its assessed value in 1996-97.

For properties built, sold or transferred more recently, the base value would be the appraised value at the time of construction or acquisition.

The group's referendum would allow the base value of property to be adjusted by a maximum of 2 percent per year, with exemptions for property transfers within families.

The plan would prohibit the state from raising the maximum property tax rate unless two-thirds of voters approved the change in a statewide referendum.

Palesky argues her group's plan would force property owners to assume financial responsibility for their community's existing debt. She predicts savings from her referendum would average 15 percent to 20 percent for property owners.

The Maine Municipal Association also has drafted an initiated referendum that would provide financial incentives for municipalities and school districts to cut costs.

The heart of its proposal is to require the Legislature to pay at least 55 percent of the cost of local schools. The state now pays about 43 percent of that bill. It would cost an extra $200 million a year to get to 55 percent.

The referendum does not say how the state would cover the extra amount, although it orders lawmakers to "generate the additional revenue necessary" to hit the target.

The theory is that increased state funding for schools would provide property tax relief by reducing reliance on property taxes. The proposal would not force cities and towns to cut or cap property taxes in exchange for increased school aid from the state.

A third referendum reworks the homestead exemption, which exempts from property taxes the first $7,000 in valuation on every Mainer's home.

The referendum would replace that exemption with a state income tax credit that would grow over time, starting with a tax break on the first $12,500 of value in the first year of the program.

That would grow to $25,000 in tax-free valuation the second year, $37,500 the third year, $50,000 the fourth year. Subsequent hikes would be pegged to growth in the total state valuation of residential property. The referendum also would limit revenue increases and make it harder for state and local governments to raise taxes.

"The purpose here is to really force the state of Maine to reprioritize government" because the state, and not the municipalities, would lose money, said Ray Richardson, an organizer of the referendum that would create an income tax credit.

Staff Writer Paul Carrier can be contacted at 622-7511 or at:

pcarrier@pressherald.com


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