(The Center Square) – Hundreds of thousands of elderly Maine homeowners will be eligible to "freeze" their property taxes under a new program that goes into effect next month.
The program, which was tucked into a $1.2 billion supplemental budget approved earlier this year, allows property owners who meet the basic eligibility requirements to "freeze" their tax obligations at the previous year’s level.
Senior advocates say the tax credits will dramatically improve the lives of many elderly Mainers who are struggling to stay in their homes amid rising property taxes and other costs.
"This will have a big impact on older adults, particularly those living on fixed incomes," said Noël Bonam, Maine state director for AARP, which supports the program. "So many older adults are unable to keep their homes because property taxes keep going up. It's become the most burdensome tax for seniors."
Maine is one of the oldest states by median age, according to census data, and nearly 80% of Maine residents 65 and older owned homes in 2017.
To qualify, applicants for the tax credits must be 65 or older and have qualified for the Homestead Exemption for at least the past 10 years, according to the law.
There are no income levels and property owners must apply by Dec. 1, every year, to receive the benefits of the program.
Overall, the new program could benefit more than 200,000 homeowners in the state, according to preliminary estimates.
Maine's constitution mandates the state to reimburse communities for only 50% of lost revenue from tax exemptions, but the law that authorized the tax credit program requires the state to reimburse communities for up to 100% of the exemptions. The state used federal pandemic relief funds to cover the costs in the first year, but after that it will have to pick up the tab.
A fiscal note estimates that costs for the program will rise from $2.2 million next year to $14 million in the third year as tax assessments are updated and more seniors join the program.
But the new law has raised concerns that cities and towns will end up shouldering the costs, if lawmakers fail to fully fund the program in the future or reduce the state's contribution level.
"That 100% reimbursement is not guaranteed," said Kate Dufour, a lobbyist with the Maine Municipal Association, which opposed the changes. "At any time, the Legislature could amend the existing law and say 'sorry we can't afford this anymore' and we're going back down to the 50% reimbursement."
"If that happens, all we're going to do is shift the financial burden from seniors to working families, or municipalities will have to cut their services," she added.
Dufour also points out that the law comes with no income limits, and few restrictions, such as a means test to determine if applicants should qualify for the tax credits.
"You could be the wealthiest human being living in the state of Maine and still qualify," she said. "There's also no limit on benefits, so you could be living in a large waterfront home and still freeze your taxes."
Maine joins six states – including Connecticut, New Jersey and Rhode Island – that offer tax freezes for elderly homeowners, according to the National Conference of State Legislatures.
Another 10 states have "tax assessment" freezes for seniors, veterans and disabled homeowners that keep their property taxes from increasing, the group says.