Reimbursement obligation of state to municipalities under Article IV, Part 3, §23 of the constitution

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) 111,,,., ;.;f;la, RICHARD s. COHEN ATTORNEY GENERAL STEPHEN L. DIAMOND JOHN S. GLEASON JOIIN M, R. PATERSON ROflERT J. STOLT DEPUTY ATTORNEYS GENERAL STAn: m· MAINE DEPARTMENT OF Tm; AITORNEY GENERAL AUGU$TA, MAINE 04333 April 18, 1979 The Honorable Bonnie Post House of Representatives State House Augusta, Maine 04333 Dear Representative Post: 7 This responds to your request for advice concerning the effect of article IV, part 3, § 23 in the three following situations: 1. Would the Legislature by appropriating money for the purchase of land obligate itself to reimburse the municifality in which the land is situated for S01o of the property tax revenue loss caused by the transfer of owner- ship from a taxpayer to the State, which is tax exempt? 2. Would the Legislature by enacting legisla- tion appropriating money to·build facilities, obligate the State to reimburse a municipality for 50,~ of the property taxes which could_ have been realized on a newly constructed facility were it not exempt? 3. Would the reimbursement obligation exist in the instance of either property purchased or facilities built with funds authorized by bond issues whith were approved by the voters of the State? We have assumed that the State did purchase real estate in each hypothetical. Page two April 18, 1979 In essence, your questions require us to determine whether article IV, part 3, § 23, requires the Legislature to provide reimbursement to municipalities which incur a property tax revenue loss because the State, an exempt entity, acquires real estate that was taxable in the hands of the previous owner. It is our opinion that the Legislature would not be required to provide reimbursement in such situations. Article IV, part 3, § 23 provides that: 11The Legislature shall annually reimburse each municipality from state tax sources for 50% of the property tax revenue loss suffered by that municipality during the previous calendar year because of statutory property tax exe~tions or credits enacted after April I, 19 8. The Legislature shall enact appropriate legislation to carry out the intent of this action. 11 (emphasis supplied) Article IV, part 3, § 23 is designed to accomplish a limited purpose. It provides some financial relief to munici- palities experiencing property tax revenue losses because of property tax exemptions or credits enacted by the Legislature after April 1, 1978. The answers to your questions can be arrived at by determining whether the tax exemption available to the State was a property tax exemption enacted before or after April 1, 1978. In each case, it is clear that the State's exempt status was fixed long before April 1, 1978 and therefore no reimbursement is required to be made. We should emphasize that article IV, part 3, § 23 was not designed to require legislative reimbursement for all property tax losses suffered by municipalities. Rather, it was designed to provide some financial relief to offset the effect of local property tax revenue losses caused by new property tax exemptions and credits. The important fact is not whether a change of owner- ~ causes a property tax revenue loss but whether the exemption cfafmed by the owner was enacted after April 1, 1978. Sincerely, -~ r1 0- .1;.r1 // - ~ .... ',\ '. ,· \, \ \, \·. ' r, f) ( / ,., l__--!t•. _.v·-()sl\( ,. 1, ()"L.,,,,.'(_.\.._,.___ _ __. Andre G. Janelle Assistant Attorney General AGJ:gr