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January 3, 2010 Jay Finegan, 287-1445
Rep. Chase’s Bill to Lower Property Taxes Moves Closer to Vote

AUGUSTA – State Rep. Kathy Chase remains hopeful that her bill to reduce property taxes will overcome tough odds and prevail in the Legislature. The bill would rebate to municipalities a portion of future sales tax growth and require them to use the funds to trim property tax levies.

The bill, LD 788, is An Act to Aid Municipalities and the Unorganized Territory in the Reduction of Property Taxes. Last year, the Taxation Committee voted it down by 7-5; but final action was carried over to the Legislature’s Second Session, which began on January 6. Votes by the full House and Senate are expected to occur shortly.

Under the provisions of the legislation, the state tax assessor would gather information on the amount of sales tax revenue attributable to each municipality in the 2012-2013 fiscal year. In subsequent years, the state would rebate to each municipality 10 percent of the sales tax revenue growth for that town or city. In the case of the unorganized territory, the rebate would go to the county level.

The 10 percent portion, known in the legislation as a local sales tax increment, would be transferred annually from the state treasurer to each municipality by October 1. The amount due to a municipality could not be reduced by any revenue sharing or other state aid flowing down to the town or city level.

“The bill would establish 2012-2013 as a base year, because that moves the launch of the program beyond the current budget,” said Rep. Chase (R-Wells). “From that point on, 10 percent of the growth in sales tax receipts in every fiscal year would return to the municipality where it was generated. Under the law, the money would be dedicated solely to property tax relief.”

Although LD 788 came out of the Taxation Committee with an Ought Not To Pass recommendation based on last year’s 7-5 vote, its ultimate fate is difficult to predict. Two Democrats on the committee voted for passage, along with all Republicans; and the bill has bipartisan support on its list of cosponsors.

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