When Suzanne Carmichael, a Deer Isle retiree living on a fixed income, began working on her budget for this year, she wasn’t sure how much her property tax would be.
The 79-year-old had filled out an application for a new state program that freezes property taxes for qualified seniors this year at 2022 tax levels. She was concerned because she had not heard back about whether her application was approved, even though she felt she met the criteria for age, home ownership and residency.
“The town office told me the man in charge of processing them for Deer Isle has not done so because the state received many more applications than expected, and there may not be money to fund them all,” she said. “I find this very disturbing. In my mind, the law was a promise to folks like me.”
A town official confirmed to a reporter that also was her understanding from the assessor who is handling the applications. The assessor confirmed that the applications in Deer Isle have not been fully processed, but he expects they will be by early spring under the assumption that towns will get full funding for the program from the state.
The confusion is a symptom of a hasty rollout and long-term questions about whether the program will last in its current form. There was an initial rush to apply when the program was announced in July, but applications were not available immediately. The state is proposing to fund it in full the first two years, but it still isn’t clear whether it will be able to reimburse towns as the program grows in the future.
“It was a huge rush for all these communities and with not a lot of guidance at first,” said Matt Caldwell, an assessor with RJD Appraisal, which handles Deer Isle.
He said he hasn’t received directions yet from the state on how to notify people on whether their applications have been denied or approved. A state revenue department spokesperson said it does not provide sample approval or denial letters and that it is the responsibility of towns to review the applications and respond.
“We’ve been telling everybody that if you’ve submitted your application and fit the criteria you should consider yourself approved unless you’ve received a denial letter,” Caldwell said.
To qualify for the program, applicants must be 65 or older, be a permanent resident of the state, must have owned a permanent residence in Maine for at least 10 years and must qualify for a homestead exemption. Caldwell hoped there will be instructions to people receiving denials on why they were denied and what to do.
The new law requires that municipalities determine whether an applicant qualifies for the tax freeze program, a Maine Department of Administrative and Financial Services spokesperson said. In most towns that decision is being made by the assessor, who notifies applicants about whether or not they qualify, she said.
In Carmichael’s case, property taxes in Deer Isle are due Aug. 31, so if she qualifies, her frozen amount would be the property taxes billed on that date in 2022, according to the budget department. Towns have different assessment and billing systems, so how the stabilized amount appears on the tax bill will likely vary from town to town.
Another question Carmichael and others have is whether the program will last in its current form. In her budget proposal, Gov. Janet Mills has allocated $15 million for the program in its first year and $31 million in its second. It will get more costly over time.
“The further you get away from the first year, the more expensive it will get,” said Kate Dufour, director of advocacy and communications for the Maine Municipal Association, which opposed the law. “It’s a question of the ability for the state to continue to fund it 100 percent.”
The association plans to propose to the Legislature that qualifying seniors get up to an additional $25,000 homestead exemption to reduce their tax burden. The current homestead exemption is $25,000.
Some legislators also are proposing raising the homestead exemption, with Sen. Rick Bennett, R-Oxford, submitting a bill to triple it and get rid of the property tax freeze, which would be costly.
While Mills funded the tax-freeze program in her two-year budget proposal, she looks to be open to changes. Ben Goodman, her spokesperson, has 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.
Meantime, qualifying seniors are expected to get the tax break, but it isn’t clear how much of the burden towns will have to shoulder with the tax freeze or in the future possibly with higher homestead exemptions that would reduce municipal revenue.
Assessor Caldwell said he is following the law as it is written with 100 percent reimbursement expected to the towns, “until we hear anything different.” It will be capped at the 2022 tax amount as long as people reapply each year.
“So they can set their budget based on that 2022 tax amount,” he said.