HP1223, LD 1713, item 1, An Act To Return Funds to Maine Property Tax Payers

An Act To Return Funds to Maine Property Tax Payers

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 5 MRSA §1518-A, as amended by PL 2015, c. 390, §1, is further amended to read:

§ 1518-A. Property Tax Relief Fund for Maine Residents

1. Property Tax Relief Fund for Maine Residents. There is created the Property Tax Relief Fund for Maine Residents, referred to in this section as "the fund," which must be used to provide property tax relief to residents of the State. The fund consists of all resources transferred to the fund under subsection 4 and section 1536 and other resources made available to the fund. The fund must be used to reduce the individual income tax rates to 4% pursuant to subsection 1-A provide relief payments to property tax payers pursuant to subsection 1-B.

1-A. Implementation. By September 1, 2016 and annually thereafter, the State Controller shall inform the State Tax Assessor of the amount available in the fund for the purposes of subsection 1.

A. By November 1st annually, the State Tax Assessor shall calculate the amount by which the income tax rates under Title 36, section 5111, subsections 1-F, 2-F and 3-F may be reduced during the subsequent tax year using the amount available from the fund. Bracket rate reductions must be a minimum of 0.2 percentage points in the first year in which reductions are made and a minimum of 0.1 percentage points in subsequent years. If sufficient funds are not available to pay for the minimum reduction, a rate reduction may not be made until the amount in the fund is sufficient to pay for the reduction. When the amount is sufficient to pay for the reduction, the reduction must first be applied equally to each bracket under Title 36, section 5111, subsections 1-F, 2-F and 3-F until the lower bracket reaches 4%. Funds available from the fund in subsequent years must be applied to reduce the higher bracket rates until there is a single bracket with a rate of 4%, after which future tax relief may be identified.

B. The State Tax Assessor shall provide public notice of new bracket rates calculated under this subsection by November 15th annually.

C. New bracket rates calculated under this subsection apply beginning with tax years that begin on or after January 1st of the calendar year following the determinations made under this subsection.

1-B. Process. The process for providing relief payments to property tax payers is established pursuant to this subsection.

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

(1) "Homestead" means any residential property, including cooperative property, that receives a homestead property tax exemption.

(2) "Homestead property tax exemption" means the exemption established in Title 36, chapter 105, subchapter 4-B.

(3) "Property tax payer" means an individual who owns a homestead.

(4) "Relief payment" means the funds, as determined pursuant to paragraph C, provided to the owner of a homestead pursuant to paragraph D to offset property tax payments made by that owner.

B. By October 1, 2019 and annually thereafter, for each homestead in this State:

(1) The assessor for each municipality shall provide the Treasurer of State with the number of homesteads in that assessor's municipality and the name and address of the property tax payer for each homestead; and

(2) The State Tax Assessor shall provide the Treasurer of State with the number of homesteads in the unorganized territory and the name and address of the property tax payer for each homestead.

C. Using the data provided pursuant to paragraph B, the Treasurer of State shall determine the amount of relief payment each property tax payer is entitled to by dividing the amount of the funds available in the fund by the total number of homesteads in the State.

D. In any year in which the amount of the relief payment for each homestead is at least $100, as determined pursuant to paragraph C, the Treasurer of State shall mail by December 1st of that year a check in the amount of the relief payment to each property tax payer at the address of the homestead provided to the Treasurer of State pursuant to paragraph B. Funds for the relief payments must come from the fund.

2. Nonlapsing fund. Any unexpended balance in the Property Tax Relief Fund for Maine Residents may not lapse but must be carried forward to be used pursuant to subsection 1-A 1-B.

3. Transfer for income tax reduction. In the fiscal years immediately following the calculation of the income tax rate reduction under subsection 1-A, paragraph A, the State Tax Assessor shall certify to the State Controller the amount of the reduction in General Fund revenue by fiscal year, and the State Controller shall transfer from the fund the amount certified for the reduction in revenue attributable to adjustments made under subsection 1-A to the General Fund unappropriated surplus.

4. Transfer from General Fund revenue growth. Beginning with fiscal year 2013-14 and before any other transfers from the General Fund, the State Controller shall transfer to the fund at the close of each fiscal year 40% of the amount by which General Fund budgeted revenue for that fiscal year exceeds the General Fund appropriation limitation calculated for that fiscal year under section 1534.

5. Report. Beginning January 2, 2020 and annually thereafter, the Treasurer of State shall report 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 the amount of funds in the fund, the amount of the property tax relief payment calculated pursuant to subsection 1-B, paragraph C and the number and amount of property tax relief payments distributed, if any, pursuant to subsection 1-B, paragraph D.

Sec. 2. 5 MRSA §1536, sub-§1, ¶F, as enacted by PL 2011, c. 692, §2 and affected by §3, is amended to read:

F. Twenty percent to the Property Tax Relief Fund for Maine Residents established in section 1518-A.

Sec. 3. 5 MRSA §1536, sub-§3, as amended by PL 2015, c. 267, Pt. L, §8, is further amended to read:

3. Exceptions; stabilization fund at limit. If the stabilization fund is at its limit of 18% of General Fund revenue of the immediately preceding year, then amounts that would otherwise have been transferred to the stabilization fund pursuant to subsections 1 and 2 must be transferred to the Property Tax Relief Fund for Maine Residents established in section 1518-A.

summary

The Tax Relief Fund for Maine Residents, which is funded by the transfer of 20% of the unappropriated surplus of the General Fund after all required deductions of appropriations, budgeted financial commitments and adjustments considered necessary by the State Controller have been made, was established to provide income tax relief by reducing income tax rates once a certain level of funds in the fund is reached; to date, the required level of funding to provide income tax relief has not been reached.

This bill renames the fund the Property Tax Relief Fund for Maine Residents and requires it to be used to provide property tax relief payments directly to residents of this State whose residence qualifies for an exemption under the Maine homestead property tax exemption. The amount of the tax relief payment is determined annually by dividing the total amount of funds available in the Property Tax Relief Fund for Maine Residents by the total number of homesteads that qualify for the Maine homestead property tax exemption. If that amount is at least $100, the Treasurer of State is required, by December 1st, to mail checks for the tax relief payment to each owner of a qualifying homestead.

HP1223 LD 1713	Session - 129th Maine Legislature		LR 2496 Item 1
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