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HomeMy WebLinkAbout1997-05-28 97-240 RESOLVECOUNCIL ACTION Item No. 9I-240 Item/Subject: Urging Maine Legislature and Governor to Authorize Municipal Service Fees On Tax -Exempt Properties Responsible Department: Legal On May 19th, the U.S. Supreme Court announced its decision in Camps Newfound/Owatonna. Inc. v. Town of Harrison, a tax Case on appeal from the Maine Supreme Court. In its decision, the U.S Supreme Court overturned the provisions of 36 MRSA S 652(1)(A)(1), which Previously limited the property tax exemption for charitable nonprofit corporations that primarily serve nonresidents of the State Of Maine to the first $50,000 of assessed value. The effect of the U.S. Supreme Court's decision is that charitable nonprofit (cont'd on next page) ��i-i e Department Head Manager's Comments: Associated Information: Resolve, statute Finance Director City Holicit Passage First Reading Referral Page 1 of 5 � Assigned to councilor Sullivan aw CITY O OR 9J-240 May 28, 1997 (TITLE.) FE501,0eBrging Maine Legislature and Governor to ..... .......... ........... _.... ..... ... .._.... .... .... ........ .... ................... _..._... _......... . Authorize Municipal Service Pees on Tax -Exempt Properties 9H fhe Cfey Caunai! wthe Cllr QfRz o DEBDLVDD, WHEREAS, the City of Bangor, as of April 1, 1996, was the host community to more than $162 million of non-governmental, tax-exempt properties; and WHEREAS,, the City Of Bangor is also the host community to more than $80 million in State-owned tax-exempt properties; and WHEREAS, Bangor residents and taxpayers are required to provide police and fire protection, fire hydrant service, street maintenance, and other public services to tax-exempt properties free of charge; and WHEREAS, provision of free municipal services to tax-exempt Properties imposes substantial burdens on Bangor residents and taxpayers and substantially increases Bangor's property tax rate; and WHEREAS, Bangor's situation in regard to tax-exempt properties is replicated in hundreds of communities across the State of Maine; and WHEREAS, for more than 20 years, the Maine Legislature has ignored calls by Maine's municipalities to provide significant relief from the local property tax burdens created by tax-exempt properties; and WHEREAS, the Legislature has specifically declined to take necessary steps to broaden municipalities' revenue base, to limit the growth of tax exempt properties, or to adopt workable service fee legislation; and IN CITY COUNCIL May 29, 1997 Passed CI CL 97-260 EES0LVE Uieine Maine Legislature and Governor to Authorize Municipal Service Fees on Tax -Exempt Properties 97-240 WHEREAS, in the current legislative session, the Legislature's Taxation Committee has recommended as "ought not to pass" proposed legislation that would have provided comprehensive restructuring of the State's tax structure (LD 1742) and that Would have created a study commission to draft a comprehensive tax reform package (LD 202); and WHEREAS, the State of Maine continues to under -fund State aid to education, general revenue sharing, and other categories of State aid to municipalities, such that in default of adequate levels of State aid, local property taxes now constitute 458 of all governmental revenues raised by the three major taxes in Maine (property, sales, and income tax); and WHEREAS, the Legislature continually receives proposals, such as LD 11 in the current legislative session, to expand still further the types and nature of properties eligible for tax-exempt status; and WHEREAS, the U.S. Supreme Court, on May 19, 1997, in Camps Newfound/Owatonna.Inc-Harrison, declared that Maine towns may no longer enforce the Provisions of 36 MRSA 4 652 that limit property tax exemptions for. non-profit organizations that primarily serve non- residents of the State of Maine; and WHEREAS, the Supreme Court's May 19th decision creates the potential for a major new expansion in the number and value of tax-exempt properties in the State of Maine; and WHEREAS, Maine's residents and taxpayers can no longer afford to bear the burden of providing free municipal cipal services to an ever-expanding number and value of tax-exempt properties; NOW, THEREFORE, by the City Council of the City of Bangor, be it RESOLVED, THAT the City Council of the City of Bangor hereby urges the Maine Legislature and Governor, as emergency legislation during the current session, to adopt workable legislation enabling Maine municipalities to charge service fees to tax-exempt properties located within their boundaries, so as to recover the local cost of municipal services provided to such properties. 9I-240 corporations may now qualify for a 100& tax exemption for their real and personal property located in Maine, even if Maine residents are expressly excluded from participating in the nonprofit's charitable programa. This decision has the potential to remove large areas of northern and coastal Maine from the property tax rolls, and will also increase the number and value of improved properties that are eligible for tax exempt status. The U.S. Supreme Court's decision follows recent action by the Maine Legislature's Taxation Committee to kill two bills, In 202 and Up 1742, intended to address inequities in Maine's present tax structure, including the burdens on local communities created by tax-exempt property. In light of the U.S. Supreme Court's owatanna V. Town of Harrison decision, the attached Resolve would urge the Legislature, as emergency legislation in the current session, to revisit previous proposals to authorize municipal service fees for tax-exempt properties.