The Maine Legislature generally does things slowly. Every now and then, something happens quickly. One of them was a program passed last year that freezes property tax payments for all Mainers 65 and older.
Now, the state needs to pay the bill. It is leading to a raft of reform proposals in Augusta. The main one could be a difficult sell, because it will carve many seniors out.
How it passed: This idea began as a Republican bill introduced in 2021 that got little attention from anyone in Augusta. But it was revived last year at the very end of budget talks when legislative Republicans used their share of money left over in a bipartisan budget deal to fund start-up costs for the program. Democrats and Gov. Janet Mills, in the middle of campaigns, allowed it to go into law.
What it does: The sweeping law applies to all Mainers 65 and older who have gotten a homestead exemption for the past 10 years or more. They can apply every year to have property taxes frozen at the level of the previous year. The state pays cities and towns for the difference, meaning the size of the program rises each year. No limits are placed on the program and your taxes can be frozen even if you move into a higher-priced community.
Rising costs: The real bill for the program is coming due. The Mills administration expects the cost to jump from $15 million in the first year to $31 million in the second year. The design of the program, which has been roundly criticized by the Maine Municipal Association and many local planners, has prompted a host of reform proposals.
The proposals: The association’s key measure is led by House Majority Leader Maureen Terry, D-Gorham. The bill would replace the program with an extra homestead exemption of $25,000 for seniors making less than 80 percent of the regional median income and $15,000 for those between 80 percent and 100 percent, inserting strict means testing into a program with none.
Terry’s case for the measure adds up to a legislative apology for the measure. She said it should not have passed with such little legislative attention and said the current version pits “neighbor against neighbor.” The change would give more aid to seniors who need it most, she said.
“I think we all, like, get into reality a little bit and know it will explode upon itself in the next few years because it will be too expensive to sustain,” Terry said.
Terry is not the only one proposing reforms. Sen. Rick Bennett, R-Oxford, wants an even larger homestead exemption to replace the program, while the municipal association is backing a bill from Sen. Matt Pouliot, R-Augusta, to eliminate the requirement for people to apply each year.
But, but, but: Reining in the program could come with political risks. Lawmakers rarely want to be clawing back benefits from a wide swath of Mainers.
Mills funded the tax-freeze program in her two-year budget proposal, but she looks to be open to changes. Ben Goodman, her spokesperson, said she thinks it is appropriate for lawmakers to consider whether the goal of keeping seniors in their homes is being accomplished in the most fiscally and administratively responsible manner.
Senate Minority Leader Trey Stewart, R-Presque Isle, backs tweaks to the system, including one clarifying that couples with only one senior in the household qualify. However, he said the state should implement the program and see how it works before smothering it.
“Let’s see what the problems really are and not what people are speculating they might be and poking holes in things because it’s a new thing they don’t want to try,” he said. “That’s what it boils down to.”
