GrowSmart Maine Testifies in Favor of LD 1496, “An Act to Modernize and Simplify the Tax Code”

Testimony of Nancy Smith, Executive Director of GrowSmart Maine
in favor of LD 1496,
“An Act to Modernize and Simplify the Tax Code”
May 10, 2013

Senator Haskell, Representative Goode and members of the Joint Standing Committee on Taxation. My name is Nancy Smith and I live in Monmouth. I am the Executive Director of GrowSmart Maine, a statewide non-profit membership-based organization working to grow Maine's economy, strengthen its distinctive communities, and enhance our state's quality places.

As a part of our commitment to strengthening Maine’s economy, GrowSmart Maine is particularly enthusiastic about well grounded, thoughtful and creative proposals which seek to grow the economy in a sustainable manner while at the same time preserving our state’s unique character and quality of place. We believe this bill fits that description. As we look at the impact of this legislation on all our stakeholders, Mainers of all income levels and all those who value Maine, we believe all are better off than with the current tax code.

I will begin by thanking all co-sponsors of this bill. Presenting a thoughtful and comprehensive tax reform package is a bold, difficult yet vital effort. I congratulate them for stepping forward and I support the result of their effort, realizing the details are still very fluid. The goal, as stated in the Overview, is valid, important and well worth the hard work ahead.

To a few specifics:

  • We strongly support the relief of property taxes for Maine residents. This benefits both Mainers and our communities. We appreciate that there are specific components directed at the unique challenges of Maine’s service center communities. I would add that the Fund for Efficient Delivery of Local and Regional Services should be funded more fully than the million dollars in the current proposal. Success builds on success, and early local efforts at regional collaboration and efficiencies will be models for other communities and other regions across the state. We have learned that a top-down required consolidation is not a lasting solution. Empower communities to find their own solutions.
  • We also strongly support the significant reduction in income taxes. This will improve the quality of life for Mainers and Maine-based businesses, most of which pay income taxes within the individual tax return of the owner. A lower income tax rate is also a powerful business attraction tool, because income taxes are considered as facility locations are evaluated. As important as our quality places are in recruiting businesses and individuals, lower income tax is vital as well.

I will raise one concern; section 4 of the property tax section of the bill, which levies a level of property taxes on nonprofit organizations. GrowSmart Maine is a nonprofit in Maine but we do not own any property. Maine’s nonprofits are varied in their mission and their financial capacity, but each nonprofit serves a public good. Rather than implement this proposal, which may well destroy some of Maine’s nonprofits, I would suggest a targeted stakeholder group be formed to look at the current method for addressing the underlying concern. Many nonprofits negotiate with the municipality so that all property owners pay something towards the costs of municipal services by paying a PILOT; payment in lieu of taxes. How does this process work? Who initiates the discussions and how is a reasonable payment decided upon? These are important questions worth a better understanding, with the information shared across the state.

I would note that this provision can be pulled from the current proposal without impacting the carefully crafted balance of taxes on income, sales and property.
Having served eight years in the Legislature, I know that Mainers run for office because we want to make a difference. If you think of all the bills that have come before your committee, and of the nearly 2,000 bills before the full Legislature this session, consider which ones will truly make Maine better; two years from now, ten years from now, a hundred years from now. This proposal, even as you work through the details, will strengthen Maine’s economy and communities without sacrificing our natural and built quality places. In closing, I ask committee members to move this bill forward to the full Legislature.