(7) Employment tax increment financing under Title 36, chapter 917.; or

(8)__The shipbuilding facility credit under Title 36, chapter 919.

Sec. 3. 36 MRSA §112, sub-§9-A, as enacted by PL 1999, c. 488, §1, is repealed.

Sec. 4. 36 MRSA §112, sub-11, as enacted by PL 1999, c. 169, §1, is repealed.

Sec. 5. 36 MRSA c. 9, as amended, is repealed.

Sec. 6. 36 MRSA §200, sub-§1, as enacted by PL 1997, c. 744, §1, is amended to read:

1. Impact of taxes on individuals. The bureau shall submit to the joint standing committee of the Legislature having jurisdiction over taxation matters and the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs a report containing the information required by this subsection to the Legislature by July 1, 1999 and by October 1st of each even-numbered year thereafter.

A. Part 1 of the report must describe the overall incidence of all state, local and county taxes. The report must present information on the distribution of the tax burden:

(1) For the overall income distribution, using a measure of system-wide incidence that appropriately measures equality and inequality;

(2) By income classes, including, at a minimum, deciles of the income distribution; and

(3) By other appropriate taxpayer characteristics.

B. Part 2 of the report must describe the impact of the tax system on business and industrial sectors. The report must:

(1) Describe the impact of taxes on major sectors of the business and industrial economy relative to other sectors; and

(2) Describe the relative impact of each tax on business and industrial sectors.

C. When determining the overall incidence of taxes under this subsection, the bureau shall reduce the amount of taxes collected by the amount of taxes that are returned directly to taxpayers through tax relief programs.

Sec. 7. 36 MRSA c. 10 is enacted to read:

CHAPTER 10

TAX EXPENDITURE REVIEW

§199-A.__Definitions

As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.

1.__Committee.__"Committee" means the joint standing committee of the Legislature having jurisdiction over taxation matters.

2.__Tax expenditure.__"Tax expenditure" means any provision of state law that results in the reduction of tax revenue due to special exclusions, exemptions, deductions, credits, preferential rates or deferral of tax liability.

§199-B.__Report

1.__Report.__The bureau shall submit a report regarding tax expenditures to the committee by January 5th of each odd-numbered year.__The report must contain:

A.__A summary of each tax expenditure in the laws administered by the bureau;

B.__A description of the purpose and background of the tax expenditure and the groups likely to benefit from the tax expenditure;

C.__An estimate of the cost of the tax expenditure for the current biennium;

D.__Any issues regarding tax expenditures that need to be considered by the Legislature; and

E.__Any recommendation regarding the amendment, repeal or replacement of the tax expenditure.

§199-C.__Review

The committee shall conduct the following reviews according to the following schedule.

1.__Odd-numbered years.__During each odd-numbered year the committee may review the report required under section 199-B.

2.__Even-numbered years.__During each even-numbered year the committee may review current issues of tax policy.

A.__During each second__regular session, the committee shall identify areas of tax policy for review during the period between the end of the second regular session and the first regular session of the next Legislature.

B.__The committee may review:

(1)__Issues of tax policy related to tax expenditures identified in its review under subsection 1;

(2)__Issues related to the overall structure of the State's tax laws and the relative tax burdens on various classes of taxpayers;

(3)__The impact of the State's tax structure on taxpayer behavior, including incentives and disincentives to reside or locate businesses in the State;

(4)__Issues identified by the committee that require more detailed review than is possible during a regular session of the Legislature; or

(5)__Any other tax policy issue identified by the committee as needing legislative review.

§199-D.__Report

The committee shall notify the Legislature of the results of each review conducted under section 199-C and may issue a report of its findings and recommendations.__The committee may report to the Legislature any legislation necessary to implement recommendations resulting from the review conducted under section 199-C.

Sec. 8. 36 MRSA §1119, as amended by PL 1999, c. 731, Pt. Y, §6, is further amended to read:

§1119. Valuation guidelines

By December 31, 2000 and biennially thereafter, the Department of Agriculture, Food and Rural Resources working with the Bureau of Revenue Services, representatives of municipal assessors and farmers shall prepare and report to the joint standing committee of the Legislature having jurisdiction over taxation matters guidelines to assist local assessors in the valuation of farmland. The department shall also deliver these guidelines in training sessions for local assessors throughout the State. These guidelines must include recommended values for cropland, orchard land, pastureland and horticultural land, differentiated by region where justified. Any variation in assessment of farmland from the recommended values must be substantiated by the local assessor within the parameters allowed within this subchapter.

Sec. 9. 36 MRSA §1121, as amended by PL 1997, c. 526, §14, is further amended to read:

§1121. Program monitoring

By January 1, 1989, and every 2 years thereafter, the The Department of Agriculture, Food and Rural Resources and the Bureau of Revenue Services shall periodically review the level of participation in the farm and open space tax program, the taxes saved due to that participation, the fiscal impact, if any, on municipalities, including the impact of any penalties assessed under section 1112 and the effectiveness of the program in preserving farmland and open space. The department and the bureau shall may report to the joint standing committee of the Legislature having jurisdiction over taxation within 6 months after completion of the review matters on the status of the program. The department and the bureau shall may identify problems that prevent realization of the purposes of this subchapter and potential solutions to remedy those problems.

By February 1, 1992, the department and the bureau shall report to the joint standing committee of the Legislature having jurisdiction over taxation matters on the potential problems that occur as a matter of transferring parcels between classifications and subsequent withdrawal of those or other parcels pursuant to sections 581, 1109, 1112 and 1115. Recommendations, if any, regarding the penalty provisions imposed by withdrawal from any of the classifications contained in subchapter II-A or this subchapter must be included in this report.

Sec. 10. 36 MRSA §5215, sub-§8, as enacted by PL 1993, c. 672, §1 and affected by §2, is repealed.

Sec. 11. 36 MRSA §6254, sub-§2-A, as enacted by PL 1989, c. 713, §4, is amended to read:

2-A. Inventory. The filing of the certificate in the registry of deeds is sufficient notice of the existence of the mortgage. Whenever the State acquires title to real estate, the State Tax Assessor shall cause an inventory to be made of all such real estate. The inventory must contain a description of the real estate, amount of accrued taxes by years and any information necessary to the administration and supervision of the real estate. The State Tax Assessor shall report annually to the Legislature not later than 15 days after the Legislature convenes. The report must contain a copy of the inventory of real estate then owned by the State and the recommendations for the disposition of this real estate that the State Tax Assessor makes.

Sec. 13. Identification of tax expenditures. By December 1, 2002, the joint standing committee of the Legislature having jurisdiction over taxation matters, in consultation with the Department of Administrative and Financial Services, Bureau of Revenue Services, shall identify tax expenditures that must be included in the report by the bureau required under that section of this Act that enacts the Maine Revised Statutes, Title 36, chapter 10 and develop a reporting format that will provide the committee with the information needed to review those tax expenditures effectively.

FISCAL NOTE

The Department of Agriculture, Food and Rural Resources may realize some minor savings from changes in certain reporting requirements.

The Bureau of Revenue Services within the Department of Administrative and Financial Services will incur some minor additional costs regarding certain reporting requirements. These costs will be offset by elimination of certain other reporting requirements within the same bureau.

SUMMARY

This bill implements the recommendations of the Joint Standing Committee on Taxation resulting from its review of tax expenditures required under the Maine Revised Statutes, Title 36, chapter 9. The bill repeals the current tax expenditure review process and replaces it with a process intended to provide more effective legislative review of tax expenditures and provide an

opportunity for legislative review of the State's tax policy and structure. The bill requires the Department of Administrative and Financial Services, Bureau of Revenue Services to provide information relating to tax expenditures for review biennially by the joint standing committee of the Legislature having jurisdiction over taxation matters. In alternate years the committee is authorized to identify and review issues related to expenditures, the State's overall tax policy and structure or other issues identified by the committee as needing legislative review. The committee is authorized to submit legislation implementing its recommendations.

The bill also repeals several reports to the Legislature by the Bureau of Revenue Services that are duplicative, obsolete or no longer considered necessary.