AGO 05-7.

• Case Date: December 29, 2005
• Court: Maine

Maine Attorney General Opinions 2005. AGO 05-7. STATE OF MAINEOFFICE OF THE ATTORNEY GENERAL 6 STATE. HOUSE STATION AUGUSTA, MAINE 04333-0006 December 29, 200505-7The Honorable John Richardson, Speaker of the House122nd Maine Legislature 2 State House Station Augusta, ME 043330-0100 Re:

Your request for an opinion concerning Art. IV, Part 3, § 23, of the Maine Constitution

Dear Speaker Richardson: This letter responds to your request for a written opinion concerning the interpretation of Article IV, Part 3, § 23 of the Maine Constitution as it applies to personal property tax revenues. You have asked the following specific questions: 1.

Does the 50% reimbursement requirement for "lost" property tax revenues in this provision apply to personal property tax revenues as well as real property tax revenues?

2.

The Constitution applies the 50% reimbursement to "property tax revenue loss suffered . . . because of property tax exemptions or credits." If the Legislature completely repeals the personal property tax [no exemptions or credits involved], does the 50% reimbursement still apply?

3.

If this provision does apply to "lost" personal property tax revenues, and the Legislature repealed the personal property tax, to what benchmark does the 50% reimbursement apply in future years? For example,

A.

If a municipality currently collects a certain amount of personal property tax revenues in year 1 of the life of machinery and equipment (at its highest value), when the personal property tax is repealed, at what value in future years is the State's 50% reimbursement requirement applied?

B.

If the State retains the personal property tax, but reduces the type of property subject to this tax [exemptions and credits not involved], is the State subject to the 50% reimbursement requirement for personal property no longer subject to the tax? SUMMARY OF CONCLUSIONS

The questions you raise have not been addressed by any Maine court. Accordingly, our answers reflect the analysis that we believe the courts would apply without the benefit of the greater certainty that clear precedents provide. Moreover, without the specific language of proposed legislation before us, our answers are of necessity quite general and may not have clear application to any particular legislative proposal. With these caveats in mind, we summarize our conclusions as follows. We believe that a court would very likely conclude that Article IV, Part 3, § 23 applies to both personal property taxes and real property taxes, as there is no language in § 23 or other rationale that would provide a basis for excluding personal property taxes from the scope of § 23. The question of whether a repeal of all personal property taxes would trigger the 50% reimbursement required when statutory property tax exemptions and credits are enacted is less clear. However, on balance we believe that the reimbursement requirement of § 23 would not apply to the total repeal of the personal property tax since such a repeal would be a different type of legislative action than the enactment of a particular exemption or credit. In addition, the legislative history of § 23 indicates that its purpose was to require careful legislative consideration of the financial impact on municipalities of new exemptions and credits. A total repeal of the personal property tax would be an action of such a different dimension that its fiscal consequences for municipalities would likely receive careful consideration even if § 23 did not exist. Finally, if a court were to conclude that the repeal...