Maine to Vote on Property Tax Cap

With passions high and polls tight, Maine voters are poised to decide once and for all whether the state should adopt a California-style tax cap that limits taxes to 1 percent of a property's assessed value.

There is little disagreement that reform is warranted: Study after study ranks Maine among the highest-taxed states in the nation.

But critics say the proposal on the Nov. 2 ballot — the most sweeping of the half dozen or so property-tax related referendums on ballots across the country — will gut municipal and school budgets and devastate local services.

"It's very polarized," said Harry Whelden, 80, whose taxes have more than tripled to $3,600 a year since his retirement 25 years ago. He plans to vote for the tax cap, even though he considers the measure unreasonable, because he believes a message needs to be sent to legislators.

Property tax collections nationwide have risen more than 30 percent over the past five years, from $225.7 billion in 1998 to $297.2 billion in 2003, census figures show.

Maine is just one of several states seeking relief in November. In Washington state, voters will decide whether to allow video gambling with revenues earmarked to reduce state property taxes. Oklahoma and New Mexico have referendums that would give property tax exemptions for war veterans.

In Texas, Houston residents will have two local revenue-cap referendums to choose from. Other referendums are up in Indiana, Wyoming and Arkansas.

Peter Sepp from the National Taxpayers Union in Alexandria, Va., said homeowners feel overwhelmed and powerless against property taxes.

"In the midst of an economic slowdown, it's easier for people to adjust to sales and income taxes because they're making less and spending less," he said. "Property tax (increases) have come at a time when people have virtually no way of coping with them — except by moving."

In Maine, the referendum championed by tax activist Carol Palesky would cap taxes at $10 per $1,000 of a property's value and limit increases in value to 2 percent as long as the property stays in the family.

Cap proponents claim taxes are driving people from their homes and forcing them to choose between paying taxes or paying for such things as medication or heating oil. With property values rising particularly fast in southern and coastal Maine, many homeowners have seen their taxes double or triple in recent years.

In Portland, Maine's largest city, officials say the tax cap would force them to lay off more than 900 municipal and school employees, while closing three elementary schools, a middle school, one of the city's two high schools, and all schools on the city's islands.

Tax cap supporters say the dire predictions are scare tactics. Wherever the truth lies, the issue has captured people's attention.

"This is a bad solution," said Leslie Hunt, 47, who believes the cap would diminish the quality of life in Maine. "It's not the way to fix the problem. It's too drastic."

Tax revolts are nothing new in the United States.

California voters passed Proposition 13 in 1978 to limit property taxes to 1 percent of assessed value. Massachusetts limits tax rates to 2.5 percent of property values, and Colorado requires voter approval for state and local tax increases in excess of inflation and population growth.

In Maine, public support for the tax cap has fallen in the past couple of months, but polls show the race is too close to call.

David Stuart, 71, said he supports the cap because lawmakers have done nothing to help ease taxes. If the measure fails, Stuart fears elected officials will come away with the message that Mainers think a heavy tax burden is OK.

"They'll figure they can get away with anything then," Stuart said. "Even if the tax cap does pass, they'll find some sneaky way to get around it. But at least they'll know how we feel."