AUGUSTA, Maine — Legislative Republicans are at odds on how to handle a politically popular but logistically fraught program freezing property taxes for Maine seniors.
Change is likely coming to the sweeping program championed by Senate Republicans and passed in the Legislature’s rush to conclude work in 2022 as debate kicks off over how to wrangle the complicated politics of reining in a large benefit for all Maine seniors.
A leading Democrat is proposing to replace the program with an increased homestead exemption for low-income seniors. One House Republican is floating a cap on home values, while Senate Republicans are mostly saying they want to keep things as is.
“I’m going to stick with it for at least this term and if I come back, I’m going to stick with it the next term,” Sen. James Libby, R-Standish, a tax committee member, said. “We made a promise.”
Under current law, Mainers 65 and older who have gotten a homestead exemption for the past 10 years or more can apply annually to have taxes frozen at the past year’s payment. The difference would be paid by the state to cities and towns. An estimated 100,000 Mainers have already applied for the program, according to the Maine Municipal Association.
The program’s novel design means the cost will grow exponentially as the population ages and the gap between sheltered and real tax values grows across the state. Gov. Janet Mills’ administration estimates that the program will cost the state $15 million in the first year and $31 million in the second year.
The Democratic governor included that money in her two-year budget proposal in January, but she has also signaled openness to changing the program. The biggest critics of the program include local assessors and the municipal association, citing the annual applications already burdening clerks and seniors and saying the program will be hard to administer.
The association supports many of the proposals aiming to change the program, including two Republican-backed bills to eliminate the annual filing requirement. But their major one is an overhaul of the program introduced by House Majority Leader Maureen Terry, D-Gorham.
It would replace the freeze 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, trading a bigger long-term benefit for a smaller immediate one. The homestead exemption reduces the value of homes for property tax purposes.
Democrats could make changes on their own, though doing so may be politically unpopular. Republicans mostly want to stick with the program aside from scrapping the annual application, but their openness to other shifts could vary by their locations and constituencies.
Libby represents the Sebago Lake region, where property values have risen sharply during the COVID-19 pandemic. But Rep. Micky Carmichael, R-Greenbush, a tax panel member from rural Penobscot County, said he is willing to consider capping the freeze on the first $300,000 of home values, calling it “a reasonable price” for a Maine house. That is under Maine’s median value of $341,000, according to Zillow.
“It’d be fair to everybody,” he said. “It wouldn’t be taken advantage [of] by people who really don’t need that much help.”
The early chatter on the issue shows there is “general interest” in fixing the program, said Kate Dufour, a lobbyist for the municipal association. But a lawmaker said it is going to be hard to do the work given the broadness of the current freeze.
“I actually feel like the odds are against us fixing it because so many thousands of people are waiting on this,” said Rep. Joe Perry, D-Bangor, who co-chairs the tax panel.