Maine is a state of small towns – 497 to be exact. Geographically speaking, all of the rest of New England can fit inside of Maine. Our 7,000 miles of saltwater coastline is compressed into 250 air miles as the crow flies from Kittery to Eastport. Throughout Maine’s history, communities along this highly indented coastline and the remote interior have been separated from each other. We learned, of necessity, to depend on ourselves, and then to be fiercely proud of our independent ways and means. We really don’t trust government much further away than town hall.
But our isolated, independent, small town way of life is also expensive. Economically, we are at the end of the line. Commodities that we don’t produce here are expensive to transport. We’ve never been wealthy, but now even our home-grown industries – shoes, textiles, pulp and paper – are moving overseas. Demographically, we have an aging population. At the same time, we have a huge amount of infrastructure like roads, bridges, wharves, ferries, schools, libraries and landfills to maintain, mostly at the local town level. As a result, we have one of the highest (many would say a crushing) tax burden to bear in comparison with most other states.
When faced with local spending choices, we used to simply do without. But that’s less and less true. We all have dreams for our kids – that they will go to good schools, read library books, access information from the Internet. We teach them to have high aspirations and they want sports, music and drama programs. We expect and demand to live in a clean environment. We’ve closed down the old dumps that leak into the water table, built sewage treatment plants to protect swimming and boating and marine resources like shellfish. We’ve upgraded water filtration systems to drink clean water. We’ve met the enemy and he is us.
To make matters worse, we are increasingly dependent on tourism to maintain our fragile economy. It’s a trade-off: for a few months a year (summer or winter depending on where you are), we trade our quality of life for the revenue it takes to pay for that quality of life. But gradually tourists become renters who become owners of seasonal property and, ineluctably, property values are pushed into the stratosphere. After a revaluation, this can happen, quite literally, overnight.
Yes, says the tax man, but when you sell your property, you can cry all the way to the bank. A fine thing unless you have no intention of selling, but are forced out of your house because you can’t pay your taxes that double or triple overnight.
Our property tax system is terribly destructive of community life because it creates a momentum that trades its established citizenry for newcomers who often expect more services for the high tax rates they pay, thus increasing the tax crunch spiral and the rate of community turnover. In cities and suburbs across America, people accept this turnover as a natural consequence of the American dream. But here in small town Maine, we’ve stood apart from these trends; we’re deeply skeptical of the changes that seem to have blighted so many other places.
The center cannot hold; something has to give – which is why the Palesky tax cap referendum has such immediate appeal. But the tax cap is a terrible solution to a problem of crisis proportions. The Palesky approach will lead immediately to disruptions in school and library programs and after-school activities. Although the effects will be felt in every town, island and working waterfront communities – especially in Casco Bay – will be disproportionately disadvantaged. Ferry service to Casco Bay islands will become less frequent and more expensive, making jobs more difficult to manage and island life more complicated to sustain. The capacity to manage infrastructure like town wharves and floats for fishing, ferries, mailboats and trap hauling will be compromised.
Oh, we’ll manage somehow. The Governor and Legislature will struggle up from their near-death paralysis and most likely pass new sales and income tax bills – arguably fairer because they’re based on the ability to pay. But a half a generation of kids will pay the most direct price until the revenue sharing gets sorted out. And at the end of the day Augusta will be in control of a greater proportion of community life. It’s not a pretty picture.
What’s the alternative? It’s hard to know. If Palesky is defeated (barely), as many islanders and all the Island Institute’s island trustees dearly wish, we’re all back to square one with the Legislature. Perhaps legislators will be chastened by the near train wreck their partisanship and leadership failure caused, and will be thus galvanized into action.
If so, one idea the Legislature should seriously re-examine is an idea that came from Chebeague Island and Harpswell for a “land bank” property tax exemption modeled on the Tree Growth Law that limits taxes on commercial forest land. Under this law, people who have no intention of selling their homesteads (for any amount of money), place their property in the program and are taxed at lower rates. Those who intend to benefit from the appreciation in real estate values have to pay the piper. This approach is not a silver bullet, and is only a piece of comprehensive tax relief, but it would slow the rate of community conversion to seasonal residential resorts surrounded by working and service class communities in the hinterlands. A homestead land bank would preserve more of Maine’s traditional core of community life – you know, the way life should be. Vermont has adopted this approach, apparently successfully.
To be politically viable, such a program would need to be limited somehow to year-round residents (which raises thorny constitutional questions that would need to be ironed out). It may be hard to find a lot of sympathy for extending tax breaks to wealthy shorefront owners “from away,” but such stumbling blocks that tripped up the momentum behind this proposal last time could be worked out in negotiations. And we, at the Island Institute, would be available to help coordinate a coastal constituency that others in hard-pressed, tax-stressed towns might be persuaded to join. We’ll report back after Election Day. In the meantime, vote early, if not often.
Philip Conkling is president of the Island Institute.