All older Mainers deserve access to safe and affordable housing, without the fear of being unable to pay their bills or losing their home as they age. Reducing the costs of homeownership can help older Mainers with low income become more housing secure. The Property Tax Stabilization Program aims to help qualifying1 Mainers 65 and older stay in their homes by freezing their property taxes2. But serious issues with the program undermine its intent:
- no income or asset limits — even Mainers with the greatest wealth will qualify
- the costs of the program are expected to balloon rapidly, siphoning resources from other priorities
- the program is rife with other flaws and complications
The Property Tax Stabilization program is poorly targeted to help older people who need it most — people who are housing insecure or less likely to be able to contribute to their community through property tax. There are no income or asset limits to qualify. Rather than reducing the cost of homeownership for struggling older Mainers and helping them stay in their homes, this law is a sweeping tax cut for anyone 65 and over, regardless of need. Property taxes pay for services that matter in our communities, including schools, roads, and municipal government. Giving wealthy Mainers 65 and over a pass on paying their fair share is the wrong approach to helping housing insecure older people stay in their homes.
While older Mainers own the majority of housing, some are more impacted by poverty and housing insecurity than others. Nationwide, 57 percent of real estate is owned by people over 55.3 This number is likely higher in Maine given the older population. But a report released earlier this year found about 25,000 women in Maine over 65 living alone would be unable to cover essential living expenses, and 11,000 older Maine women living alone have incomes below the poverty level (less than $12,880 per year).4 Policies and programs aiming to help older Mainers stay in their homes should focus on people who are at risk of losing them. Instead, this program will disproportionately benefit property rich Mainers while those with less valuable property will see a much smaller benefit.
In addition to the upside-down nature of the Property Tax Stabilization Program, it will cost the state millions of dollars each year because the lost property tax will never be repaid. The first year of state payments reimbursing municipalities for reduced taxes is expected to reach a cost of $7 million, jumping to $14 million in the second year as participants continue to sign up.5 The cost will rise over time as more Mainers age into the program and more property taxes are shifted onto the state from multiple years of accumulated property tax freezes. In contrast, programs like the newly reinstated Property Tax Deferral Program6 allow older Mainers to postpone repaying property taxes until their heirs take ownership of their property and use the home equity to fully repay the state. This allows older Mainers below certain income and asset limits to keep the cost of homeownership more affordable over time, while ultimately repaying the property taxes owed back to the state.
The program has several other flaws, including potential constitutionality issues. The Maine Constitution requires all property to be taxed equally based on its value,7 leaving questions about the legality of the program and the possibility that it could be challenged in court. The program also creates an increased administrative burden for municipalities,8 and added risk that they may lose property tax revenue if the state cannot find funds to fully reimburse them. Increasing program costs could leave communities to make up the difference or cut other needs like local services or school funding. Another feature of the program allows property tax freezes to be transferred when recipients move, meaning a homeowner could sell their home and move to a more expensive property and/or an area with higher taxes, while their property tax payment will stay the same. This loophole and the program’s other flaws undermine the goal of helping older Mainers.
While the Property Tax Stabilization Program will certainly benefit some older Mainers who need assistance, it will disproportionately benefit property owners with wealth who can — and should — pay their fair share. Other housing security programs exist in Maine that better provide targeted support to older Mainers in need, including the Property Tax Fairness Credit and the Property Tax Deferral Program.
This blanket property tax freeze benefits a group of Mainers who need it least, while failing to focus on the housing security of people 65 and over who need it most. Maine Center for Economic Policy urges the legislature to correct this inequity.
Notes:
[1] In order to qualify, applicants must be a permanent resident of Maine, age 65 or older, own a homestead in Maine for at least 10 years, and qualify for the Homestead Exemption. https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/stabilization_guide_applicant.pdf
[3] Federal Reserve, Distribution of Household Wealth in the U.S., 2022
[4] Cutler Institute, Economic Security of Older Women in Maine, Jan 2022, https://usm.maine.edu/cutler/report-release-economic-security-older-women-maine
[5] See original fiscal note for LD 290, http://www.mainelegislature.org/legis/bills/bills_130th/fiscalpdfs/FN029001.pdf The final version passed deferred the estimated second year of costs ($14m) to a future budget.
[7] Article IX, Section 8, https://www.maine.gov/legis/const/
