Municipal leaders ask Maine tax committee to enshrine homestead reimbursements and 5% revenue sharing in constitution

Amanda Campbell, representing the Maine Municipal Association's 70‑member Legislative Policy Committee, told the Joint Standing Committee on Taxation that LD 1112 is “in strong support” of municipal priorities and property‑tax relief. ‘‘This bill accomplishes 3 important tasks,’’ Campbell said in testimony delivered at the public hearing.

The proposal would (1) raise the state reimbursement to municipalities for lost revenue from the homestead, veteran and blind exemptions to 90%; (2) increase the homestead exemption from $25,000 to $50,000; and (3) enshrine a constitutional floor guaranteeing that no less than 5% of combined state sales and income tax revenue be shared with municipalities.

‘‘This bill supports both municipalities and property taxpayers,’’ Campbell said, adding that revenue sharing has been reduced or repurposed in recent years and that enshrining 5% in the Constitution would prevent future transfers away from municipalities. She cited a figure — ‘‘a staggering $859,908,116’’ — that she said had been transferred out of the revenue‑sharing program between February 2022 and 2023.

Kerry Leishman, a certified Maine assessor from Camden and Rockport, described the changes as ‘‘meaningful systemic change’’ and noted the constitutional roots of Maine property tax law. ‘‘A minimum of 90% is not a huge or unreasonable ask,’’ Leishman said, arguing that the change would protect municipalities from future state budget reallocations and provide predictability for local budgeting.

City officials testified about local impacts. Mark Myers, city manager of Bath, told the committee Bath currently receives more than $2 million in municipal revenue sharing and roughly $500,000 in homestead reimbursement. ‘‘Any loss of revenue to municipalities at the state level increases the mill rate and affects residential property taxpayers,’’ Myers said.

The administration opposed the bill in testimony from Michael Allen, associate commissioner for tax policy at the Department of Administrative and Financial Services, who highlighted fiscal and technical concerns. Allen said the proposed constitutional changes would ‘‘significantly increase the annual reimbursement issued to municipalities’’ and estimated the homestead change alone could cost ‘‘approximately $100,000,000 or more on an annual basis.’’ He warned that locking minimum revenues and reimbursement levels into the Constitution could limit the governor and Legislature’s flexibility in balancing the budget and could be viewed negatively by bond rating agencies.

Allen also flagged drafting questions: he noted the bill’s language about ‘‘residential real estate of veterans’’ could conflict with current statute that references a veteran’s estate (real and personal property), and he urged clarification of implementation timing and of an inflation adjustment clause.

Committee members pressed for more detail in the work session on how the 5% revenue‑sharing floor would interact with future changes and on the bill’s technical language. Supporters said they would provide additional fiscal and policy context at a work session.

Why it matters: The measure would shift the balance of property‑tax relief and municipal funding toward guaranteed state support, and it would constrain future legislative choices on budget tradeoffs if adopted as a constitutional amendment. The committee has the option of advancing the bill to a work session for redrafting and fiscal review.

Next steps: Committee members asked for additional data and clarifying language in a work session; the administration and municipalities expected to return with fiscal detail if the panel moves forward.

Sources: Testimony from Amanda Campbell (Maine Municipal Association), Kerry Leishman (certified assessor), Mark Myers (City Manager, Bath), and Michael Allen (DAFS).