After many long days at the State House, the Legislature has wrapped up its work for 2023. One of our final tasks was to pass part two of the state’s biennial budget. The budget, which has been signed into law by Gov. Mills, addresses some of our most pressing challenges and makes long-term investments in our people – all while balancing the budget and maintaining the largest rainy day fund in Maine history. Among the major initiatives in the budget are investments to tackle the statewide housing crisis, improve our lack of affordable child care, fund a new paid family and medical leave program and establish a fully refundable child tax credit. The budget also made important changes to the way we help older Mainers afford to stay in their homes as they age.

In 2022, the Legislature enacted LD 290, which created the Property Tax Stabilization Program. The program allowed permanent Maine residents 65 and over to freeze their property taxes if they owned a home for 10 years and were eligible for the homestead exemption. This program had several flaws, including a lack of income limits or limits based on property value. Recipients could also take advantage of a loophole that would have allowed them to transfer their stabilized rate from a property with a low property tax rate to a high one. Its fiscal impact was expected to balloon exponentially in the coming years, leaving other taxpayers to cover the costs.

For all of these reasons, the Legislature’s Taxation Committee proposed a more sustainable and targeted approach to providing property tax relief to older Mainers which was ultimately included in the budget. This approach replaced the Property Tax Stabilization Program with expansions of the Property Tax Deferral Program and the Property Tax Fairness Credit. The Property Tax Deferral Program allows certain individuals to postpone payment of the property taxes on their homes until they pass away, move or sell their property. The expanded program raises the maximum income level to establish eligibility from $40,000 to $80,000 and increases the maximum asset test to $100,000. By raising the income and asset limits in this program, we are increasing the number of Mainers who would be eligible for the program while still ensuring that the program targets Mainers who are truly in need of support.

Eligible taxpayers who apply for the Property Tax Fairness Credit can receive a portion of the property taxes or rent paid each year as a credit on their state income tax return. The expanded version of this credit increases the credit amount for eligible Mainers 65 or older from $1,500 to $2,000 and establishes a new maximum benefit base for those 65 or older at $4,000 and indexes it to inflation. The benefit base is what helps determine the size of the credit an individual receives. The higher the benefit base, the higher the credit. Previously, the maximum benefit base was $2,050 for individuals, $2,650 for heads of households and $3,250 for married joint filers. Because this previous benefit base was determined by one’s filing status, if a spouse passed away or something else changed in the household, you might be faced with a lower benefit base, and therefore a lower credit. This new approach ties the $4,000 benefit base to age, so no matter what changes at home, those 65 and older will always receive their credit based on the maximum $4,000 base.

This assurance of stability makes planning for the future easier. I am incredibly proud of the thoughtful work that went into the budget this session to enable older Mainers living on fixed incomes to lower their property taxes, empowering more of our friends and neighbors to age with dignity in their homes.