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Saturday, May 17, 2003
Council to debate proposed tax rebate
Copyright © 2003 Blethen Maine Newspapers Inc. | ||
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Mayor James Cloutier's tax rebate proposal for Portland homeowners is destined for lively debate when the City Council considers the idea on Monday. Cloutier and some councilors believe that the $3.7 million property-tax relief program, which would be funded by a tax rate increase, is a necessary first step toward tax reform. Other councilors and critics say Cloutier's proposal would benefit only certain homeowners at the expense of businesses, renters and other taxpayers who wouldn't qualify. "It just redirects taxes from one group to another," said Councilor John Griffin. "It's not equitable." Councilors are hearing from Portland business owners who, led by the Greater Portland Chamber of Commerce, have mounted a campaign to fight the tax proposal. "The chamber is opposed to shifting property taxes to the business community and we're going to work to get the message out," said chamber President Godfrey Wood. The local tax exemption will be up for a council vote on Monday, along with a $228.3 million municipal and school budget for the fiscal year starting July 1. Cloutier's proposal would benefit the 9,232 Portland homeowners who are already enrolled in the state's Homestead Exemption Program. The state program exempts as much as $7,000 of taxable value on owner-occupied homes and reimburses municipalities for the uncollected taxes. A resident must have lived in their home for at least one year and must apply by April 1 to receive a homestead exemption during the following tax year. The newly revised homestead program exempts $7,000 on homes valued at $125,000 or less, $5,000 on homes valued between $125,000 and $250,000, and $2,500 on homes valued at more than $250,000. Cloutier's tax relief program would give Portland residents a rebate equal to the taxes paid on the first $15,000 of assessed value. Each homeowner who qualified would receive about $400. Actual savings would be less than that because the rebate program would add 91 cents to the current property-tax rate of $25.72 per $1,000 of assessed value. The savings would vary according to the assessed value of each home. Owners of modest homes would save more than owners of expensive homes. Commercial property owners, including absentee landlords, would receive no rebates and would see their tax bills grow at a greater rate than would homeowners. That's because they would pay the higher tax rate on the full value of their properties. If the council passes the budget without the tax relief proposal, it will add 16 cents to the property tax rate. That alone would add $16 to the annual bill on a home assessed at $100,000. Some city councilors question the logic of giving some taxpayers a break at the expense of others. "For me, the best form of tax relief is keeping the tax rate down," said Councilor James Cohen. Cloutier's proposal comes in the middle of a property revaluation that promises to shift a greater share of the tax burden onto homeowners, because residential property values have doubled in the last five years. Cohen said he believes the council should wait until after the revaluation is complete to learn how much tax relief is necessary. Councilors Cheryl Leeman and Peter O'Donnell also have expressed concerns about the tax relief program, even though O'Donnell helped to sponsor the proposal, along with Councilors Jill Duson and Nicholas Mavodones Jr. Some councilors are on the fence about the issue, including Nathan Smith. "I'm weighing the pros and cons of it at the moment," Smith said. "We're looking at a fairly significant tilt toward residential taxpayers as a result of the revaluation, and that's a legitimate concern. On the other side, there is a legitimate concern about equity." Smith said he believes the tax relief proposal would result in rental rate increases over time. Cloutier figures the proposal would have a negligible impact on rents, adding about $2 per month to the rent on a typical apartment. He questioned whether landlords would lower rents if the city decreased the tax burden by $2 a month. "I believe in this proposal 100 percent," Cloutier said. "The whole idea of tax reform has been so hard to achieve, it's going to take some time to get used to." Staff Writer Kelley Bouchard can be contacted at 791-6328 or at: kbouchard@pressherald.com
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