AUGUSTA — Democratic House Speaker Mark Eves has introduced a bill designed to beef up a rent and property tax credit program criticized for providing significantly less tax relief to low- and middle-income residents than the so-called “circuit breaker” program it replaced.

The Legislature repealed the Maine Residents Property Tax and Rent Refund Program, known as the circuit breaker, swapping in a less robust property tax fairness credit. Lawmakers adopted the change as an alternative to Gov. Paul LePage’s plan to limit the circuit breaker to people 65 or older and veterans. Both proposals were meant to help balance the state’s current two-year budget.

The new program adopted by the Legislature is expected to save the state between $20 million and $25 million, but lawmakers are getting pushback from residents who came to rely on a circuit breaker benefit that provided a tax refund ranging from $479 to $1,600.

Mainers who qualify for the new program can receive a maximum tax credit of $300 a year, or up to $400 if they are 70 or older. However, residents who thought they were going to receive a circuit breaker refund in August won’t get one. Additionally, the replacement tax credit isn’t available until 2014.

Few details have been released about Eves’ proposal, including how much it’s expected to increase the property tax credit. A spokeswoman for Eves said Thursday that the bill will be funded by a portion of the General Fund year-end surplus revenue. It also directs lawmakers to find additional funding sources to increase the amount of the tax rebate.

Eves, in a written statement, said the bill was a response to growing concerns about the new tax rebate program.


“Democrats were committed to preserving property tax credits for Maine families and this bill will help ensure the funds are there to do it going forward,” Eves said.

The bill won’t be considered until January when the Legislature convenes for an abbreviated session.

Residents who received refunds from circuit breaker began receiving notices in July that the program ended.

Bob Pelletier, of Scarborough, told the Press Herald in July that replacement program was a “pacifier.” Pelletier used to receive a $1,200 property tax refund.

“It’s kind of a joke for someone on Social Security who is barely getting by,” Pelletier said. “It’s obviously going to be a huge difference for me.”

Some of the commenters on the Portland Press Herald story said they had adjusted their household budgets in anticipation of the circuit breaker refund. One woman from Windham wrote that she used the refund check to purchase heating oil.


The property tax fairness credit is refundable. However, a homeowner must file a state income tax return to receive the credit, even if the person receives only Social Security income.

Fewer than half the estimated 200,000 eligible households in Maine had applied for the circuit breaker program in the past.

Michael Allen, the state’s associate commissioner for tax policy said in July that the program had about 89,000 recipients In fiscal year 2012.

In 2011, the average yearly refund was $479 and the maximum refund was $1,600, according to Maine Revenue Services.

A study by the AARP found a 40 percent participation rate among similar programs in other states.

Under the new tax credit program, the state estimates about 125,000 people will qualify to receive credits totaling $34 million to $35 million.


Democrats have argued that the tax credit adopted in the state’s two-year budget was a compromise struck with Republicans and alternative to LePage’s proposal which would have limited circuit breaker to people aged 65 and older and veterans while providing no benefit to others.

Rep. Kathleen D. Chase, R-Wells, ranking minority member on the Appropriations Committee, recently said the circuit breaker was too complicated and confusing. She said the new program should attract more applicants because the forms will be easier to fill out.

“All in all going forward, I think we will see a lot more people applying for refunds,” Chase said.

Democrats have since said that Republicans were unwilling to give up tax breaks for high-income Mainers to fund programs for middle- and low-income Mainers.

The change in tax relief programs will save the state’s general fund an estimated $20 million to $25 million. The circuit breaker program was budgeted at just over $43 million in fiscal 2012.

There are other tax-relief programs available for homeowners, such as the homestead exemption, which subtracts $10,000 from the assessed value of a Mainer’s home for the purpose of assessing property taxes. Some narrow exemptions also exist for certain veterans.

The new tax credit program aims to help Maine homeowners or renters who make $40,000 a year or less. To qualify, individuals must have paid property tax on a home in Maine that was more than 10 percent of their Maine adjusted gross income, or paid rent that was more than 40 percent of Maine adjusted gross income.

Social Security does not count as income. Sources of income include pensions and retirement pay, distributions from an IRA or 401(k) plan, rental income from real estate, interest from dividends from stocks or bonds, unemployment benefits, as well as damages paid under court judgments.

Steve Mistler — 620-7016
[email protected]

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