Property taxes are rising rapidly in many communities in Maine, burdening individuals and small businesses alike. Communities are faced with the wrenching choice between cutting education programs or further raising taxes. As property taxes rise, more and more families are forced to sell property that has been passed down several generations. The Legislature made progress in 2005 by enacting legislation that increased state funding for education, raised the Homestead Exemption to $13,000, and expanded the Circuit Breaker Program to provide up to $2,000 in property tax relief to individuals with incomes below $75,000 and families with incomes below $100,000. Although progress has been made, we must continue to explore ways to provide direct property tax relief to Maine families.
More fundamentally, tax reform is needed to avoid billion dollar budget deficits in the future. Maine's tax structure produces revenue that rises and falls with the economic cycle, producing enormous deficits when we can least afford them. History has demonstrated that saving money in rainy day funds is not an adequate mechanism for smoothing out the revenue stream. A better approach is to broaden the tax base in a revenue neutral way. A smaller tax rate on more sources would yield a more consistent and predictable revenue stream.