Change in municipal fiscal year of South Portland

MAINE STATE LEGISLATURE The following document is provided by the LAW AND LEGISLATIVE DIGITAL LIBRARY at the Maine State Law and Legislative Reference Library http://legislature.maine.gov/lawlib Reproduced from scanned originals with text recognition applied (searchable text may contain some errors and/or omissions) RICHARD S. COHEN ATTORNEY GENERAL ST/\'rn 01•· MA1N1~ DC:l'Alt'l'MEN'i' Ol" 'l'Ui:: A'l"l'OltNC:Y GBNJ.m.AL AUGU:S'l'A, MAINI!: 04:Jaa June 15, 1979 Honorable Sharon B. Benoit House of Representatives State House Augusta, Maine 04333 Dear Representative Benoit: STEPHEN L. DIAMOND JOHNS. GLEASON JOHN M. R. PATERSON ROBERT J. STOLT DEPUTY ATTORNEYS GENERAL You have related to us that the City of South. Portland voted recently to change its. municipal fiscal year from January through December to July through June. This change takes effect on July 1, 1979. During the period of transi- tion, the City will raise two property taxes.· The first provides revenue for the "old" municip,;:111 fiscal year - January 1, 1978 thrqugh. December·31, 1978.' The second provides revenue for~an abbreviated municipal budget period - January 1, 1979 through June 30, 1979. These taxes are based on the April 1, 1978.valuation of property and are due in October 1978 and April 1979, respectively, Thereafter the City will raise one property tax for each succeeding new municipal fiscal year - July 1 through June 30. It will be payable in two installments - October and April. You have requested that we determine whether general state law prohibits the City of South Portland from adopt- ing a muni.cipal. fiscal year that does not correspond with the property tax year; also, whether state law prohibits ..i mun.i.a.i.pulit.y fron\ raising two property taxos on tho :.:;.:imQ valuation of property. It is our opinion that general statutory law does not prohibit the City of South. Portland from adopting a fiscal year that does not correspond with. the property tax year; it is al$O our opinion that state law does not prohibit the city from raising two property taxes on the same valuation. Page 2 General statutory law provides that the property tax year is April 1 to April 1. 36 M.R.S.A. §§ 502, 558. Municipalities have no power to change the property tax year. When a property tax is raised, it is based on the value of property as of April 1 of the tax year. Similarly, the status (taxability) of property is determined as of that date. Although state law establishes an Aprill to Aprill tax year, it does not require that the revenue produced by the tax be budgeted on an Aprill to April 1 basis. On the contrary, state law specifically recognizes ·that·municipalities are free to budget property tax revenue on a fiscal year that dififers from the property tax ye.ar. 30 M.R. S .A. § 5110. 'l'hus a property tax collected for tax year 1978 (Aprill, 1978 to Aprill, 1979) may be budgeted and spent on the basis of a municipal fiscal year which runs from July l, 1978 to July l, 1979. State law does place a limit on the budget period for which property taxes may·be raised during a single property tax year. One or two property taxes may be raised during a single property tax year (April 1 to April 1) provided that the revenue gener- ated is used to finance a budget period that does not exceed an 18 month period. 30 M.R.S.A. § "5110. It is clear, therefore, that the City of South Portland did not violate general state law"when'it changed its municipal fiscal year from January through December to July through June. Similarly, South. Portland did not contravene general state law by raising two taxes for property tax year 1978 since these two taxes raise revenue for a bu~get period·of 18 months. SLD/ec Sincerely, A k...~ •• ··-.J..,. b ..... ... :, ··•• STEPHEN L. DIAMOND Deputy Attorney·General