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LD 1,
the property tax relief bill, was enacted on January 20, 2005. This new
law contains over 80
printed pages of statutory changes.
Key
provisions include:
Homestead expansion:
The homestead exemption has
been expanded to $13,000, and is available to all those who qualify
under the
existing terms (primary residence held for more than 1 year.) Using
this year’s
tax rate, it would result in a $235.30 tax savings for those who
qualify. The
state will only reimburse 50% of the exemption, creating a hole in
Freeport’s
budget of about $210,000.
“Circuit
Breaker” expansion: This
program of reimbursement for taxes paid now has increased funding for
eligible
applicants, i.e. those whose property tax bill exceeds a certain
percentage of
income. The standards for qualifying have been relaxed as well. Forms
will be
available at the town hall, probably after Labor Day.
Spending
limitation system would work as follows:
State. the
limit would be governed by growth in total personal income, currently
2.58% PLUS
average annual growth in state population. This year’s cap would be
3.14%. If the Legislature determines that an “extraordinary
circumstances” has been triggered, it can expand its growth allowance.
The list
is:
1.
Catastrophic events such as natural disaster,
terrorism, fire, war or riot.
2.
Unfunded or underfunded federal mandates.
3. Citizen
initiatives or other referenda.
4. Court
orders or decrees.
5. Loss of
federal funding.
County/municipal
spending limits.
The
municipal and county spending limits are similar to
the state. For the municipalities, the year-to-year limit in property
tax
commitment increase (excluding money related to county government and
excluding
money related to schools) would be calculated by adding the real growth
in
total personal income plus the growth in new valuation over the prior
year.
For the
counties, the year-to-year limit would apply to county’s
total assessment.
The same
list of “extraordinary circumstances” would be
available to the municipalities and counties as is available to the
Legislature.
To
establish an extraordinary circumstance for the purpose
of increasing the growth limit, it must be determined by a “strict
majority”;
i.e., a majority of the entire town council. A
“extraordinary circumstance” at the county
level would require a “strict majority” vote of the county budget
committee as
well as a strict majority vote of the county commissioners.
“People’s veto.” A
“people’s veto” process would be available whereby the county or
town council action could be made subject to a referendum override if
petitioned within 30 days of the final council/county action. The
petition
would have to be signed by a number of registered voters equal at least
to 10%
of the voters at the last gubernatorial election.
School
spending limits. The spending limit system governing all school
budgets is
based on the EPS system defined by the Department of Education.
Specifically,
any proposed school budget that exceeds the amount that the EPS
allocation
system (at 100% of the model) identifies as the amount necessary must
be
adopted according to the special procedures. The special “override”
procedures
are: A strict majority vote of the school committee followed by a
strict
majority vote of the council, with the council vote expressly
recognizing the
fact that the budget exceeds the EPS model, and by how much. The
“people’s
veto” process described above would similarly apply to council votes on
the
school budget.
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Special
Town Council Workshop Presentation -
On September 14 the Council heard a public
presentation by the town administration and school
department, explaining the tax cap and how it could be implemented in
Freeport. This link will open the Power Point Presentation given
that night on your computer; it is 770k in size. You must have
Microsoft Power Point installed to view it. The Freeport
Cable TV office in town hall recorded the meeting and copies are
available be
available. In addition, paper copies of information handed out at the
meeting are available at town hall.
Question
#1 Language
This link takes you
to the State's web site which gives the full 3000 words of the proposed
legislation. (The actual language on the November 2004 ballot
reads: "Do you want to
limit property taxes to 1% of the assessed value of the property". )
Budget Cuts
- Municipal portion
This link gives a summary of estimated cuts to the municipal side of
the budget necessary to comply with the tax cap.
Budget Cuts -
School portion
This link gives a summary of estimated cuts to the school side of the
budget necessary to comply with the tax cap.
FY 2006 BUDGET
This link takes you to a page that lists the town and school operating
budgets and the capital budget for fiscal year 2006.
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