Sometime in January or February of 2020, approximately 305,000 Maine homeowners will receive at least $100 from the state in direct property tax relief. The checks will go to households that qualify for the Homestead Exemption.
These payments are the result of a law passed in 2012, which was the last time Republicans controlled both houses of the legislature and the Governorship. That law, and eight years of responsible budgeting, resulted in a $30 million fund designed to gradually lower the income tax rate to 4% once enough funds accumulated in the account.
In 2019, legislative Democrats amended the law to redirect the fund away from income tax relief, toward households that qualify for the homestead exemption. Democrats opposed the 2012 income tax relief law and 2019 Republicans opposed doing away with the goal of lowering income taxes by redirecting the fund toward the homestead exemption.
From my point of view, we should be lowering taxes in general, especially the income and property taxes. Lowering taxes stimulates the economy, creating jobs and providing individuals and families with more money to spend, save or invest. It would also help us be more competitive with states that have no taxes on wages, such as New Hampshire and Florida.
The evidence is clear. After eight years of fiscal discipline and lowering tax rates, state revenues have increased, unemployment has gone down, wages have gone up, and state government has generated surpluses instead of annual shortfalls.
I am glad Maine homeowners will receive some property tax relief, but fear that the $100 check will not begin to make up for what taxpayers will lose down the road when the full impact of the nearly $8 billion state budget that just passed is felt by taxpayers. This state budget is 11% higher than the previous one. This new spending will be added to the next baseline budget, which increases every year as expenses such as state employees’ wages go up.
If the economic growth that we currently enjoy slows down, or becomes negative, which is very possible based on the proposals coming from Democratic presidential candidates, Maine will be in big trouble. A tax increase would be required to maintain services and we may even return to a time of program cuts, layoffs, and government shutdown days as in 2009.
This past session, several proposals to increase taxes on home heating fuel (.40 cents a gallon) and gasoline were defeated. Expect to see these proposals again and again, as the Legislature fails to live within its’ means.
Although I voted against the budget, I appreciate that my fellow Republicans on the Appropriations Committee succeeded in including property tax relief in the budget. The so-called Keschl/Millet budget proposal allocates an additional $75 million in property tax relief, some of which will go directly to homeowners by increasing the Homestead Exemption to $25,000. Republicans insisted on this type of tax relief because it goes directly to homeowners in the form of lower property tax bills. The budget also provides relief to nearly 13,000 low-income taxpayers, expanding eligibility for the Property Tax Fairness Credit.
I do fear that reductions you see in property taxes will be more than offset by other tax increases in future years. I will do my best to oppose those increases and encourage state government to set priorities and spend responsibly.
I appreciate hearing from you on issues of concern, or to facilitate communications with state agencies. I will continue to base my decisions on what makes your ability to live, work and raise a family in Maine easier, not harder.
Rep. Amy Arata is a small business owner who represents District 65: New Gloucester and Poland (part). She serves on the Appropriations and Government Oversight Committees.