MECEP has strong reservations about LD 1401.
LD 1401 proposes a constitutional amendment to limit changes in valuation to a few select occurrences, such as change of ownership. This approach, which is similar to Proposition 13 in California and what was the “Palesky” initiative in Maine in 2004, comes at great risk to Maine taxpayers. Restricting valuation erodes property tax revenues, which fund education and other municipal infrastructure and economic development initiatives. Mainers have consistently and repeatedly rejected such reckless approaches that seek to undermine municipal investment, voting against arbitrarily restricting state and local governments from making appropriate investments in education, infrastructure, and other critical services. LD 1401 would be an unwelcome development, further hurting property taxpayers.
Moreover, this bill would undermine fair market valuation as the basis of property taxes, and over time shift property taxes disproportionately onto the backs of new property owners. LD 1401 would also increasingly shift property taxes onto property owners with lower values as compared to property owners with properties whose values are rapidly rising. Indeed, LD 1401 would shift property tax burdens from waterfront property taxpayers to more inland property taxpayers as the latter generally have properties with less value and earn less income.
California has had problems with Proposition 13. The State has an extremely precarious financial situation, in part because of its inability to replace lost property tax revenue that previously supported local education. LD 1401 could easily put Maine in a similar fiscal straightjacket, directly leading to an erosion of local education and other services.
For these reasons, MECEP urges this Committee to reject LD 1401.
Thank you for this opportunity to testify, and I am happy to answer any questions the Committee may have.
Dan Coyne, Fiscal Policy Analyst, speaking before the Joint Standing Committee on Taxation in opposition to LD 1401, RESOLUTION, Proposing an Amendment to the Constitution of Maine to Restrict Property Revaluations.
