AUGUSTA, Maine — Gov. Paul LePage’s biennial budget proposal to allow municipalities to levy property taxes on major nonprofit organizations drew more than 40 people to the State House on Thursday, nearly all of whom barraged lawmakers with reasons to soften or reverse LePage’s proposals.
Thursday’s hearing before the Appropriations and Taxation committees, which came three days into weeks of scheduled testimony about LePage’s $6.57 billion two-year budget proposal, focused on items that so far have been the source of the most controversy and analysis: taxing large nonprofits and cutting property tax relief programs such as the homestead exemption and the tree growth tax law.
The proposals link to a related LePage plan to eliminate Maine’s revenue sharing program, through which state tax revenues flow to municipalities. LePage proposes to soften the effect of that cut by allowing cities and towns to tax nonprofit organizations with assessed property values of more than $500,000.
Thursday’s theme was that those organizations provide substantial public benefits that would be threatened if hospitals, colleges and service providers are forced to pay property taxes.
“We are providing needed community services,” said Richard Brown, CEO of the Charlotte White Center in Dover-Foxcroft, which provides services to people with developmental disabilities. “To extract tax payments from our organizations would decrease the amount of services we would be able to provide.”
Legislators heard that message over and over again from representatives of hospitals, conservation groups, educational institutions, museums and other nonprofits. Laurie Lachance, president of Thomas College in Waterville and director of the Maine Independent College Association, was one of them.
“National pundits suggest that one in five higher education institutions will disappear in the next decade,” she said. “I pray every day when I go to work that I’m not one of them.”
Lachance estimated that Thomas College would pay nearly $600,000 annually in property taxes under LePage’s proposal, which compares to the institution’s $400,000 annual budget for scholarships. The added expense would put Thomas at a “grave disadvantage” compared to competing colleges, said Lachance.
Jeff Austin of the Maine Hospital Association said that the property tax could cost Maine’s hospitals up to $20 million per year, at a time when many of them are operating at cash deficits due in no small part to $125 million in unpaid care they provide annually. He said other provisions in LePage’s budget, namely reductions to Medicaid reimbursement rates, would cut tens of millions of dollars more from hospital revenues.
Rep. John Martin, D-Eagle Lake, wondered whether a federal law that values property at “just value” would work in hospitals’ favor because it’s unlikely a hospital’s facilities could ever be sold because of their specialized nature.
“If I were a hospital administrator, I’d make that my plan,” said Martin.
Public hearings on LePage’s budget proposal will continue next week, although lawmakers are not expected to start making decisions for several weeks.
