The Honorable Joseph C. Perry, Senate Chair
AGO 2008-3
No. 2008-03
Maine Attorney General Opinion
State of Maine Office of The Attorney General
March 24, 2008
The
Honorable Joseph C. Perry, Senate Chair
The
Honorable John F. Piotti, House Chair
Members
of the Joint Standing Committee on Taxation
123rd
Maine Legislature
10
State House Station
Augusta,
ME 043330-0100
Re:
L.D. 2229, An Act to Expand the Economic Development Benefit
of Tax Increment Financing in Counties that Include
Unorganized Territories
Dear
Senator Perry, Representative Piotti, and Members of the
Joint Standing Committee on Taxation:
In your
letter of March 13, 2008, you asked for an opinion concerning
the constitutionality of L.D. 2229, An Act to Expand the
Economic Development Benefit of Tax Increment Financing in
Counties that Include Unorganized Territories. This bill
would authorize county commissioners to use property taxes
generated from tax increment financing ("TIF")
districts within the unorganized territory of that county to
fund "county economic and community development,"
as defined in 30-A M.R.S.A. § 125(1)(A).
It was
suggested to the Taxation Committee that allowing county
commissioners to use property taxes collected from TIF
districts within the unorganized territories to support
county-wide economic development may violate Article IX,
Section 8, of the Maine Constitution when property taxes from
taxpayers in the organized areas of the county are not
contributing to such expenditures. Your letter asked for our
opinion as to whether Article IX, Section 8, presents a
barrier to the enactment of L.D. 2229 under these
circumstances.
Based
on the analysis described below, we believe that a court
would likely conclude that the bill satisfies Article IX,
Section 8, when the county's expenditure of property
taxes from the unorganized territory for "county
economic and community development" results in some
special benefit to the unorganized territory within that
county. However, we also believe that a court may well
conclude that L.D. 2229 violates Article IX, Section 8, to
the extent that it permits property taxes from the
unorganized territory tax district to be spent without
providing a special benefit to the unorganized territory. We
believe that the bill would more likely survive a court
challenge under Article IX, Section 8, if it expressly
required that the authorized spending by the county
commissioners for "county economic and community
development" must result in a special benefit to the
unorganized territory within that county.
Background
As your
letter states, TIF districts are ordinarily negotiated by a
municipality and a developer to provide an incentive to
economic development within that municipality. The specific
requirements of TIFs are set out in Maine statutes. See,
e.g., 30-A M.R.S.A. §§ 5221-5235. Typically,
as your letter also notes, a portion of the property taxes
derived from the TIF...
