Tax season demands new tax relief

During the recent State of the State address by Governor Paul LePage, a significant amount of time was devoted to conservation tax easements and the nonpayment of property taxes by countless nonprofit organizations in the state of Maine.

Never one to shy away from controversial topics, the Governor has long pressed for changes to Maine law regarding fees or property taxes for nonprofits, land trusts and other tax-exempt organizations. Knowing how the state’s finances work, knowing the increasing demands on the state’s budget for opioid abuse campaigns, Medicaid expansion and in-home health care for an aging population, the Governor is slyly stating that we are reaching critical mass and that far too many property tax payers across the state can no longer afford the annual increases that are driving fixed-income citizens from their homes.

Data from Maine’s Revenue Services Municipal Valuation Returns (collected from towns and cities) reveals how dramatic the tax shift has become. From 1996 to 2016, the tax-exempt property value in Maine increased 55 percent to over $18 billion. No matter what mill rate or fee schedule is used, $18 billion of property could generate significant revenues to help fund many of the expenses of running a Maine community.

Advocates for land trusts can easily cite the soft impacts of their work — increased recreational opportunities, enhanced access to undisturbed lands and water, preserved hunting and fishing properties and more, while taxing proponents can decry the impact on community tax rolls and lack of land for hard economic opportunity. Mainers have consistently sided with efforts to protect more Maine land, devoting millions to bond efforts. This work, with numerous nonprofit land trusts, has resulted in 1.8 million acres of government-owned protected lands in Maine, plus 2.3 million acres in easement positions, or, 4.1 million acres set aside from direct, full-value property taxes.

Protected lands don’t consume many resources and do provide economic benefits beyond life quality, however the state’s varied nonprofits, like hospitals, colleges, laboratories, churches and other organizations, consume the same police, fire and road maintenance resources as taxpayers — while often not paying any fees or taxes at all. Some nonprofits pay small PILOT fees (payments in lieu of taxes), yet most pay nothing to the communities in which they operate, transferring all of the community-operating expenses onto property tax payers.

A case in point: Bowdoin College has over $3 million in tax-deferred property in Brunswick and pays $172,200 a year in PILOT fees, which is $172,200 more than Bates College in Lewiston pays on similar tax-deferred property, but still less than one-third of what the University of Maine pays the town of Orono. Bowdoin has an endowment of $1.455 billion. Many other nonprofits also enjoy healthy endowments.

Not every nonprofit has the ability to pay property taxes. But not every residential property owner can afford the escalating property taxes that continue unabated each year. However, there needs to be a balance, a fairness that employs PILOT programs or varying levels of tax assessments for all nonprofits so that they pay to support the services they enjoy in every community.

Property taxes are the primary revenue source for most Maine communities. Land trusts, hospitals, colleges and other nonprofits all enjoy the same services that tax-paying citizens enjoy — all too often without paying. Where is the fairness in that? It’s time that nonprofits step up.